Parties wishing tomake corrections tothisdraftshould submit themtotheSecretariat assoon
aspossible andnotlaterthan7February 1996. IftheSecretariat hasreceived nocorrections bythat
date, thedraftreport willbeconsidered asapproved. (Rule 8oftheRules ofProcedure.)
96-0052RESTRICTED
WORLD TRADE WT/SPEC/15
10January 1996
ORGANIZATION(96-0052)
International Dairy Agreement
COMMITTEE ONCERTAIN MILK PRODUCTS
Draft Report oftheThird Session
(16October 1995)
1. TheCommittee onCertain Milk Products helditsthirdsession on16October 1995.
2. TheCommittee adopted thefollowing agenda:
A. Adoption ofreport ofthesecond meeting
B. Adoption ofquestionnaires (IDA/W/5)
C. Information required bytheCommittee:
(i) Replies toquestionnaires:
Questionnaire 1:Milk Powders
Questionnaire 2:Milk Fat
Questionnaire 3:Cheese
(ii) Summary tables
(iii) Other information
D. Transactions other thannormal commercial transactions
E. Sales under derogation
F. Review ofthemarket situation
G. Oralreport totheCouncil
H. DateofnextmeetingWT/SPEC/15
Page2
A. Adoption ofreport ofthesecond meeting
3. Thereport ofthesecond meeting wasadopted anddistributed asdocument IDA/CMP/3.
B. Adoption ofquestionnaires (IDA/W/5)
4. TheCommittee noted thatthisitemwould beconsidered bytheCouncil.
C. Information required bytheCommittee
5. TheCommitteereviewedtherepliestoQuestionnaires1,2and3forthefirstandsecondquarters
of1995. Ittooknoteofthesummary tables based oninformation provided uptothesecond quarter
of1995 inrespect ofmilkpowders, milkfatandcheese, issued asdocument IDA/CMP/W/6. The
Committee alsotooknoteoftheinformation which theSecretariat hadcompiled onproduction, trade,
stocks andconsumption ofdairy products intheUnited States.
D. Transactions other thannormal commercial transactions
6. TheCommittee noted thatnonewrelevant information hadbeenreceived bytheSecretariat.
E. Sales under derogation
7. TheCommittee noted thatnonewrelevant information hadbeenreceived bytheSecretariat.
F. Review ofthemarket situation
8. Parties gavethefollowing reports onthemarket situation intheirrespective countries.
Switzerland
9. Comparing thesecond quarter of1995withthesecond quarter of1994, production ofskimmed
milkpowder increased by8percentto10,800 tons, while consumption decreased by14percentto
8,300 tons. Imports andexports were nilinthesecond quarter of1995.WT/SPEC/15
Page3
10. Production ofbutter inthesecond quarter of1995 increased by3½percentto12,500 tons.
Imports remained negligible anditwasexpected thattheywould remain negligible inthesecond half
of1995. Stocks attheendofthesecond quarter of1995 wereat8,400 tonscompared to7,300 tons
oneyearearlier. Measures were being taken toreduce thelevelofbutter stocks.
11. Withregard tocheese, measures hadbeentaken inthefirsthalfof1995toreduce production
by5percent. Itwasexpected thatproduction would alsodecrease inthesecond halfof1995. Exports
increased slightly inthefirsthalfof1995 buttheoutlook wasforadecrease inexports inthesecond
halfof1995. Imports decreased slightly (by1percent) inthefirsthalfof1995 to14,700 tons. It
wasexpected, however, thatimports would increase inthesecond halfof1995. Consumption decreased
slightly anditwasexpected tocontinue todecline. Stocks attheendofthesecond quarter of1995
increased by4percentto30,000 tonscompared to28,900 tonsoneyearearlier. Thishighlevelof
cheese stocks wasofconcern. Itwasdecided totakemeasures inorder toreduce thelevelofstocks.
Norway
12. Inthethirdquarter of1995, therewerenosignificant changes intheNorwegian dairy market.
There wasacontinued decline intheproduction ofmilkastheceiling setfortotalproduction within
thequota system hadbeen, andstillwasbeing, reduced bytheGovernment. Production ofthevarious
dairy products wasthusexpected toremain fairly stable in1995ascompared to1994. Total production
ofmilkin1995 wasexpected todecline by½percentascompared to1994 withafurther reduction
by½percentin1996. Consumption offresh products wascontinuing todecline andwasexpected
tofollow thesame downward trend in1996.
13. Comparing thesecond quarter of1995withthesecond quarter of1994, skimmed milkpowder
production decreased by18percentto1,300 tons. Production ofwhole milkpowder decreased to
250tonswhile consumption remained stable at250tons. There werenosubstantial exports orimports
ofmilkpowders inthesecond quarter of1995.
