European dairy exports widens US deficit

- Last updated on GMT

Related tags: Dairy, International trade, Butter, Us

Last week's USDA report revealed that imports of European dairy
products in the US has widened the deficit gap in the country. The
widening of the deficit has meant that alliances have been formed
by US groups in an attempt to balance the exports and imports.

Italy is still the leading supplier of cheese in the US market, its imports are valued at $137.5 million, (€114.3 million) which was equal to last years figures. However, the volume of its imports have decreased to 46.7 million pounds. This is down 2.48 per cent from last year.

The French imported a total of 28.7 million pounds of dairy produce. This was up 2.33 per cent and valued at $72.7 million. Denmark imported a total of of 23 million pounds closely followed by Lithuania and the Netherlands with 17.6 and 16.7 million pounds of dairy imports.

Non-European countries that had high imports in the dairy sector were New Zealand with 68.2 million pounds. Imports were down 16.23 per cent from the first nine months of last year from New Zealand, but in terms of volume, it remained the leading supplier of US cheese. Canadian imports totaled to 9.3 million pounds, up 14.09 per cent from the year earlier. This was valued at $20.8 million which was up 20.68 per cent.

In an attempt to stabilise milk prices in the US, the Co-operatives Working Together group (CWT), which is a farmer-funded milk reduction effort managed by the US National Milk Producers Federation (NMPF) has announced its plan to implement an export assistance programme. This, the organisers believe will mean that Europeans will see an increase in dairy products from the US over the next six months.

The organisation is using a budget of $20 million to meet its goals, and the group plans to export approximately 30 million pounds of cheese, and 10 million pounds of butter in the next half year. These volumes represent around 500 million pounds of milk in accordance to a measuring system known as the butterfat basis.

The group claims that exports will occur only when overseas buyers are found for the products. There are geographic restrictions that will exist so it is likely that some countries will not be effected by the exports initiative.

"We are encouraged by the fact that there are buyers out there already inquiring about when this programme will commence,"​ Jerry Kozak NMPF president and CEO, said in a Dairy news report.

The CWT believe that a factor that has caused the farm-level milk prices to suffer is the glut of dairy products that the group says hangs over the market. The group plans to offer an incentive to dairy manufacturers and exporters to sell these products to foreign and commercial markets.

Currently there is a USDA programme which provides bonuses to business entitles that exports dairy commodities. The CWT has stressed that it does not intend to rival or replace this programme. Instead its aim is to act as an aid to the USDA's Dairy Export Incentive Program, the organisers of the alliance said.

The CWT will provide assistance in connection with export sales to most countries. The group has stated that a number of countries in the Carribean will have US exporting restriction, these include Dominica, Jamaica and Grenada. While the Netherlands is the only European nation that has restrictions, Chris Galen, vice president of communication at CWT told DairyReporter.com that "although Europe is not a restricted area it is unlikely there will be much export activity in the EU, given the market access restraints there compared to most countries or regions".

Related topics: Markets

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