UN to the EU

The European Dairy Association’s World Dairy Forum in Stresa, Italy attracted a diverse audience. Suzanne Christiansen reports.

The wind and wet weather on the edge of Lake Maggiore couldn’t hide the grandeur of the Regina Palace Hotel hosting the EDA’s World Dairy Forum. And the mood indoors did not match the gloomy weather outside, as speakers discussed the future of dairy in the modern world. Michel Nalet, the EDA president, predicts that the European Union will be seen as a global player in the dairy industry, as the quotas disappear next year.

Giuseppe Ambrosi president of Asso Latte, the Italian milk association started out by providing an overview of the Italian dairy industry. Italy is home to around 2,000 dairy companies and is worth around €2 billion in dairy exports alone, he notes. The big companies account for 38 per cent of total turnover, and 32 million litres are collected every day. The country also imports more than two million tons of milk products per year.

Italy is home to 46 of the 181 PDO cheese in Europe, and no other country produces such quantities of cheese in the world, Ambrosi says.

Export has been in a state of constant growth over the past 30 years, and Italian cheese is exported to five continents. In 2013, the amount of cheese exported increased in value by 4.2 per cent and by 7.4 per cent in volume. The top five destinations for Italian cheeses are France, Germany, the US, the UK and Switzerland.

There was also a positive upward trend in Russia before the embargo started, he says. Imports were around 2.1 million tonnes, of which roughly 25 per cent was cheese. The majority of the products were imported from Germany and France.

Future trends

Enrico Krien, senior business consultant at the Nielsen Company for FMCG, took a look at the consumption of milk and charted the trends for European dairy consumers. Krien notes that as consumer confidence increases, consumers start buying more. Concerns range from job security in places like France, Spain and Italy, to utility bills being the first worry of German and British consumers. Spare cash is being put into savings for 35 per cent of people in Western Europe. Turkey’s confidence is quite high right now, due to positive trends such as being very trendy for tourism. For fast moving consumer goods at retail, the last three years have been driven by price increases overall.

Key trends for the dairy market include buzzwords such as Fairtrade, lactose free, gluten free and free of everything, more or less, Krien says. Health is one of the key issues, and sustainability. However, he points out that if you ask 10 different people what sustainability is, you will wind up with 10 different explanations.

Snacking products and items to eat on the go are a trend. As an example, Krien mentioned cheese strings, which offer a very small package with a large price, and turn mozzarella from a €5 per kg product, to a €24 per kg item. Consumers also consider cheese and yogurts one of the top three snacking products, according to Nielsen research.

Krien concluded by saying, “Don’t ask what the category can do for you, ask what you can do for the category.”

Laurent Damiens, chairman of the European Milk Forum, detailed his organisation’s work in eight countries in Europe. These include Austria, Belgium, Denmark, Iceland, the Netherlands, Northern Ireland, Norway and France. “Our ambition is to build generic dairy platforms and join forces for the same approach. By using one voice we can attract money from the EU,” he says. “We have eight countries involved, but more are welcome, and we’re working on getting messages out to consumers and key opinion leaders in the countries.”

The first project is “Milk, nutritious by nature,” which is financed 100 per cent by the participating countries. The six-year project runs through 2017 and it is targeting key opinion leaders – scientists, doctors and other medical professionals. The objective is to explain how milk is a complex food and why it is good for health. “It positions milk as positive for health,” Damiens notes.

The second project is “Milk, a force of nature,” which is due to spend €16 million over three years, with the EU contributing €8 million. This project is targeted at consumers, and the targets are mothers and teenagers, especially boys. “Milk consumption has dropped for teenagers,” Damiens explains. The result of the television advertising has been that dairy’s image improved in all countries, but certain tweaks had to be made depending on which country it was in. “People drink milk differently in different countries. For example, in the Netherlands they will drink milk for lunch but in France, never,” Damiens observes.

The next project lined up is focussed on cheese, and will launch in January 2015. This will focus on Europe as being the motherland where cheese was born. The EMF is also looking at highlighting snacking and dairy’s place in this trend. The group also will focus on areas such as the older generations and their intake of dairy, as this is a growing group in Europe, he says. “Our final goal long term is to shape trends for a better image for dairy, and to change a negative into a positive.”

UN plans

Phillipe Anvers of the FAO animal production and health division of the UN, was on hand to discuss the global benefits of dairy.  He discussed the remit for the United Nations Food and Agriculture Organization, noting that it now has 3,400 staff and a $2.4 billion budget, provided by member countries and voluntary contributions. Its offers five strategies, which include the elimination of malnourishment, more production for agriculture, forestry and fisheries, reducing rural poverty, improving value chains, and increasing the level of response to emergencies such as famine.

For dairy, there is a global consumption of 83kg of milk per year per person on average, and this has increased from 1980 when the number was 77kg per year. Most of this growth is from developing countries – their dairy consumption is well below industrialised countries but is now catching up, Anvers says. The FAO believes that milk and dairy products can be an important part of the human diet, and he notes that under nutrition in the first two years of life impacts on a person’s lifespan and overall health. As a result, the FAO is promoting school milk programmes around the world, in order to improve diet. Anaemia, for example, affects 1.62 billion people on the planet currently, and milk can help alleviate this.

In Bangladesh, a pilot programme funded by the FAO targeted 2,000 children with 200ml of milk daily. “It is a good programme and there is more attendance among schoolchildren who consumed milk daily,” he says. “It was interesting to note that there has been a significant increase in height and weight versus the other children, about 1.2 kg more in weight and 1cm more in height. Dairy is very important for nutrition, and it’s also a fantastic way to create jobs. For 300 million families on the planet, dairy is both a source of nutrition and income.”

