RESTRICTED
WORLD TRADE IDA/W/1
3March 1995
ORGANIZATION(95-0451)
International Dairy Agreement
INTERNATIONAL DAIRY COUNCIL
Status Report ontheWorld Market forDairy Products
Note bytheSecretariatIDA/W/1
Page2
INTRODUCTION
TheInternational Dairy Agreement entered intoeffect on1January 1995. Itreplaces the
InternationalDairyArrangement,whichhadoperatedsince1980.Asof17February1995,thefollowing
wereparties totheInternational Dairy Agreement: Argentina, theEuropean Community (15),Japan,
NewZealand, Norway, Romania, Switzerland andUruguay. Other countries, previously signatory
totheInternational Dairy Arrangement, areexpected tobecome parties totheInternational Dairy
Agreement upon completion oftheirnational ratification procedures.
Theprimary objectives oftheAgreement, likeitspredecessor, aretoadvance theexpansion
andliberalization ofworld trade indairy products under asstable aspossible market conditions, on
thebasis ofmutual benefit toexporting andimporting countries, andtofurther economic andsocial
development indeveloping countries. Inadopting these objectives, theeconomic importance ofmilk
anddairyproductstomanycountrieswasrecognized,aswellastheneedtoavoidsurplusesandshortages
andtomaintain prices atanequitable level.
AnInternationalDairyCouncilandaCommitteeonCertainMilkProductshavebeenestablished
toadminister theAgreement. What hadpreviously beenthree Protocols annexed totheInternational
Dairy Arrangement havebeencombined intoasingle Annex onCertain Milk Products.
Under thisAnnex, minimum export prices areestablished forskimmed milkpowder, whole
milkpowder, buttermilk powder, anhydrous milkfat,butter andcheese (seeTable 1).Theminimum
export prices arefixed fordefined pilotproducts andtaking intoaccount thecurrent market situation,
dairy prices inparticipating producing countries, theneedtoensure equitable prices toconsumers,
andthedesirability ofmaintaining aminimum return tothemostefficient producers inorder toensure
stability ofsupply overthelonger term.
Asof4May1994, theCommittee oftheProtocol Regarding MilkFatdecided tosuspend the
minimum export prices forbutter andanhydrous milkfatforaperiod nottoexceed twelve months.
InDecember 1994, itwasdecided thatthissuspension, andother operative decisions under the
International Dairy Arrangement, would beapplied onadefactobasisunder thenewAgreement until
suchtimeastheInternational Dairy Council takes adefinitive decision onthematters (L/7568).
TABLE 1:MINIMUM EXPORT PRICES EFFECTIVE 1JANUARY 1995
Pilot products US$/metric tonf.o.b.
Skimmed milk powder 1,200
Whole milk powder 1,250
Buttermilk powder 1,200
Anhydrous milk fat 1,625*
Butter 1,350*
Cheese 1,500
*Minimum export prices forthese products were suspended on4May 1994
foraperiod ofuptotwelve months.IDA/W/1
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Thisstatus report hasbeenprepared bytheSecretariat inaccordance withArticle IV:1ofthe
Agreement and,inlightoftheabove-mentioned decision ofDecember 1994, inaccordance withRule29
oftheRules ofProcedure oftheInternational Dairy Arrangement. Theaimofthisreport istoprovide
abasis fordiscussion andadvancement ofthework oftheCouncil andCommittee attheirmeetings
inMarch 1995.
Thisreport isbased oninformation provided byparticipants aswellasdocumentation provided
bytheFood andAgriculture Organization (FAO), theOrganization forEconomic Co-Operation and
Development (OECD), theUNEconomic Commission forEurope (ECE), theInternational Dairy
Federation (IDF), Agriculture Canada, theUnited States Department ofAgriculture, Zentrale Markt-
undPreisberichtstelle (ZMP), Agra Europe andother selected national andprivate sources.
Thereport should bereadinconjunction withthestatistical information circulated inthe
following documents:
IDA/W/2 Milk Deliveries andProduction
IDA/CMP/W/1 Committee onCertain Milk Products -Summary Tables
Thisreport focuses onsignificant changes andnewinformation available subsequent tothe
preparation oftheNovember 1994 Annual report ontheWorld Market forDairy Products. Itdoes
notreproduce information available inthatreport, norallinformation provided byparticipants tothe
International Dairy Arrangement during thecourse oftheirmeetings ofDecember 1994, which is
contained indocument DPC/PTL/47.
Delegationswishingtosuggestmodificationsorcorrections,ortoprovideadditionalinformation,
areinvited tomake submissions totheSecretariat, preferably inwriting, assoonaspossible. Such
submissions might cover boththepresent report andthestatistical information mentioned above. The
drafting ofthisreport wascompleted on17February 1995.IDA/W/1
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TABLE OFCONTENTS
Page
WORLD DAIIRY MARKET HIGHLIGHTS . . . . . 6
WORLD MILK PRODUCTION AND CONSUMPTION . . . . 7
MILK POWDERS . . . . . . . . . 7
BUTTER AND ANHYDROUS MILK FAT . . . . . . 12
CHEESE . . . . . . . . . . 15
DAIRY PRODUCTION AND POLICIES INSELECTED COUNTRIES
AND REGIONS . . . . . . . . . 19
WESTERN EUROPE . . . . . . . . . 19
TheEuropean Community (12) . . . . . . 19
Austria, Finland andSweden . . . . . . . . 21
EFTA -Norway andSwitzerland . . . . . . . 22
CENTRAL AND EASTERN EUROPE . . . . . . 23
OCEANIA . . . . . . . . . . 24
Australia . . . . . . . . . . 24
NewZealand . . . . . . . . . . 25
NORTH AMERICA . . . . . . . . . 26
Canada . . . . . . . . . . 26
United States . . . . . . . . . . 28
LATIN AMERICA . . . . . . . . . 30
ASIA . . . . . . . . . . . 30
Japan . . . . . . . . . . . 30
Other Asian Countries . . . . . . . . . 31
AFRICA . . . . . . . . . . 32IDA/W/1
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Page
TABLES
Table 1 Minimum Export Prices Effective 1January 1995 . . . 2
Table 2 International Dairy Prices 1992-94 . . . . . 19
Table 3 EC(12) Deliveries andLiquid Milk Production . . . 19
Table 4 EC(12) Dairy Production, Consumption andTrade . . . 20
Table 5 EC(12) Dairy Export Refunds in1994/95 . . . . 21
Table 6 Austria, Finland andSweden -Butter andCheese . . . 22
Table 7 Norway andSwitzerland -Butter andCheese . . . . 23
Table 8 Central andEastern Europe -Milk Production . . . . 23
Table 9 Australia -Milk Deliveries . . . . . . 25
