EU’s common food name policy will cost U.S. dairy billions – eDairyNews
United States |27 febrero, 2019

Dairy | EU’s common food name policy will cost U.S. dairy billions

Dairy industry faces losses of $9.5-20 billion if EU restrictions on geographical indications for food names proliferate.

The U.S. dairy industry — and the U.S. economy — could be hit with anywhere from $9.5 billion to $20-billion in revenue losses if the European Union is successful in expanding restrictions on the use of generic cheese terms like parmesan, asiago, feta and others, according to a new study conducted by Informa Agribusiness Consulting, commissioned by the Consortium for Common Food Names (CCFN) and the U.S. Dairy Export Council (USDEC).

The study, which provides timely information in light of U.S.-EU trade negotiations, examined the potential impact the EU’s aggressive geographical indications (GI) agenda would have if imposed on a broad variety of U.S. cheeses and markets.

Seizing the common names that U.S. marketers have used for generations would confuse and alienate both domestic and international consumers, leading to a dramatic drop in demand for U.S. cheese. If the EU’s GI initiatives were to be enforced on U.S. cheeses, the study — conducted by Informa Agribusiness Consulting — predicts that the dairy industry could see a dramatic drop in demand for U.S. cheeses, with prices falling 14% and resulting revenue losses of between $9.5 billion and $20.2 billion, depending on consumers’ willingness to pay for recognizable cheese names.

Consumption of U.S.-produced cheeses could drop 306-814 million lb. in the first three years. At the same time, EU cheese exports could see a surge of 13%, thereby exacerbating the existing $1.4 billion U.S.-EU dairy trade deficit. The impact of GI restrictions would also have grave effects on the broader dairy industry via plummeting milk prices and shifting demand, as well as on the broader U.S. economy. The Informa study reveals that between 108,000 and 223,000 jobs could be at risk, while gross domestic product (GDP) could fall $12-25 billion over three years.

«The threat is serious and mounting; the EU is very clear in its intentions and the scope of its GI restrictions continues to expand,» CCFN executive director Jaime Castaneda said. «Already, we have seen European groups attempt to seize usage of specific names in the U.S. market, including parmigiano, asiago, romano and gruyere, and in key export markets around the world, the EU is abusing GI policies to dismantle competition and erect barriers to trade. Only collaborative actions between the U.S. government and impacted industries will stop the EU’s increasingly aggressive efforts and ensure that other countries hold the line against the EU.»

In testimony this week to the Office of the U.S. Trade Representative, Castaneda urged the Administration to be as strong and persistent in protecting market access opportunities for U.S. agriculture on this issue as the EU has been in fighting to impose GI-related market restrictions.

«This study sends a clear warning to U.S. negotiators to stand firm and not to give into the EU’s sweeping demands on GI protections that overstep the bounds of fair trade,» Castaneda said.

In addition to assessing the impact of banning the use of terms currently targeted by the EU, the study also looked at the impact if subsequent GI status is approved for popular cheeses like provolone and mozzarella. The EU has not provided clear assurances that use of these additional terms will not be restricted in future, and its GIs continue to proliferate. The study found that damage would continue to mount in this scenario, reaching a cumulative $71.8 billion in lost farm revenue over 10 years.

The delayed impacts of GI status for cheeses like provolone and mozzarella would be more severe than the initial impacts due to the market sizes for these cheeses, the study noted. Results from models on GI impacts show that total U.S. milk equivalent consumption would fall to between 56 billion and 136 billion lb. (2.7-6.7%).

The average farm price in the long-run scenario ranges from 90 cents to $2.03/cwt. lower than in the baseline case. Farm-gate margins would remain significantly below breakeven levels for seven of the 10 years modeled in this study, forcing greater liquidation of the U.S. dairy herd. The loss in herd size would range from 460,000 to 740,000 head due to the implications of GI restrictions on common cheese terms in the U.S.

“The European Union has repeatedly targeted the U.S. dairy industry by undermining our ability to freely use generic cheese names in foreign markets,” USDEC chairman and chief executive officer Tom Vilsack said. “The United States must make it abundantly clear that attempts to restrict common names in our domestic market will be met with swift and forceful opposition.”

The impact of GI restrictions would not be limited to the U.S. cheese industry; there also would be grave effects on both the milk industry, through plummeting prices and shifting demand, and the broader U.S. economy.

“Failing to confront the European Union’s aggression will have a serious impact on the United States’ ability to continue to expand exports, negating the important progress dairy has made towards securing ‘The Next 5 Percent,’” Vilsack added.

The Next 5 Percent is an industry initiative to increase U.S. dairy export volume from approximately 15% of the U.S. milk supply to 20% through a coordinated effort between USDEC and dairy suppliers that builds upon existing markets and cultivates new ones.

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