Anvers also notes that dairy is part of the solution when looking at tackling climate change. “The dairy sector has an advantage over the meat sector, as the outputs versus the inputs are more efficient,” he says.

Global challenges

Jeremy Hill, president of the International Dairy Federation, was on hand to find global answers to the challenges of the dairy sector. “There are real global challenges and demands, and if we don’t overcome them, we’ll miss the fantastic opportunity to provide nutrition and health to consumers,” Hill says. “We need to develop more sophisticated standards of nutrition, and move everyone towards the half litre per person required.”

Population growth is set to grow well into 2100, up to 12 billion people, by one estimate. The growth in affluence will also mean that more people can afford dairy, so that around five billion people will be interested in consuming dairy, which is up from 1.2 billion in 1990, Hill notes. China alone will see around 50 per cent of households able to buy milk by 2030, which is well up from the one per cent back in 2000. “The question then becomes, how will we produce enough?” he asks.

Another issue is that the world has two divergent problems, which is combatting the nutritional issue of affluence and overeating, side by side with poverty.

Hill also wonders how to overcome the parts of the world where they believe that the saturated fat in dairy is bad for health, despite the science to the contrary. “Food safety standards have to be devised using sound science and be globally harmonised as well. The IDF has an important role to play helping to spread policy internationally,” Hill says.

Mella Frewen, director general of pan-European organisation FoodDrink Europe, which represents the European food and drink industries, discussed the pressures on European food companies, including the proposed country of origin label and the Russian embargo. “The meat sector is also worried,” she says. The Transatlantic Trade and Investment Partnership (TTIP) with the US was also explored and its ultimate effect on EU-US relations.

A single voice

Jais Valeur, EDA vice president, was the moderator for the last session, and he agreed the free trade agreement between the US and the EU was a very big issue. “Deregulation will be in full effect next year, and there will be an increase in milk supplies from some areas. It is important here in Europe to have a unified strategy,” he says. “On the back of the failed WTO agreement, there will be more and more bilateral agreements.”

John Clarke, director for international bilateral relation, the European Commission on trade negotiations for the food industry, discussed the TTIP. “The role of dairy is of a way of life and part of the rural fabric and culture in Europe,” he notes. “The abolition of quotas will help the dairy sector in Europe be more competitive and market orientated. After all, the EU is the biggest exporter in the world, with €120 billion in exports in 2013, but we are facing increasingly competitive global markets.”

The Russian ban, he states, was a wake up call for Europe not to be overly reliant on one market. Nearly €1 billion in cheese and butter exports head to Russia normally. “This is why it’s important to open new markets for dairy exports,” Clarke says.

Asia, for example, is where the biggest growth opportunities lie. China, with its growing middle class, has a dairy sector that suffers from poor production and lack of technical know-how. “There is a massive potential for European companies to export and invest now that dairy quotas are abolished,” he states. “There is already quite a lot of investment between European and Chinese companies, but the EU will be set to tap into the Chinese market further after 2015.” The EU and China are currently quite close to signing a bilateral agreement to protect European PDOs such as Comté and Parmigiano Reggiano.

The EU is also working on FTAs with India, Malaysia, Thailand, Indonesia and Japan. Clarke says that it’s not just Asia where growth lies. Africa, for example, is expected to double its population by 2050, and has the fastest growing middle class in the world. “Dairy exports have doubled in the last 10 years to the region,” he notes. “FTAs within African regions encourage European dairies to invest, and can help Africa with its value chain. It’s a win-win situation over the next 30 years. The region is the fastest growing importer of cheese and milk powder.”

The TTIP covers almost half of the world trade, and is worth €2 billion every day, Clarke notes. “Agriculture is central to this agreement and a key sector for the US Congress. But this is also true for the European Union. There will be no TTIP without a good agricultural outcome, and the partnership will be judged on the basis of agriculture.”

The dairy tariffs being abolished will benefit the US, mainly, as EU tariffs are higher than the US ones at present. “The US consumer does not understand the beauty of the choice awaiting them. Europe is promoted as a source of good, high quality food, and this is our global calling card when it comes to agricultural food exports,” he says.

MEP Paolo De Castro explained that the negotiations for the TTIP have been as transparent as possible, in order to avoid a negative perception of the agreement in either the European Parliament or the US Congress. “It is extremely important – otherwise we risk a lack of understanding and failure. But the FTA with the US won’t jeopardise our quality standards. It’s a great opportunity to carefully control and uphold them,” De Castro says. “I hope this important agreement will be finalised. The negotiators will try and obtain the best possible solution, so our institutions can help disseminate knowledge and increase the number of jobs on both sides.”

Jim Higgiston, with the US mission of the US Department of Agriculture, spoke last. “TTIP will be beneficial to both sides of the Atlantic,” he says. “We have more in common than what separates us. A lot has changed over the last 50 to 60 years.” This change has included a more sophisticated US palate, Higgiston notes, “American consumers want choice, variety and quality, and they want it now.”

Farming has also evolved, with the US, like Europe, having mainly family-owned farms, with an average of 115 cows. “Agriculture will benefit from the TTIP package, and not just bigger companies,” he states. “There is $25 billion in agricultural trade between the EU and US now, and there is the opportunity to increase this. There will be benefits beyond the two regions with a communal approach, including a common safety standard.”

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