Table 10 Australia -Dairy Production, Consumption, Exports . . . 25
Table 11 NewZealand -Milk Deliveries . . . . . 26
Table 12 NewZealand -Dairy Production, Consumption,
Exports andStocks . . . . . . . 26
Table 13 Canada -Milk Production andLiquid Sales . . . . 27
Table 14 Canada -Dairy Production, consumption andTrade . . . 27
Table 15 United States -Milk Production andLiquid Sales . . . 28
Table 16 Unites States -Dairy Production, Consumption,
Trade andStocks . . . . . . . 29
Table 17 United States -Dairy Export Incentive Program Allocations . . 29
Table 18 Japan -Milk Deliveries andConsumption ofDrinking Milk . . 30
Table 19 Japan -Dairy Production, Consumption, Imports andStocks . . 31
GRAPHS
Graph 1 Skimmed Milk Powder Production 1980-1994 . . . . 8
Graph 2 Skimmed Milk Powder Exports 1980-1994 . . . . 8
Graph 3 Skimmed Milk Powder Stocks 1980-1994 . . . . 9
Graph 4 Skimmed Milk Powder Prices 1980-1994 . . . . 9
Graph 5 Whole Milk Powder Production 1980-1994 . . . . 10
Graph 6 Whole Milk Powder Exports 1980-1994 . . . . 11
Graph 7 Whole Milk Powder Prices 1980-1994 . . . . . 11
Graph 8 Butter Production 1980-1994 . . . . . . 12
Graph 9 Butter Exports 1980-1994 . . . . . . 13
Graph 10 Butter Stocks 1980-1994 . . . . . . 13
Graph 11 Butter Prices 1980-1994 . . . . . . 14
Graph 12 Anhydrous Milk FatProduction andExports 1980-1994 . . 14
Graph 13 Anhydrous Milk FatPrices 1980-1994 . . . . . 15
Graph 14 Cheese Production 1980-1994 . . . . . . 16
Graph 15 Cheese Exports 1980-1994 . . . . . . 16
Graph 16 Cheese Stocks 1980-1994 . . . . . . 17
Graph 17 Cheese Prices 1980-1994 . . . . . . 17
Graph 18 Price Indices forSkimmed Milk Powder andWhole
Milk Powder . . . . . . . . 18
Graph 19 Price Indices forButter andCheese . . . . . 18IDA/W/1
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WORLD DAIRY MARKET HIGHLIGHTS
Worldmilkproductionin1994continuedtodeclineslightly,asfurtherdropsinoutputinCentral
andEastern European countries offset increases inOceania andmost developing countries.
Following twoyears ofrecord production levels, milk supplies continued togrow in
NewZealand andAustralia, butthegrowth inthe1994/95 season isbeing limited bythesevere
drought inparts ofAustralia andtheconsequent increases insupplementary feedcosts, and
unusually coldweather inNewZealand.
World production ofskimmed milkpowder alsodeclined in1994, particularly inEuropean
countries. Incontrast, world traderecovered somewhat, andpricelevels wererelatively high.
Japan, inparticular, announced itsneed forsubstantial imports ofskimmed milkpowder
following anincrease indemand fordrinking milkduetotheunusually hotsummer andthe
subsequent reduction insupplies available formanufacturing purposes. Thedraw-down of
stocks insome major producing areas hasreduced thesupplies normally available foranimal
feeduse.
Whole milkpowder production continued toincrease globally in1994, buttheincrease in
demand forskimmed milkpowder andbutter inlate1994 ledsome major exporters tobegin
ashiftawayfromproduction ofwhole milkpowder toskimmed milkpowder andbutter. Prices
forwhole milkpowder remained firmduring thelatter partof1994.
World butter andbutter oilproduction continued todrop, while world consumption appeared
tohavelevelled offafteralong-term decline. World exports in1994 areestimated tohave
declined further, buttherewasanotable surge inRussian import demand intheclosing months
of1994 andintoearly 1995. World prices forbutter weresubstantially higher inthelatter
partof1994 thaninrecent years. World stock levels were 10percentlower attheendof
1994 thanoneyearpreviously, andafurther substantial decline isexpected in1995.
Cheese production continued toincrease globally, by1percentin1994, andconsumption
alsocontinued togrow by1-2percent. World trade further expanded, although prices were
steady andrelatively high.
Milk production inAustria, Finland andSweden increased in1994, presumably toattain the
thequota levels which became applicable asof1January 1995when thethreecountries joined
theEuropean Community.
There wasasteady growth intheuseoftheproduction enhancing hormone, BST, inUSdairy
herds following itsavailability inthemarket inFebruary 1994. TheEuropean Community
further extended itsmoratorium ontheuseofBSTuntil2000, withlimited trialusesapproved.
InCanada, avoluntary moratorium ontheuseofBSTuntilJuly1995wasagreed bythedairy
anddrugindustry.
Thequantity ofdairyproducts eligible forexport subsidies under theUSDairy Export Incentive
Program (DEIP) hasbeenannounced forthefirsthalfof1994. (UScommitments toreduce
subsidized export quantities asaresult oftheUruguay Round negotiations willbegin asof
1July1995.) 156,000 tonsofmilkpowder, butter/butter oilandcheese hasbeenallocated,
fargreater thanhalfofthe1994 actual DEIP sales. Mexico andAlgeria remain themajor
destinations forDEIP exports, butcertain Asian countries havebeentargeted forthefirsttime
in1995.IDA/W/1
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WORLD MILK PRODUCTION AND CONSUMPTION
1. In1994 world milkproduction (including sheep, goatandbuffalo milk), isestimated tohave
fallen by2million tonsto523million tons. Thisfollows adecline of1million tonsin1993, and
continues thetrend ofrecent years. Thisreflects reduced output inEurope andtheformer USSR,
which wasnotoffset byrecord production inAustralia andNewZealand. Forthedeveloping countries,
overall production isestimated tohaverisenby2percentto181million tons, withAsiaaccounting
formost oftheincrease.
2. Percapitaconsumptionofmilkandmilkproductsattheworldlevelhasremainedaround75kgs.
inmilkequivalents. Thislargely reflects similar ratesofgrowth inpopulation andproduction inthe
developing countries. Forthedeveloped countries, afterastable period inthelasthalfofthe1980's,
percapita consumption hasdropped asaresult oflower levels ofconsumption inEastern andCentral
Europe, andOceania. There aremarked regional differences inconsumption levels. Thehighest levels
ofconsumption arefound inNorth America, followed byWestern Europe, Oceania andCentral and
Eastern Europe. Among thedeveloping countries, thehighest levels ofconsumption arefound inLatin
America, followed bytheNear East, Africa andtheFarEast.
