Dairy Trade Offensive Interests. Presentation structure

Transcription

1 Dairy Trade Offensive Interests Eucolait 25 th June 2007 Mr Jack Baines President Presentation structure Brief overview of world dairy market : > the EU and its competitors > products and their markets Eucolait s wish list & FTA priorities Comments on targeted third markets 1

2 The Basics The Global Dairy Trading Environment Positive environment (consumption rising faster than production) Average prices expected to rise over the next decade World market only 7% of total production most trade is local and regional (eg EU) Market dominated by NZ (Fonterra) EU s share of world market is declining Growth in world dairy trade WMP, cheese and whey are the main growth products 000 mt Butter SMP WMP Cheese Cond. Whey/whey Milks prods Source PZ/IDF

3 World Trade Flows Source: Rabobank, 2006 The Competitors EU s share of world market has fallen over last decade (and will fall further) Shifts in World Trade Flows over past Decade EU-25 Oceania USA Argentina Ukraine Other 5% 4% 9% 9% 28% 35% 0% 10% 20% 30% 40% 50%

4 Cheeses Growing demand worldwide Russia, Japan and US to remain largest cheese importers EU still the largest exporter Encouraging growth of unsubsidised exports (but still less than 50%) Value added business But declining market share Dramatic rise in new suppliers Impressive growth in Ukraine and Argentina World Cheese Exports World cheese market growing. Attracting new cheese suppliers. EU market share is on the decline. More markedly for Oceania. 000 mt % 24% 25% 15% 13% 18% 21% 17% 22% 35% 40% 33% Source PZ/IDF EU-25 NZ Aus. Others 4

5 EU and Oceania Still Dominate m.t. EU-25 Oceania Ukraine USA Argentina Switzerland Uruguay Chile Turkey Canada Source PZ/IDF New Global Cheese Suppliers m.t. Ukraine USA Argentina Uruguay Chile Turkey Source PZ/IDF

6 EU unsubsidised cheese exports Unsubsidised exports accounted for 45% of total exports in total cheese exports grown mt in 7 years (+ 46%) % m.t % Subsidised Unsubsidised Inward Proc Source: Rabobank,

7 Global Cheese Importers 05 m.t. Russia 19.4% Japan USA EU-25 Mexico Saudi-Arabia Australia S. Korea CH Canada Algeria UAE Egypt Lebanon Kuwait Philppines Croatia Indonesia 0.6% Top EU cheese markets 06 Russia USA Japan CH mt mt mt mt S. Arabia mt Algeria mt Canada mt UAE 9 102mt Lebanon 8 659mt Australia 8 447mt Russia, USA and Japan are key strategic markets for the EU Milk Powders Most important traded dairy commodity Dominated by Oceania (NZ) and market share to grow Latin American presence (Argentina) growing Fragmented import markets Key products for Asia (ASEAN and S. Korea) Consumer of half the world s dairy products Middle East and N. Africa important for the EU Unsubsidised EU WMP exports not competitive in lower price environment 7

8 Global WMP Importers 05 WMP demand growth concentrated in developing markets - strongest in Africa, followed by Asia and Latin America Algeria 9.3% Saudi-Arabia Venezuela Indonesia Algeria mt China Malaysia Nigeria mt Sri Lanka S. Arabia mt Nigeria Cuba Dom. Rep mt Singapore Oman mt UAE UAE mt Jordan Philippines Angola mt Mexico Senegal mt Thailand Vietman Sudan mt Russia Senegal 1.7% Lebanon mt Top EU WMP markets 06 m.t Butterfat EU surplus product reliant on subsidies for past 40+ years future export business without refunds? Oceania will remain the world s largest exporter (50% of market) EU share predicted to decline from 38% to 22% in 2015 (OECD-FAO) India is the single largest consumer (and producer) Russia is the largest importer 8

9 Global butterfat markets 05 Russia 12% Mexico EU Egypt S. Arabia Morocco Singapore USA China Algeria Lebanon Iran Top EU butterfat markets 05 Russia mt S. Arabia mt Morocco mt Egypt mt Singapore 9 153mt Iran 9 091mt Lebanon 6 319mt Algeria 5 707mt Switzerland 4 024mt m.t Whey products Whey (dynamic product and will grow by-product of cheese production) EU-25 USA Aust NZ Canada CH Others Top EU whey markets 05 China mt Russia mt Thailand mt Indonesia mt Malaysia mt Japan mt Vietnam mt 0% 10% 20% 30% 40% 50%

10 EU exports declining but... EU exports still account for a quarter of total milk production Exports in milk equiv. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 37% 36% 31% 33% 32% 30% 27% 73% 63% 64% 69% 67% 68% 70% Source: PZ/IDF intra-trade exports EU s future export potential Quota restrictions and growing consumption maybe reducing export volumes now BUT WE NEED TO LOOK AT THE FUTURE Further CAP reform and WTO will determine our export potential (climate change/biofuels?) Clear demand for EU products on export markets Growth of unsubsidised cheeses and whey products shows our potential, but new market access essential Risk of stagnation if focus exclusively on home market (globalisation, stay competitive and innovative) 10

