RESTRICTED
WORLD TRADE IDA/2
1June1995
ORGANIZATION(95-1471)
International Dairy Agreement
INTERNATIONAL DAIRY COUNCIL
FIRST SESSION
Report
Chairperson: Ms.BridCannon
1. TheInternational Dairy Council helditsfirstsession on20-21 March 1995.
2. TheCouncil adopted thefollowing agenda:
A. Election ofChairperson
B. Rules ofProcedure (IDA/W/4)
C. Admission ofobservers
D. Evaluation ofworld dairy market situation
-Report ofthesession oftheCommittee onCertain Milk Products
-Status Report (IDA/W/1)
-Summary Tables (IDA/W/2 andIDA/CMP/W/1)
-Replies toQuestionnaires 4and5
E. Functioning oftheAgreement
F. Other business
Election ofChairperson
3. Inaccordance withtheRules ofProcedure, Ms.BridCannon (Ireland) waselected Chairperson
oftheInternational Dairy Council for1995/96.
Rules ofProcedure
4. TheCouncil adopted amended Rules ofProcedure forthenewInternational Dairy Agreement
(IDA/1).IDA/2
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Admission ofobservers
5. TheCouncil welcomed signatories ofthenewAgreement including those whohavenotyet
ratified (Bulgaria, Chad andHungary). TheCouncil welcomed representatives fromAustralia, Brazil,
Canada,Korea,Mexico,PolandandSouthAfrica,inaccordancewithRule10oftheRulesofProcedure,
which permits Members oftheWTO notsignatories totheAgreement tofollow theproceedings of
theCouncil inanobserver capacity.
6. Inaccordance withRule11oftheRules ofProcedure theCouncil mayinvite non-signatory
countries notMembers oftheWorld Trade Organization toparticipate inthemeetings oftheIDAin
anobserver capacity. TheCouncil extended aninvitation tothegovernments which hadbeengranted
observer status intheInternational Dairy Arrangement, and,inparticular totherepresentatives ofthe
People'sRepublicofChinaandChineseTaipei.Furthermore,inresponsetoarequest,therepresentative
ofLatvia waswelcomed toparticipate asanobserver atthemeetings oftheInternational Dairy
Agreement.
7. TheCouncil alsoextended aninvitation, inaccordance withRule14oftheRules ofProcedure,
totheEconomic Commission forEurope, FAO, OECD andUNCTAD toparticipate asobservers at
sessions oftheCouncil tothenewAgreement. Atthisfirstsession, theCouncil welcomed the
representative from theFAO.
Evaluation ofworld dairy market situation
Report ontheFirstSession oftheCommittee onCertain MilkProducts
8. Concerning thefirstsession oftheCommittee onCertain MilkProducts, theChairperson of
theCommittee presented thefollowing oralreport totheCouncil.
9. TheCommittee onCertain Milk Products helditsfirstsession on20-21 March 1995.
10. After examining thereplies tothequestionnaires, theCommittee reviewed themarket situation
forproducts covered bytheAnnex onCertain MilkProducts. Information andcomments regarding
milkproduction anddairy policies weregiven intheCommittee andwillberecorded inthefullreport
ofthemeeting.
11. TheCommittee noted thatworld production ofskimmed milk powder declined in1994,
particularly inEuropean countries. Whole milkpowder production increased further. World butter
andbutter oilproduction continued itslong-term diminishing trend. World cheese production continued
toexpand in1994.
12. World consumption ofskimmed milkpowder continued todecline in1994, asworld prices
remained relatively high. World butter consumption appeared tohavelevelled offafteralong-term
decline. World cheese consumption continued itslong-term growth trend.
13. World exports ofskimmed milkpowder recovered slightly in1994 whereas those ofwhole
milkpowder increased. World exports ofbutter areestimated tohavedeclined further, butthere was
anotable surge inRussian import demand intheclosing months of1994andintoearly 1995. Cheese
exports increased in1994.
14. Stocks ofskimmed milkpowder increased insome major producing areas anddecreased in
others attheendof1994. However, thedraw down ofstocks insome producing areas inearly 1995
hasreduced thesupplies normally available foranimal feeduse.World butter stocks were10percentIDA/2
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lower attheendof1994thanoneyearpreviously, andafurther substantial decline isexpected in1995.
On1January 1995, stocks ofcheese inthemain producing countries werelower thanayearearlier.
15. Prices forbothskimmed milkpowder andwhole milkpowder strengthened during thesecond
halfof1994 andinearly 1995 duetoincreased demand facing reduced export supplies. Inthelatter
partof1994, world market prices ofbutter firmed andtheycontinued toriseinJanuary 1995, mainly
duetoincreased import demand from Russia. Attheendof1994, cheese prices were steady and
relatively high.
16. Inthefirstquarter of1995, themarkets forallmajor dairy products remained relatively firm,
inpartduetotherelatively lowvalue oftheUSdollar. Available supplies ofskimmed milkpowder
andbutter remained limited, andasproduction declined insome major producing areas inthefirst
quarter, thefirmsituation islikely tocontinue inthecoming months. Forwhole milkpowder, lower
production insome producing countries, inthefaceofincreased demand from Russian andAsian
markets,alsoresultedinafirmmarketsituation.Asproductionapproachesitsseasonalpeaksinnorthern
hemisphere countries, thesustainability ofthecurrent price levels beyond thecoming months may
betested. Although production ofcheese continued toincrease inmajor producing countries, thelong-
termtrend ofgrowing demand resulted inrelatively firmprices.
17. Forthefirstquarter of1995, thefollowing price ranges were reported (pertonf.o.b.):
-between US$1,900 andUS$2,250 forskimmed milkpowder forhuman consumption;
-between US$1,900 andUS$2,250 forwhole milkpowder;
-between US$2,000 andUS$2,430 forbutter;
-between US$2,100 andUS$2,580 foranhydrous milkfat;
-between US$1,900 andUS$2,400 forCheddar cheese.