MILK POWDERS
Skimmed Milk Powder
3. World production ofskimmed milkpowder in1994isestimated tohavedeclined byafurther
1percentfrom theprevious yearto3.5million tons, duemainly toreduced milksupplies inmajor
producing countries. Production declined intheEuropean Community (12)andinCentral andEastern
Europe whereas itincreased inNorth America andOceania.
4. World consumption ofskimmed milkpowder continued todecline in1994, asworld prices
remained relatively high. However, afterhaving declined in1993, world exports recovered slightly
in1994, increasing by1percentto990,000 tons. Exports fromOceania andNorth America increased
whereas those ofEurope decreased. Asregards imports, Algeria, Japan andMexico remained the
main markets forskimmed milkpowder.
5. Stocks ofskimmed milkpowder increased insome major producing areas anddecreased in
others attheendof1994, making itdifficult toestimate world stocks attheendof1994. On1October
1994,totalstocksofskimmedmilkpowderintheEuopeanCommunity(12),NorthAmericaandOceania
amounted to243,000 tons, 42percnetmore thantheirlevel oneyearearlier. However, thedraw
down ofstocks insome producing areas inearly 1995 hasreduced thesupplies normally available
foranimal feeduse.
6. Attheendof1994, themarket situation forpowders wasrelatively tight, withanincrease
indemandfacingreducedexportsupplies,particularlyforskimmedmilkpowderfromEuropeansources.
Thishasstrengthened prices forbothskimmed milkandwhole milkpowders during thesecond half
of1994 andinearly 1995. Reported prices ofskimmed milkpowder inthefourth quarter of1994
ranged between US$1,750 andUS$2,000 pertonf.o.b. andincreased further inJanuary 1995. There
hasbeenachange inprice relativities, withskimmed milkpowder often quoted athigher prices than
whole milkpowder, reflecting thehighvalue ofmilkprotein. Theminimum export price effective
1January 1995 wasUS$1,200 pertonf.o.b.IDA/W/1
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TABLE 2:INTERNATIONAL DAIRY PRICES* (1992-94)
(US$ permetric tonf.o.b.)
Product1992 1993 1994
January-
DecemberJanuary-
MarchApril-
JuneJuly-
SeptemberOctober-
DecemberJanuary-
MarchApril-
JuneJuly-
SeptemberOctober-
December
Skimmed milk
powder1,550-1,950 1,725-1,920 1,650-2,000 1,400-1,650 1,500-1,750 1,450-1,600 1,425-1,620 1,500-1,900 1,750-2,000
Whole milkpowder 1,550-1,900 1,625-1,800 1,575-2,000 1,350-1,650 1,400-1,600 1,380-1,560 1,425-1,600 1,475-1,750 1,600-2,000
Anhydrous milkfat 1,625-1,950 1,625-1,720 1,625-1,800 1,625-1,750 1,625-1,750 1,625-1,780 1,400-1,800 1,450-2,300 1,480-2,230
Butter 1,350-1,800 1,350-1,430 1,350-1,500 1,350-1,550 1,350-1,500 1,350-1,480 1,100-1,500 1,150-1,800 1,300-1,850
Cheddar cheese 1,750-2,200 1,750-2,100 1,800-2,000 1,800-2,150 1,800-1,950 1,650-2,000 1,750-1,950 1,650-2,100 1,650-2,100
*Ranges asreported byIDAparticipants.
DAIRY PRODUCTION AND POLICIES INSELECTED COUNTRIES AND REGIONS
WESTERN EUROPE
TheEuropean Community (12)
Forthepurpose ofthisreport, thefollowing information ontheEuropean Community refers tothe
EC(12) anddoesnotinclude dataforthethree newmember States (Austria, Finland andSweden) that
acceded totheEuropean Community on1January 1995.
18. Themarket situation intheECdairysector attheendof1994could becharacterized aspositive
andstable. Milkdeliveries wereabout 1percentlower inthefirstthree quarters of1994, compared
tothesameperiod intheprevious year, buthigher inOctober andNovember. Fortheyearasawhole,
provisional estimates pointtonosignificant change indeliveries andonlyamarginal decrease isforecast
for1995. In1994, cownumbers fellbyapproximately 1percentandwereestimated at21.0million
head; asimilar decline isforecast for1995. Thismarks aslower rateofherdreduction compared
tothedropbetween 1991 and1993.
TABLE 3:EC(12) -DELIVERIES AND LIQUID MILK PRODUCTION
('000metric tons; ()=%change from previous year)
1993 1994
(provisional)1995
(forecast)
Milk deliveries 103,082 (-0.2%) 103,040 (0.0%) 102,860 (-0.2%)
Liquid milk production 26,738 (-0.7%) 26,800 (0.2%) 26,800 (0.0%)
Source :ZMP.IDA/W/1
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19. ECcheese andwhole milkpowder production increased while production ofbutter andskimmed
milkpowder decreased in1994. Consumption figures forthefirstthree quarters of1994, aswellas
estimates forthewhole year, generally indicate slight increases -except forwhole milkpowder, the
consumption ofwhich increased markedly inthefirstthree quarters oftheyear. Demand forfresh
products wasalsostrong, confirming atrendofincreasing consumption oftheseproducts. Withrespect
totrade, exports fellsteeply during thefirstthree quarters oftheyear, while imports rose. Despite
thefallinexports, ECmarket prices ofmajor products werereported tobequite strong. Itmaybe
worth noting that,seenfromtheperspective ofoverall farmexports fromtheEuropean Community,
thedairy sector recorded thehighest nettrade surplus, followed byspirits, cereals andmeat.
TABLE 4:EC(12) -DAIRY PRODUCTION, CONSUMPTION AND TRADE
('000metric tons; ()=%change from corresponding period ofprevious year)
SMP WMP Butter Cheese
Production
First 3quarters 1994
Estimate 1994*923 (-8.2%) 756 (3.6%) 1,106 (-4.3%) 4,096 (1.9%)
1,160 (-5.4%) 940 (4.1%) 1,590 (-3.5%) 5,570 (1.1%)
Consumption
First 3quarters 1994
Estimate 1994*777 (0.4%) 310 (17.4%) 1,073 (1.2%) 3,808 (1.9%)
1,010 (1.9%) n.a. 1,590 (2.3%) 5,370 (1.7%)
Exports
First 3quarters 1994 109 (-57%) 446 (-4.3%) 46(-43.2%) 372 (-4.1%)
Imports
First 3quarters 1994 15 (50%) 1(from zero) 38 (0.0%) 92(22.7%)
Stocks atendof3rd
quarter 1994 89 (154%) n.a. 232 (-21.1%) 119 (-7.7%)
Source :GATT; *ZMP.
