Inside Milk
Dairy sector divided over US and China conflict
China has announced that it will boycott dairy imports from the United States (US) in about 2,5 weeks. The Asian giant is going to do that by introducing a 25% levy. Is it good or bad news for the Dutch dairy sector? The dairy sector appears to be divided over the conflict between the US and China.
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There has been talk about it for weeks trade dispute between the US and China. For example, American President Donald Trump announced that he would tax products from China with 25%. However, China does not just let that happen and retaliates with the same tariff on imports of American products, including dairy.
Effective July 6
As the plans now stand, the import tariff will come into effect on July 6. This leaves approximately 2,5 weeks for peace to return. Greenmark Dairy analyzed the developments, which are already causing a lot of anxiety among dairy farmers in California.
Greenmark indicates that WPC80 and Lactose are still in the clear. Furthermore, all major types of milk powder, butter and cheese are on the list. It means that 16% of US dairy exports are at risk. Greenmark calculated that these products represent a value of $400 million.
However, the above is seen as an opportunity by other players in the market. For example, Ukraine and Belarus are ready to take over the American market share in whey. In any case, Belarus will get the wind in its sails when it comes to exports. Russia announced that a number of blockages have been lifted again, allowing 6 Belarusian companies to export to its large neighbor.
Opportunities for EU
It also creates opportunities for the European Union (EU). This is partly because the southern hemisphere is heading into winter. However, Greenmark emphasizes that it is not all positive. For example, one of the lessons learned during the boycott of the Russians was that dairy exports are finding their way, but this is usually accompanied by heavy discounts on prices. This would further disrupt the market.
The conflict between the US and China is having an impact on the dairy trade in the US. For example, the Chicago stock exchange has once again taken a step back in dairy derivatives. For the dairy farmers who are plagued by an already... minimum margin, it is a new setback. Which on the one hand could mean that there will be less milk, but that if things continue like this, that milk will have to be given new destinations.