18. Asof4May1994, theCommittee oftheProtocol Regarding MilkFatdecided tosuspend the
minimum export prices forbutter andanhydrous milkfatforaperiod ofuptotwelve months. Intaking
theDecision theCommittee agreed tokeepthelevelofworld market prices under regular review based
onanalyses bytheSecretariat. Participants agreed toprovide totheSecretariat, every twomonths,
themostrecent information available tothem ontheirexport salesofbutter andanhydrous milkfat.
TheCommittee tooknoteofthedocument prepared bytheSecretariat onthebasis ofinformation
furnished byparticipants for1994 (IDA/CMP/W/2). Thisdocument willberevised toinclude new
available information. There waspreliminary exchange ofviews withregard totheappropriate level
oftheminimum prices forbutter andanhydrous milkfatfollowing theexpiration ofthesuspension.
19. Thenextregular session oftheCommittee willbeheldon19-20 June1995, subject to
confirmation bytheSecretariat.
Status Report
20. Foritsevaluation ofthesituation inandoutlook fortheworld market fordairy products, the
Council hadbefore itvarious documents prepared bytheSecretariat: theStatus Report ontheworld
market fordairy products (IDA/W/1), atableonmilkdeliveries (IDA/W/2), summary tables onthe
products covered bytheAnnex onCertain Milk Products (IDA/CMP/W/1) andanoteonfoodaid
(IDA/W/3). Since thediscussions intheCommittee concerned those sections oftheStatus Report
which dealwithmilkpowders, butter andcheese (which willbereflected inthereport ofthatmeeting),
theCouncil focused onother sections oftheStatus Report.
21. Therepresentative oftheEuropean Community noted thatthere were several references to
BST(milk-yield enhancing hormone Bovine Somatotropin) intheStatus Report. Hequestioned theIDA/2
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extent ofuseofBSTinIndia andPakistan where itsutilization has,asstated inthereport, been
approved. Therepresentative from theFAO confirmed thattheuseofBSTwasapproved inthese
countries, butstressed thattheusewasnotwide-spread.
Replies toQuestionnaires 4and5
22. TheChairperson recalled thatannual dataonmilkanddairy products other thanthose covered
bytheAnnex onCertain Milk Products wastobeprovided inQuestionnaire 4according toRule23
oftheRules ofProcedure. TheSecretariat hadcirculated anairgram on15February 1995reminding
participants tosubmit theirresponses. TheCouncil tooknoteofthereplies toQuestionnaire 4received
from NewZealand, Norway, Poland, Sweden, Canada andSouth Africa.
23. TheCouncil noted thatnoreplies toQuestionnaire 5hadbeenreceived.
24. TheChairperson noted that,inconcurrence withthepreceding discussion ontheRules of
Procedure, itwasagreed thatpartofthedatapreviously contained inQuestionnaire 4,regarding milk
deliveries and/or production, should, wherever possible, beprovided onaquarterly basis, aswellas
annually.
25. Furthermore, theChairperson noted thatArticle III:3oftheInternational Dairy Agreement
stipulates thatParties shallprovide information ontheirdomestic policies andtrade measures, and
ontheirbilateral, plurilateral ormultilateral commitments inthedairy sector andshallmake known,
asearly aspossible, anychanges insuchpolicies andmeasures thatarelikely toaffect international
trade -withtheproviso, ofcourse, thatParties arenotrequired todisclose confidential information.
Under Rule23oftheRules ofProcedure, participants haveagreed tosubmit thisinformation, inthe
format ofQuestionnaire 5,within fourmonths following theentry intoforce oftheAgreement, or
within fourmonths following theiracceptance oftheAgreement. ThenewAgreement entered into
force on1January 1995, thus,for"founding members" the4-month period extends onlyuntiltheend
ofApril.
26. TheChairperson urged signatories torapidly comply withthisrequirement. TheChairperson
recognized theunresolved questions regarding whatinformation onpolicies must benotified tothe
Committee onAgriculture. Nevertheless, itwaspointed outthatthisuncertainty would notjustify
non-compliance withtheparticipant 'sobligations under theInternational Dairy Agreement. Noting
thedesire byalltoavoid duplication ofeffort, theChairperson suggested thatresponses to
Questionnaire5couldmakereferencetonotificationsalreadysubmittedtotheCommitteeonAgriculture,
orinclude therelevant portions ofthese.
27. Concludingthedairymarketreview,theCounciltooknoteoftheStatusReport,otherdocuments
andrelated statistical information, ofamendments suggested concerning thesedocuments, andofother
comments made.
Functioning oftheAgreement
28. AstheInternationalDairyAgreemententeredintoforceonlyon1January1995,theChairperson
noted thatthere wasnotmuch ofconsequence todiscuss under thisagenda item. However, the
Chairperson suggested thatduring thecurrent transitional period, when thesituation ofmembership
wasuncertain andprocedures wereevolving (both inthisbodyandintheCommittee onAgriculture),
theAgreement would function bestifallconcerned tookapragmatic andflexible approach withregard
toprocedures, andmade aserious effort tocomply withallprovisions oftheAgreement.IDA/2
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Other Business
29. Itwasdecided thatthenextregular session oftheCommittee onCertain MilkProducts would
betentatively scheduled for19-20 June1995, andthenextregular session oftheCouncil for
20September 1995. These dates remain subject toconfirmation andmodification, ifnecessary.
30. TheChairperson presented abriefreport oftheCouncil meeting. Thereport bytheChairperson
wassubsequently distributed asdocument WT/L/61.