20. InDecember 1994, andintothefirstmonth of1995, Russian demand forbutter roseremarkably.
Strong demand combined withlowECbutter stocks brought about adistinct strengthening ofECbutter
prices. Total ECstocks ofbutter werereported tobe232,000 tonson30September 1994; byJanuary
1995, however, ECpublic stocks ofbutter were estimated at55,000 tonsandprivate stocks at
36,000 tons,bothofwhich havecontinued todecrease. Adding tothepressure oninternational butter
prices, supplies fromNewZealand andAustralia werenotabletomeetthesudden increase indemand.
Inresponse tohigher butter prices, theEuropean Commission twice cutexport refunds ondairyproducts
during January 1995.IDA/W/1
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TABLE 5:EC(12)-DAIRY EXPORT REFUNDS IN1994/95
Effective dateSkimmed milk powder Whole milk powder Butter
ECU perton
1May 1994 600.0 1,045.0 1,600.0
13January 1995 582.0 992.8 1,552.0
26January 1995 582.0 976.4 1,500.0
1February 1995 - - 1,811.3*
8February 1995 n.c. n.c. 1,720.7
14February 1995 n.c. n.c. 1,600.0
Note:Asof1February 1995, theECswitchover mechanism wasabolished withtheeffect thatGreen Rates
were devalued. Thisexplains thehigher figures after 1February 1995.
Source :Official Journal oftheEuropean Communies.
21. InDecember 1994, ECfarmMinisters decided toextend themoratorium onthemarketing
anduseofthemilkyield-enhancing hormone Bovine Somatotropin (BST) until31December 1999.
Itwasalsodecided thatmember States would beallowed toconduct monitored trials ofthesubstance.
These trials willserve asabasis foradecision bytheEuropean Commission aftertheextended
moratorium expires.
22. TheCouncil alsoagreed inDecember 1994 toextend theexisting preferential butter import
arrangement withNewZealand through thefirsthalfof1995, untiltheexpanded commitments under
theUruguay Round agreement become effective on1July1995. Thequota forthefirsthalfof1995
wassetathalfthevolume applied in1994.
Austria, Finland andSweden
23. WhenAustria,FinlandandSwedenjoinedtheEuropeanCommunityon1January1995,member
quotas fortheirmilkproduction became effective. ForSweden, thequota isfixed at3,303 thousand
tons, reflecting thecurrent production level. Thequota forFinland isfixed at2,552 thousand tons
andtheAustrian milkquota issetat2,752 thousand tons. Milkproduction inbothFinland andSweden
isontherise. Finnish milkproduction wasexpected toreach approximately 2,380 thousand tonsin
1994, anincrease ofabout 2.2percent. InSweden ,deliveries todairies increased byalmost 3percent
inthefirst9months of1994compared tothecorresponding period in1993. Austrian milkdeliveries
wereupby0.2percentbetween January andSeptember 1994, compared tothesame period in1993.
Theenlargement oftheEuropean Community isthusexpected toresult inanincrease inmilkdeliveries
byapproximately 8percenttoabout 111million tonsin1995. Thisincrease willfurther addtothe
European Community 'sstructural surplus, eventhough percapita consumption inthethreenewmember
States isabove theECaverage.
24. InSweden there wasanotable switch from butter tocheese production during thefirstthree
quarters of1994compared tothesameperiod in1993. Sweden isatraditional exporter ofmilkpowder
andbutter; however, inthefirsthalfof1994, exports ofbutter dropped sharply compared tothe
previous year. Thismayhavereflected expectations ofproducers inanticipation ofmembership to
theEuropean Community. Imports ofdairy products bySweden aredominated bycheese, which
increased modestly inthefirsthalfof1994.IDA/W/1
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25. Butter production inFinland showed adownward tendency during thefirstthree quarters of
1994. Forthewhole yearproduction wasestimated at57,000 tons,anincrease of1.3percentcompared
to1993. Exports ofbutter wereexpected tobesignificantly higher in1994compared totheprevious
year. Cheese exports wereestimated tobeabout 25,000 tonsin1994, approximately thesame level
astheprevious year.
TABLE 6:AUSTRIA, FINLAND AND SWEDEN -BUTTER AND CHEESE
('000metric tons; ()=%change from corresponding period ofprevious year)
Austria†Finland Sweden
Butter
(First three quarters 1994)
Production 30.8 (-3.1%) 39 (-7.1%) 22.6 (-26.0%)
Consumption n.a. 26 (-10.3%) 14.1 (6.0%)
Exports 3.1 (1,760%) 20 (122%) 5.9* (-41.6%)
Imports 7.0 (18.6%) 0.0 (0.0%) 0.0* (from 0.5)
Cheese
(First three quarters 1994)
Production 69.3 (1.7%) 70 (2.9%) 127.6 (11.4%)
Consumption n.a. 52 (2.0%) 70.3* (4.1%)
Exports 25.3 (0.2%) 18 (5.9%) 3.0* (328%)
Imports 17.5 (17.4%) 3 (50%) 10.3* (4.0%)
*Figures refer tothefirsthalfoftheyearonly.
Source :GATT,†Monatsberichte -Österreichische Landwirtschaft.
EFTA -Norway andSwitzerland
26. InNorway ,milkdeliveries in1994wereestimated tohavefallen byapproximately 2percent
toabout 1.8million tons. Production in1995 isforecast toremain stable. Thelower milkoutput
wasreflected indecreased production ofdairy products: bothcheese andbutter production fell,and
thefallinbutter production wassubstantial. Butter exports declined byoveronethirdinthefirstthree
quarters of1994compared tothesame period oftheprevious year. Thereason forthiswasreported
tobelowbutter stocks. InSwitzerland ,milkdeliveries inthefirsttenmonths oftheyeartotalled
about 2.6million tons, anincrease ofabout 1.2percentcompared withthecorresponding months
in1993.
27. Cheese exports, ofmajor importance totheNorwegian andSwiss dairy sectors, declined in
bothcountries during thefirstthree quarters of1994. InNorway, exports were expected tototal
19,000 tonsbytheendoftheyear. Duetomeasures taken tolimitcheese production inSwitzerland,
output decreased inthefirstthreequarters of1994. Although Swiss exports fell,stocks remained high
attheendofthethirdquarter of1994.IDA/W/1
Page23
TABLE 7:NORWAY AND SWITZERLAND -BUTTER AND CHEESE
('000metric tons; ()=%change from corresponding period ofprevious year)
Norway Switzerland
Butter (First three quarters 1994)
Production 10.2 (-12.9%) 31.4 (19.4%)
Consumption 6.4 (-4.7%) 31.6 (12.9%)
Exports 3.5 (-33.6%) -
Imports - 0.6 (-72.3%)
Stocks atendofperiod 1.3 (-30.2%) 4.8 (0.0%)
Cheese (First three quarters 1994)
Production 60.6 (-3.5%) 103.9 (-1.1%)
Consumption 43.4 (1.2%) 80.2 (0.1%)
Exports 16.6 (-6.0%) 41.1 (-6.6%)
Imports 1.6 (-4.7%) 22.5 (2.7%)
Stocks atendofperiod 17.4 (0.6%) 31.2 (21.4%)
Source :GATT.