11 Eucolait Wish List EU to develop a new dairy export policy unsubsidized environment (refunds, milk quota?) new market conditions (higher world prices) Policy = Clear, Offensive, Long term, Targeted (COLT) improve market access (FTA s) market EU origin USP (GI?) offensive interests in imports The GI Debate Important not to exaggerate trade benefits (In dairy) only relevant for cheese Covers a minority of products, of markets and of consumers Serious lack of data on volumes traded Not a substitute for export refunds or preferential market access Should not be a precondition for preferential market access 11

12 Improve Market access Have equal if not better access than our competitors in key markets - raft of bilateral agreements under negotiation or targeted; EU cannot be left behind - don t give up on multilateral process Bilateral Agreements can work but m.t Source PZ/IDF...most successful have a regional focus and historical suppliers can be quickly squeezed out! Evolution of cheese exports to Mexico 9% 27% 22% 25% 17%-Uruguay 23%-Chile 10%-Arg 24%-USA 16%-NZ 9%-EU EU-25 NZ Australia USA Argentina Chile Uruguay 12

13 Priority FTA s for dairy 1. Highest priority for EU dairy is for improved market access in Russia, USA and Japan 2. Categorisation of other trade blocs Priority high Mediterranean Western Balkan ASEAN S.Korea Priority medium Mercosur Ukraine India ACP South Africa Priority low Andean Comm. Central America - Neighbouring countries Mediterranean region High tariff region Need to deepen existing concessions (expand TRQs and reduce in-quota tariffs) Preference for EU product but price sensitive Demand for milk powders to grow some growth potential for cheese Strategic interest, particularly in Turkey, but region also growing in importance for NZ Western Balkans (strategic) FTA a key priority Market for dairy-related NAI goods Tariff-related? Potential to grow cheese and butter Exports to Croatia twice TRQ volume 13

14 South East Asia ASEAN Growing consumption and strong reliance on imports Important market already (particularly for milk powders, whey and butteroil) Milk proteins to remain dominant import NZ dominant supplier but cannot cover the whole market Several bilateral FTA s already (with USA and NZ in particular) Tariffs need to be harmonised and reduced (preferably) to zero South Korea 2 nd largest dairy market in SE Asia (after Japan) Commercial opportunities for full spectrum of dairy products high duties currently applied Cheese imports to increase 48% over 10 years to 2015 to meet growing demand Emphasis on quality (and well-being) and prepared to pay for it Has several FTA s already or under negotiation with EU s competitors - Other dairy countries Mercosur Limited exports, mostly whey (Brazil) and WMP (Venezuela) Competition from local suppliers Complicated Venezuelan import licencing and product registration system Brazilian (milk powders) and Venezuela (cheese) anti-dumping rules (what does this mean for an EU-Mercosur Agreement?) Abolition of refunds should not be a precondition for new accord Some potential for milk powders, value-added products (speciality cheese, WPC, NAI products) Less EU interest in the past in an accord because of export refund issue A more offensive interest for Mercosur (Argentina, Brazil)? Ukraine Market for dairy-related NAI products Duty-free access for former Soviet states Significant producer and trader in own right Potential supplier for EU market India Self-sufficient producer/protected market Growing middle class: target for EU value added products Estrogenic treatment certification requirement should be challenged 14

15 - ACP & South Africa ACP* Tariffs generally low Price sensitive Market for commodities and dairy-related NAI products (food preparations) Limited opportunity to grow unsubsidised products South Africa Positive outlook for EU products Food preparations, whey, cheese and butter RSA refuses to grant preferential access to subsidised EU cheeses * Countries analysed: Senegal, Mauritania, Nigeria, Angola, Ivory Coast, Ghana, Kenya & Mauritius, Dominican Republic, Trinidad & Tobago, Barbados, Jamaica - Andean & C. America Difficult competitive environment Price sensitive Regional suppliers and CAFTA (and NZ!) Some opportunities for cheeses, Ch 19 and Ch 21 blends Andean duties calculated on c.i.f value (including freight and insurance) Pre-export product registration requirement in several countries Peruvian cheese certification difficulties for EU internal transit consignments On-going requirement for individual EU factory approvals 15

16 To Conclude EU s future trade will be more targeted Preferential access will help facilitate longer-term development Improved market access needed most especially in our key markets (Russia, USA and Japan) Order of priority in our FTA (dairy) offensive interests Demand growing fastest for cheese, WMP and whey but no product should be discounted (including NAI) Benefits of PDOs/GIs for dairy trade should not be overestimated Urgent need to analyse current level of PDO exports Limited SPS problems generally Could deteriorate in a more liberal environment Thank You! 16