A2B-UnctBtef Firming, Saturday, March 11,1089
BY JOYCE BUPP
York Co. Correspondent
PHOENIX. AZ Key leaders
in the nation’s dairy industry
gathered in Phoenix in early
February, for updates on industry
issues and sharing policy ideas.
Hosted at the Pointe at Squaw
Peak, the U.S. Dairy Forum
focused on ideas ranging from
milk marketing orders, drought
and production costs to restructur
ing of the foods industry, nutrition
and advertising.
Especially timely, in light of
dissension among participating
nations in the current round of
GATT trade talks, was a panel of
international representatives
addressing the world dairy situa
tion. Participants represented
Canada, New Zealand, France and
the United States.
Richard Tudor Price, Agricul
ture Canada, sees a new mood in
world trade against production
subsidies and excess product
“dumping” on the world markets.
Current world market prices,
especially for skim milk powder,
are high, reflecting several factors
which affected production and
supply.
The European Economic Com
munity imposed quotes in 1984,
and further reduced them two
years later, while selling at a loss
huge volumes of butter and skim
milk powder which had accumu
lated with high subsidy prices.
Meanwhile, New Zealand has
experienced two severe drought
seasons back-to-back, further cut
ting world powder supplies.
The Canadian warned that cur
rent high powder prices are tern-
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Finger Pointing At U.S.
porary; the EEC is raising quota
by one million tons and New Zea
land will eventually have favor
able weather. Cost of producing
milk in New Zealand is about one
fourth the cost in the U.S.
‘Treat yourcurrent exports as a
windfall,” advised Price, “and not
a basis for long-term investment.”
Canada’s dairy industry is simi
lar to the U.S. in several rspects,
according to panelist Price. Like
the U.S., Canada has limited dairy
imports, about three percent of
production.
Processors have a guaranteed
market for butter and skim milk
powder to the Canadian Dairy
Commission. However, if the
Canadian government resells
those products at a loss, the differ
ence is charged back to Canadian
dairy producers, not the treasury.
Support prices to producers and
make allowances to processors are
based on costs.
Greatest difference is in the
Canadian quota system, with quo
ta amounts bought and sold like
other farm capital assets. Produc
ers do receive a direct federal pay
ment on industrial (manufactur
ing) milk, based on butterfat, cur
rently about $2.20/cwt. on 3.5 test
milk. Fluid milk is controlled by
the provinces, each using quota
and pricing systems.
Upshot of the programs is a
fairly stable production, and
Canada remains a relatively small
“player” in the world’s dairy
trade. With less subsidization in
competing countries, Canada
could someday become more
world market oriented. Tradeoff
would be that domestic markets
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would be more accessible to fore
ign competition.
Robert De Wilde, France, out
lined various programs of the
European Economic Community
in the past two decades aimed at
controlling dairy production.
Included have been cow slaughter
subsidies, diversion programs,
and the 1984 quota introduction.
De Wilde also cited EEC quo
tas, the New Zealand drought and
U.S. diversion and buyout prbg
rams as contributing to reduced
world market stoeks and higher
international prices.
“The EEC has played more than
its part in balancing the world
dairy markets,” he observed.
World market volume is 25 mil
lion tons milk equivalent, and the
EEC has taken IS million tons out
of production.
“It is hard,” De Wilde added,
“to explain to our farmers why
other countries can increase pro
duction, while they must reduce
theirs.”
Nigel Mitchell, New Zealand
Dairy Board, told Forum particip
ants that the U.S. dairy industry
has been insulated from interna
tional market developments.
“It is to me ironic that the dairy
industry in the United States has
such relatively little knowledge of
Atlantic Field Representative Andy Potocek, right, makes a farm visit with
Steve Kurtz, QC Inc., to calibrate a milk bulk tank.
What’s the best approach to
solvirvg a farmer’s problem? At
Atlantic Dairy Cooperative, we
believe it’s one-on-one. Face
to-face, informal meetings be
tween our field representatives
and our members.
Our field representatives are
a crucial link between Atlantic
and its members. The cooper-
Dairy Forum ~
global dairy developments and
issues,” said Mitchell. He pre
dicted that forces such as increas
ing integration of the world’s
major economies and new tech
nology, will change that.
“It will not be so easy, I would
say impossible, for the U.S. dairy
industry to be insulated cosily
from the effects of these changes
in the way it has in the past,”
Mitchell added. He cited the pet
roleum industry as an example of
free world market trading, with
Middle East production changes
impacting immediately on Ameri
can consumers and oilmen.
According to the New Zealan
der, world dairy trade is lightly
regulated among participating
nations with quotes, tariffs, and
regulatory measures. Only two to
three percent of total world milk
production, 30 billion pounds, is
open to true competitive pricing.
New Zealand, he adds, is
unique in that it exports 85 percent
of its dairy production, and there
fore highly susceptible to price
swings from excess product
“dumping.” With surplus&s
reduced, and the USSR emerging
as a stable customer of dairy pro
ducts. Mitchell anticipates a true
world market picture emerging,
driven by supply and demand.
One
One
Atlantic
ative can pay out a record
amount in patronage, equity
and premiums, yet our members
rely on the personal service
they receive.
Each of our field representa
tives is trained to help dairy
farmers produce better milk
and make more money. They
are experts in improving milk
quality and milking systems,
and are well-versed in farm
construction and equipment.
Would you like to be a part of
this one-on-one approach?
Then call or write today. Get to
know the advantages of Atlantic
membership.
Atlantic Dairy Cooperative
1225 Industrial Highway
Southampton, PA 18966
(215) 322-0200
World market butter prices con
tinue to be below domestic sup
port prices in the U.S., and Mitch
ell suggests an adjustment in the
competitive value of butterfat to
non-fat powder under the support
program. That, he says, would
bring the U.S. dairy industry into
closer harmony with the interna
tional economy.
William Paddock, Foreign
Agricultural Service of USDA,
reviewed U.S. dairy exports of the
past two decades. Total value
climbed in that time, but took a
surge in 188 as skim powder
prices strengthened. For die first
eleven months of 1988, dairy pro
duct exports were valued at SS2S
million, up 14 percent over 1987.
Eleven countries purchased a
total 88,785 million tons of dairy
products from the CCC in fiscal
1988, about two-thirds of that
milk powder. Major buyers
included Algeria, Jamaica, India,
Iraq and Mexico.
Paddock noted that in
mid-1987, powder has selling in
northern European ports between
$BOO and $9OO a ton, about half
the current price. Casein prices
jumped from $1 to as high as
s2.SSAx)und. Since the EEC has
traditionally accounted for 40 to
(Turn to Pago A 37)