CENTRAL AND EASTERN EUROPE
28. Milkproduction inCentral andEastern Europe declined in1993, andthere islittledoubt that
thedownward trend continued in1994. Thecauses forthedecline inmilkanddairy production have
remained unchanged, including liquidity anddebtproblems, lowprofitability, poorfeedharvests,
declining demand fordairy products, marketing deficiencies andimport competition.
TABLE 8:CENTRAL AND EASTERN EUROPE -MILK PRODUCTION
(million tons, ()%change from previous year)
1993 estimate 1994 estimate
Poland 12.7 (-3%) 12.4 (-2%)
Romania 2.9 (-12%) n.a. -
Hungary 2.1 (-3%) n.a. -
Bulgaria 1.3 (-18%) n.a. -
Czech Republic 3.5 (-9%) 3.2 (-9%)
Slovak Republic 1.2 (-9%) n.a. -
CIS,
ofwhich Russia83.9
46.3(-2%)
n.a.76.0
42.8(-9%)
(-8%)
Baltic Republics,
ofwhich Estonia4.0
n.a.(-20%)
n.a.n.a.
0.43-
n.aIDA/W/1
Page24
29. InPoland ,therateofdecline inmilkproduction seems tohaveslowed during thepasttwo
years.Polishexportsofskimmedmilkpowderactuallyincreasedin1994.However,butterconsumption
during thefirstthree quarters of1994 wassignificantly below 1993 levels, asconsumers havebeen
switching frombutterfat tomargarine. Under itsUruguay Round commitments, Poland iscommitted
toopenaninitial tariffquota of10,100 tonsofbutter(fat), significantly more thanitsimports in1994.
Dairy production andconsumption areforecast todecline further in1995. Romania 'sdairy production
in1994showed signs ofstabilization, perhaps evenaslight increase over1993. Production ofbutter,
subject toexport prohibition, andcheese wereupinthefirstthreequarters of1994. InHungary ,cheese
imports which hadincreased sharply to6,500 tonsin1993, weresustained atarelatively highlevel
in1994. InBulgaria, butter imports appeared toexceed domestic production. Cheese production
continued tofallsharply in1994, while exports began torecover inthethirdquarter. IntheCzech
Republic ,inspiteoffurther reduced milkdeliveries, exports ofskimmed milkpowder increased in
1994 from 66,400 tonsin1993. TheSlovak Republic plans tointroduce aproduction quota system
atguaranteed prices inorder tostabilize milkproduction.
30. Russia 'smilkproduction isestimated tohavedropped byanother 8percentin1994, asthe
cash-strapped public agricultural sector continued toliquidate itscattle inventories. There arefew
private dairyfarmers. Russia 'sbutter imports reached 170,000 tonsin1993, with100,000 tonscoming
fromIDAparticipants and70,000 tons(including anhydrous milkfat)fromtheUnited States. Total
imports inthefirstthree quarters of1994 reached 69,000, excluding sales from theEuropean
Community (12).
31. Thecontinued contraction ofCentral andEastern Europe 'sdairy production hashadanumber
ofconsequences bothforthedomestic markets andtheinternational markets. First, reduced milk
production hasledtolower availability ofskimmed milkpowder forexport, which inturnhashad
apositive impact onworld prices ofskimmed milkpowder. Poland andtheCzech Republic, both
large skimmed milkpowder exporters inrecent years, weretheexceptions tothissituation. Second,
abutter shortage inRussia, thereasons forwhich arenotentirely clear, hastriggered aprice increase
ontheworld market beginning inlate1994, withprices quoted around US$2,000 pertonc.i.f. Third,
rising dairy imports inanumber ofcountries haveledtopolicy measures tosafeguard thedomestic
production base(e.g., theintroduction ofso-called equalization payments inPoland). Atthesame
time, thegovernments ofCEFTA (Central European FreeTrade Agreement) -theCzech Republic,
Hungary, Poland, andtheSlovak Republic -andSlovenia asanon-member, decided toreduce
agricultural tariffs within CEFTA by50percenton1January 1996. Agricultural tariffs aretobe
phased outbyJanuary 1998.
OCEANIA
Australia
32. Thecurrent dairy season (beginning on1July1994 )started withasharp increase inmilk
deliveries compared tothe1993/94 season. Many dairy factories recorded adouble-digit increase.
Subsequently, theeffects ofthesevere drought werealsofeltinthedairy sector, notably intheStates
ofNewSouth Wales andQueensland. Milk deliveries inthese twoStates dropped below 1993/94
levels. Victoria, which accounts forsome 60percentoftotalproduction, hassofarbeenmuch less
affected. Fortheseason asawhole, itisexpected thatAustralia 'smilkproduction willincrease only
modestly, notleastbecause farmers arereducing theuseofsupplementary feed(barley) inreaction
tosoaring feedgrain prices.IDA/W/1
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TABLE 9:AUSTRALIA -MILK DELIVERIES
(million litres, ()%change from corresponding period ofprevious year)
1992/93 (July-June) 7,327 (8.8%)
1993/94 (July-June) 8,076 (10.2%)
1994/95 (July-November)
1994/95 (July-June) Forecast3,914
8,300(6.7%)
(2.8%)
33. Whole milkpowder production intheearly season (third quarter of1994) wassharply ahead
oftheprevious season, reflecting favourable price relativities andincreased production capacity.
However, withtherecent shiftinmarket returns infavour ofskimmed milkpowder andbutter, itis
expectedthatinthecourseofthisseasonproductionofskimmedmilkpowderandbutterwillbeexpanded
attheexpense ofwhole milkpowder.
TABLE 10:AUSTRALIA -DAIRY PRODUCTION, CONSUMPTION AND EXPORTS
('000metric tons, ()%change from corresponding period ofprevious year)
First 3quarters of
1994SMP WMP Butter Cheese
Production 58.5 (35.1%) 30.2 (87.6%) 14.0 (6.1%) 52.3 (12.2%)
Consumption 12.7 (14.4%) 7.3 (17.7%) 10.3 (22.6%) 43.7 (2.3%)
Exports 26.0 (18.2%) 14.7 (69.0%) 5.4 (50.0%) 20.0 (19.0%)
34. Inaccordance with theAgreement onAgriculture, Australia 'sexport subsidy reduction
commitments forskimmed milk powder, "other milk products" (including whole milk powder),
butter/anhydrous milk fatandcheese willcome intoeffect inJuly1995. TheAustralian Dairy
Corporation reports thattheAustralian Government intends toterminate thefinancing ofexports through
producer levies (so-called market support payments) asof1July1995andtoimplement analternative
domestic support mechanism.
NewZealand
35. Astheresult ofgood winter pasture andearly calving dates, NZmilkdeliveries intheearly
1994/95 season (beginning on1June) weresignificantly higher thaninthe1993/94 season. Unusually
coldweather inOctober andNovember 1994, theperiod ofpeakseasonal milkyields, eroded much
oftheincrease. BytheendofNovember, totaldeliveries inthecurrent season wereonlyslightly ahead
oflastseason. There hasbeenamuch greater expansion ofNewZealand 'sdairy herdthanpreviously
forecast, inpartduetoachange inthesurvey procedure. June1994 cattle census datanowindicate
thatcownumbers increased by6.5percentto2.54million headcompared toJune1993.IDA/W/1
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TABLE 11:NEW ZEALAND -MILK DELIVERIES
(million litres, %change from corresponding period ofprevious year)
1992/93 (June-May) 7,629 (2.4%)
1993/94 (June-May) 8,603 (12.8%)
1994/95 (June-September)
1994/95 (June-November)1,670
4,380(8.4%)
(2.9%)
36. Thepastmonths haveseenachange intheprice relativities ontheworld market fordairy
products. Since mid-1994, prices forskimmed milkpowder andbutter haveincreased atafaster rate
thanwhole milkpowder prices. Inorder tocapitalize onthese developments inthecurrent season,
NewZealand hasbegun tochange theproduct mixinfavour ofskimmed milkpowder andbutter
production attheexpense ofwhole milkpowder. Consequently there hasbeenaslowdown inthe
growth ofwhole milkpowder production, while skimmed milkpowder production andexports increased
sharply inthethirdquarter of1994. Stocks werereduced tolevels significantly lower thaninrecent
years. Inthethirdquarter, theshifttowards butter production wasnotyetapparent, however anhydrous
milkfatproduction wasexpanded significantly. Fortheseason asawhole, itisexpected thatNZbutter
production willincrease compared tolastseason. Thecheese market hasbeentheleastaffected by
therecent riseofworld market prices. Nonetheless, NZcheese production increased further. Demand
fromJapan wasbrisk andsalestothesecond andthirdmajor export markets, Australia andtheUnited
States, alsoincreased.
TABLE 12:NEW ZEALAND -DAIRY PRODUCTION, CONSUMPTION, EXPORTS AND STOCKS
('000metric tons, ()%change from corresponding period ofprevious year)
3rdQt.1994 SMP WMP Butter Cheese
Production 27.6 (32.1%) 59.6 (0.5%) 34.2 (-17.6%) 28.7 (24.2%)
Consumption 0.0 - 0.0 - 7.4 (1.4%) 8.4 (12.0%)
Exports 31.8 (20.4%) 59.6 (4.0%) 27.8 (13.9%) 39.5 (38.6%)
Stocks
(endofperiod) 17.5 (-59.0%) 47.9 (64.6%) 14.7 (-65.0%) 24.1 (47.9%)
37. Inlightoftheencouraging market developments, theadvance milkpricesetbytheNewZealand
Dairy Board forthe1994/95 season wasincreased from NZ$2.40 perkg.milksolids toNZ$2.80
(NZ$4.52 perkg.milkfat),withtheexpectation thatafinalpriceofNZ$2.85-2.95 could bereached.
NORTH AMERICA
Canada
38. Inthe1993-94marketingyear,totalmilkproductionisestimatedtohaveincreasedby2percent
to7.6million tons. However, forcalendar year1994, production isestimated tohaveremained stable
ataround 7.5million tons.IDA/W/1
Page27
TABLE 13:CANADA -MILK PRODUCTION AND LIQUID SALES
('000metric tons; ()=%change from previous year)
1993 1994 (provisional) 1995 (forecast)
Production ofcow'smilk 7,500 (-4.0%) 7,500 (0.0%) 7,400 (-1.0%)
Liquid milk sales 2,700 (-2.0%) 2,700 (0.0%) 2,800 (4.0%)
39. On1August 1994, theMarket Sharing Quota (MSQ) wasincreased by2.5percent. On
17August 1994, theMSQ wasincreased byafurther 2percent, retroactive to1August 1994. A
reviewofyear-endmilkproductionstatistics,butterstocksandprojecteddomesticrequirementsprompted
thequota increase. Requirements werehigher while stocks werelower thananticipated inJuly1994.
Withtheincrease, thetotalMSQ forthe1994/95 dairy yearwasestablished at43.7million hectolitres
at3.6kgs.ofbutterfat perhectolitre ofmilk.
40. Asof1August 1994, theCanadian Dairy Commission increased thetarget return toproducers
from Can$50.76 toCan$52.28 perhectolitre ofmilkcontaining 3.6kgs.ofbutterfat. Thesupport
price forskimmed milkpowder rosefrom Can$3.498 toCan$3.708 perkg.Thesupport price for
butter wasmaintained atCan$5.324 perkg.
41. During 1994, skimmed milkpowder production decreased while butter andcheese output
registered small increases. Consumption ofskimmed milkpowder andbutter fellwhile thatofcheese
increased. Exports ofskimmed milkpowder more thandoubled inthefirstthree quarters of1994
while exports ofbutter andcheese registered substantial declines. Imports ofcheese declined slightly.
TABLE 14:CANADA -DAIRY PRODUCTION, CONSUMPTION AND TRADE
('000metric tons; ()=%change from corresponding period ofprevious year)
SMP Butter Cheese
Production
Estimate 1994 50 (-4.0%) 84 (1.0%) 269 (2.0%)
Consumption
Estimate 1994 33 (-6.0%) 82 (-4.0%) 284 (1.0%)
Exports
First 3quarters 1994 21 (107.0%) 2 (-67.0%) 5 (-20.0%)
Imports
First 3quarters 1994 - 0.3 (80.0%) 15 (-1.0%)
42. Themanufacturers oftheyield-enhancing hormone bovine somatotropin BSThaveagreed to
delay thesaleanduseofBSTuntil1July1995, butthiswillnotaffect imported products. During
thisperiod ataskforce made upofconsumers, government andindustry representatives aretoincrease
public consultation andresearch, andplandefinitive regulatory action withrespect toBST.IDA/W/1
Page28
United States
43. Fairly strong milkprices, theuseofBSTandfavourable weather boosted milkproduction
2percentto69.85 million tonsin1994. Alarge gaininyields easily outweighed arelatively small
decline incownumbers. Commercial useofmilkfatisestimated tohaverisen 3percentin1994.
Farm milkprices increased by2percentonaverage. Strong demand absorbed theexpansion inmilk
output andboosted prices slightly. Surpluses ofmilkfatandskimsolids weresmall forthefirsttime
since 1979.
44. ExpandeduseofBSTisexpectedtoboostyieldsin1995byapproximately3percent,generating
a3percentincrease inmilkproduction to71.62 million tons. Producers 'initial experiences with
BSTwere generally positive, andsome milkbuyers havedropped theiropposition totheproduct.
However, thebestmanagement practices fortreated herds arestillevolving. About oneeighth ofthe
cowherdisprojected tobetreated forthefirsttimein1995, bringing thetotaltreated tomore than
onefourth oftheherdbyyearend. Milk cownumbers in1995 willaverage onlyfractionally below
ayearearlier. Milk/feed priceratios arenotexpected tobeveryfavourable, withmilkprices decreasing
slightly more thanconcentrate prices.
TABLE 15:UNITED STATES -MILK PRODUCTION AND LIQUID SALES
('000metric tons; ()=%change from previous year)
1993 1994 (provisional) 1995 (forecast)
Production ofcow'smilk 68,470 (-1.0%) 69,850 (2.0%) 71,620 (3.0%)
Liquid milk sales 26,320 (0.0%) 25,880 (-1.7%) 26,380 (2.0%)
45. During 1994, USskimmed milkpowder, whole milkpowder andcheese production increased
while production ofbutter registered aslight decrease. Consumption estimates indicate general increases
forthemain dairy products, notably forbutter CCC stocks ofbutter were30,000 tonson1January
1995, compared to104,000 tonsoneaearearlier, andCCCsalesofbutter havebeensuspended. Exports
ofskimmed milkpowder, whole milkpowder andbutter fellduring thefirstthree quarters of1994,
whereas exports ofcheese increased during thatperiod. Imports ofcheese decreased while imports
ofcasein increased. Itisworth noting thatthevalue ofUSdairy product exports decreased by10per
centinthefirsttenmonths of1994while thevalue ofdairy imports increased by10percentcompared
tothecorresponding period of1993. Incontrast, forcalendar year1993, thevalue ofdairy exports
wasalmost equal tothatofimports.IDA/W/1
Page29
TABLE 16:UNITED STATES -DAIRY PRODUCTION, CONSUMPTION, TRADE AND STOCKS
('000metric tons; ()=%change from corresponding period ofprevious year)
SMP WMP Butter (including
milk fat)Cheese
Production
estimate 1994 539 (25.0%) 74 (7.0%) 592 (-1.0%) 3,050 (4.0%)
Consumption
estimate 1994 330 (18.0%) n.a. 548 (3.0%) 3,174 (3.0%)
Exports (first
3quarters 1994) 43 (-33.0%) 18 (-50.0%) 56 (-19.0%) 15 (9.0%)
Imports (first
3quarters 1994) 1 (0.0%) n.a. 1 (-50.0%) 107.5 (-2.0%)
Stocks atendof
3rdquarter 1994 72 (76.0%) n.a. 76 (-60.0%) 206.0 (-9.0%)
46. Atotalof156,000 tonsofUSdairy products aretobeexported atsubsidized prices under
the1995Dairy Export Incentive Program (DEIP) bytheendofJune1995, when arevised DEIP will
come intoeffect. (UScommitments toreduce subsidized dairy export quantities negotiated aspart
oftheUruguay Round agreement takeeffect asof1July1995.) Theprogramme forthefirsthalf
of1995provides forthepayment ofbonuses toexport 114,500 tonsofmilkpowder to110countries,
37,650 tonsofbutterfat to99countries and3,850 tonsofcheese to75countries. The1994programme,
which wasnotannounced untilmid-March, wasforatotalof169,850 tons. However, bythetime
itconcluded atotalof174,170 tonsofdairy products hadbeenexported atacostofUS$139 million
insubsidies.MexicoandAlgeriacontinuetobetheprincipaldestinationsofsubsidizedUSdairyexports.
They aretheonlycountries tobeallocated specific quantities. Thebalance hasbeenshared outon
aregional basis, including theformer USSR. The1995programme includes certain countries inAsia
which were previously untargeted countries: Hong Kong, Indonesia, Malaysia, thePhilippines,
Singapore, Taiwan, Thailand andIndia. Australia andNewZealand expressed serious concern about
theUSdecision toshipsubsidized dairy products tosome oftheirimportant traditional markets in
Asia.
TABLE 17:UNITED STATES -DAIRY EXPORT INCENTIVE PROGRAM ALLOCATIONS
1January -30June 1995
(Metric tons)
Destination SMP WMP Butterfat Cheese
Algeria 30,000 n.a. 5,000 1,200
Mexico 30,000 n.a. 7,000 n.a.
Former USSR 1,000 3,500 5,500 300
Asia 15,000 n.a. 7,000 3,000
North Africa
Middle East
Persian Gulf12,000 1,000 10,000 n.a.
Caribbean and
Central America7,000 2,000 n.a. n.a.IDA/W/1
Page30
LATIN AMERICA
47. InLatin America milkproduction isestimated tohaverisen by2percentin1994 toreach
46million tons. Output benefited fromfavourable weather conditions, although inCentral America
some countries were short ofrainandtheiroutput wasreduced.
48. InArgentina inthefirstthreequarters of1994, production, consumption andimports ofwhole
milkpowder increased while exports decreased. Forskimmed milkpowder, production increased
while exports andimports declined. Inthesameperiod, production ofbutter remained stable. Imports
increased while exports remained almost negligible. Forcheese, production, imports, exports and
consumption increased inthatperiod.
49. In1994, Mexico wasthesecond largest market fortheUSDairy Export Incentive Program
(DEIP). USsalesunder theDEIP reached 26,000 tonsofdairyproducts, mainly skimmed milkpowder
andmilkfat,which wasconsiderably lessthaninitial allocations. Under theDEIP forthefirsthalf
of1995, Mexico hasbeenallocated 30,000 tonsofskimmed milkpowder and7,000 tonsofbutterfat.
However, thepesodevaluation inDecember 1994might havebothimmediate andlonger-lasting effects
onUS-Mexican trade.
50. After showing some signsofrecovery in1993, Venezuela 'soutput isestimated tohavedeclined
in1994, asprices formilkfixed bythegovernment areproving adisincentive toproduction. The
sizeofthenational dairy herddropped in1994andafurther decline isforeseen for1995. Venezuela
continues tobeamajor importer ofmilkpowders.
ASIA
Japan
51. Asaresult ofanunusually hotsummer of1994, demand fordrinking milk increased
considerably, which inturnledtoasharp decrease intheproduction ofmanufactured dairy products,
notably skimmed milkpowder andbutter. Thesudden riseindemand forskimmed milkpowder, for
themanufacture ofice-cream, milkbeverages etc.,ledtoarelatively tightmarket situation inearly
autumn which wasreflected intherun-down ofstocks. Inorder tomeetcurrent demand, theLivestock
Industry Promotion Corporation (LIPC) hasopened emergency import tenders for17,000 tonsof
skimmed milkpowder. Inaddition, themilk producers 'organization decided toadjust themilk
production reduction target from 2.9percentto1.9forFY1994.
TABLE 18:JAPAN -MILK DELIVERIES AND CONSUMPTION OFDRINKING MILK
(million litres, ()%change from corresponding period ofprevious year)
Milk deliveries Consumption ofdrinking milk
FY1992/93 (April-March) 8,617 (3.3%) 5,109 (-0.2%)
FY1993/94 (April-March) 8,549 (-0.8%) 5,031 (-1.5%)
FY1994/95 (April-November) 5,640 (-2.7%) 3,639 (5.5%)
52. Despite amarked decline inbutter production lastyear, themarket remains over-supplied.
Stock levels, albeit lower thanbefore, stillcover sixmonths ofconsumption. Japan'scheese imports,IDA/W/1
Page31
which exceed domestic production, showed afurther increase, withvigorous growth particularly in
thesecond halfof1994.
TABLE 19:JAPAN -DAIRY PRODUCTION, CONSUMPTION, IMPORTS AND STOCKS
('000metric tons, ()%change from corresponding period ofprevious year)
First three quarters of1994 SMP Butter Cheese
Production 143 (-16.4%) 64 (-24.7%) 88 (0.0%)
Consumption 235 (11.4%) 68 (11.5%) 193 (2.7%)
Imports 61 (7.0%) 3 (0.0%) 104 (5.2%)
Stocks (endofperiod) 34 (-50.0%) 47 (-11.3%) n.a. -
53. Overall, theJapanese dairy market remains under pressure, astheresult oflarge supplies of
dairy products (notably butter) andspillover effects from thebeefmarket. Tariff cutsaswellasa
strong Yenhaveledtolower beefprices, inparticular forbeefofdairy breeds. Thus, prices fordairy
calves (Holstein), which areanimportant secondary income source fordairy farmers, havebeenalmost
halved overthepasttwoyears.
54. Japan'sUruguay Round market access commitments enterintoforceon1April 1995(beginning
ofthefiscal year). Japan hasrecently provided details ontheimplementation oftheUruguay Round
tariffquota for"designated dairyproducts forgeneral use"totalling 137,202 tonswhole milkequivalents
(seeSpecial Annex totheFifteenth Annual Report, page38). Beginning inApril 1995, nolessthan
75percentoftheLIPC tariff quota willbeavailable forimports ofskimmed milkpowder andbutter.
Given conversion factors of6.48forskimmed milkpowder and12.34 forbutter, a75percentshare
would allow forexport opportunities of16,000 tonsofskimmed milkpowder or8,000 tonsofbutter
(oracombination ofboth).
Other Asian Countries
55. Thedeveloping countries ofAsiacontinued toshow thestrongest growth compared toother
developing regions. Milk production roseby3percentto123million tonsin1994. InIndia,the
largest producer among developing countries, cowandbuffalo milkproduction isestimated tohave
increased by3percentin1994to63million tons,duetogoodpasture conditions andfodder supplies.
Indiadoesnotsubsidize thedairysector andproducer prices arelow.Consequently, Indiamight emerge
asamajor exporter ofdairy products, mainly milkpowder, toneighbouring countries suchasPakistan
andtheMiddle East.
56. InPakistan ,milkproduction hasrisenfrom11million tonsin1984/85 toover18million tons
in1993/94. Some 72percentisbuffalo milk, 24percentcow'smilkandtheremaining 4percent
isgoatandsheep milk. Percapita consumption ofmilkstood at113kgs.in1994. However, the
rising production cannot meettheincreased demand withtheresult thatinthesummer, when lactation
islow,large volumes ofmilkpowder areimported. Itisworth noting thatIndia andPakistan have
approved BSTusewithout anyrestriction.
57. InthePhilippines ,production isestimated tohaveincreased in1994 following alarge-scale
government programme toexpand domestic supplies oflivestock products. IntheRepublic ofKorea ,
milkproduction isestimated tohaveincreased by7percentto2million tonsin1994duetothegrowthIDA/W/1
Page32
inthedairy herdandinyields. Import liberalization inKorea willboost trade asthiscountry is
committed under itsUruguay Round commitments toestablish tariff quotas totalling 24,000 tonsof
dairy products for1995, rising to56,000 tonsin2004. InChina ,asecond yearofhighfeedprices
resulted inlittlegrowth inmilkoutput; however, asthere hasbeenonlylimited evidence ofherd
reduction, production could increase in1995 should feedprices decline.
AFRICA
58. Developing countries inAfrica areestimated tohaveproduced slightly more milkin1994than
their1993aggregate of11.9million tons. Thiswasprimarily duetogenerally favourable conditions
forgrowth ofpastures andfeedcrops.
59. InSouth Africa totalmilkproduction for1994/95 isestimated at1.96million tons. Domestic
consumption ofmilkduring 1994/95 isexpected todecrease by3percentfrom theprevious year,
reflecting lower consumption offresh milkandmilkusedforindustrial processes. Inthefirstthree
quarters of1994, production andimports ofskimmed milk powder decreased while exports and
consumption increased leading tothelowest levelofskimmed milkpowder stocks forseveral years.
Attheendofthethirdquarter of1994, stocks haddeclined to1,300 tonscompared to6,500 tonsa
yearearlier. Forwhole milkpowder, butter andcheese production andconsumption declined inthe
period under consideration. Imports ofbutter increased while exports registered asubstantial decline
inthatperiod.
60. In1994, Algeria wasthemostimportant destination forUSdairy exports under theDEIP for
thethirdconsecutive year. Exactly halfofthe174,000 tonsofDEIP dairy exports wenttoAlgeria.
Thus, USsales toAlgeria under theDEIP totalled 87,000 tonsofdairy products, mainly skimmed
milkpowder, butter andanhydrous milkfat.Under theDEIP forthefirsthalfof1995, Algeria has
beenallocated 30,000 tonsofskimmed milkpowder, 5,000 tonsofbutterfat aswellas1,200 tonsof
cheese. Algeria reportedly recently bought 20,000 tonsofskimmed milkpowder and10,000 tons
ofwhole milkpowder from theEuropean Community (12). Already considered oneofthelargest
dairy importers intheworld, Algeria isexpected tocontinue toincrease itsdemand forimported dairy
products. However, thecurrent political situation inthecountry mayresult inrestricted trade
opportunities in1995.
61. Egypt wasthethird most important destination fortheUSDairy Export Incentive Program
in1994. United States salestoEgypt under DEIP totalled 15,000 tonsofdairy products.