14. Butter production was3,500 tonsinthesecond quarter of1995, anincrease by2½percent.
Forthewhole yearof1995, production wasexpected toremain unchanged ataround 14,000 tonsas
compared to1994. Domestic consumption inthefirstandsecond quarters remained stable. Exports
ofbutter roseinthefirstquarter butdeclined inthesecond quarter duetofluctuations intheexchange
rateoftheUSdollar. There were noimports ofbutter inthesecond quarter of1995. Production
ofanhydrous milkfatdecreased, respectively, by29and41percentinthefirstandsecond quartersWT/SPEC/15
Page4
of1995. Exports andimports werenilinthefirsthalfof1995while domestic consumption remained
stable inthatperiod.
15. Production ofcheese for1995 wasexpected toincrease by3percentto83,000 tonsandto
remain unchanged atthislevelin1996. Exports wereforecast toincrease by4percentin1995 but
theoutlook for1996 wasforadecrease by6percent. Themain destinations were the
European Community, theUnited States, Canada andJapan. Imports ofcheese werestable in1995.
Domestic consumption ofcheese wasincreasing slightly, following thetrend ofthepastfewyears.
Romania
16. Comparing thesecond quarter of1995 withthefirstquarter ofthesame year, production of
skimmed milkpowder, whole milkpowder, butter andcheese increased asaresult ofstabilization
ofRomania 'seconomy. However, thelevels ofproduction were stillbelow therealpotential of
Romania 'sdairy industry.
17. Asfrom 1August 1995, Romania started the"fastprivatization process" under which more
than3,000 companies willbeprivatized. Allfoodindustry, including thedairysector, willbeprivatized
under thisprocess which isexpected tobefinalized bymid-1996. After aperiod ofstagnation, itis
expected thatthedairy sector willbecome more competitive.
NewZealand
18. The1994/95 season started withproduction inexceeding thehighlevels of1993/94. During
thesummer, production declined below yearearlier levels because ofdryweather conditions. However,
inthefinalmonths oftheseason production recovered significantly andsurpassed byaconsiderable
amount thelevels ofprevious years. Intheend,totalmilkproduction onamilksolids basis was
732million kgs.compared to735million kgs.in1993/94. Todate,in1995/96, production hadbeen
below expectations, largely because ofwetandcoldconditions inmany dairying regions. Despite
this,current estimates were thatforthefull1995/96 season, production would exceed 1994/95 by
2to3percent.
19. Forthe1994/95 season, theNewZealand Dairy Board (NZDB) announced afinalprice of
NZ$3.00/kg.milksolidstofarmers.Thiswasslightlyaboveearlierestimatesandalsoabovethe1993/94
levelofNZ$2.90. Theaverage levelofpayment tofarmers fromdairy co-operatives wasNZ$3.40/kg.WT/SPEC/15
Page5
permilksolids. Thiscompared toNZ$3.32 perkg.for1993/94. Forthe1995/96 season, theNZDB
hadannounced anaverage price ofNZ$2.65/ kg.permilksolids withanexpected finalpayment of
NZ$3.00 toNZ$3.10, however therewereindications thattheseprices would besignificantly increased.
20. Theinternational market remained inagood position forexporters suchasNewZealand.
IntheEuropean Community, themarket wascharacterized bytightened availability ofskimmed milk
powder andbutter. Stocks remained atlowlevels. Thishadunderpinned astrong price position for
allproducts except cheese. Thehigher ECinternal prices werereflected inhigher export prices which
hadbeenboosted bysignificant subsidy cutsacross arange ofproducts. Currency factors hadalso
beenimportant. Thecontinued weakness oftheUSdollar hadmaintained prices athighlevels when
expressed inUSdollars. Onthesupply side,lower thanexpected production inNewZealand and
Australia in1994/95 hadcontributed tothelevelofprices. Thishadbeensupported bytheconsiderable
degree ofcommitment tomarkets in1994/95, continuing into1995/96.
21. IntheUnited States, production hadincreased butthishadmainly beenabsorbed bydomestic
consumption. Inthefirstsixmonths of1995Dairy Export Incentive Program (DEIP) sales, particularly
ofskimmed milkpowder, wereatahighlevel. Currently bonuses forDEIP saleswereatmuch lower
levels.
22. Theindicative export prices inthethirdquarter of1995 were asfollows:
US$pertonf.o.b.
Skimmed milkpowder 2,150-2,250
Whole milkpowder 2,200-2,300
Butter 2,100-2,300
Butter oil 2,350-2,500
Cheese 2,150-2,350
23. Theoutlook fortheremainder of1995 wasforprices toremain around existing levels with
limited scope forfurther increases. Thekeyfactor would bedevelopments intheECinternal market
including theproduct mix.
Japan
24. Thetotalproduction ofrawmilkduring thesecond quarter of1995 decreased slightly (by
2percent)compared withthecorresponding quarter of1994. Thedemand fordrinking milkdecreased
by3percent, however, milkusedforprocessing dairy products decreased onlymarginally. TheWT/SPEC/15
Page6
production ofwhole milkpowder increased sharply (by24percent) while theproduction ofbutter
andskimmed milkpowder decreased, respectively, by2½and½percent. Demand forcheese was
stillgrowing anditsproduction increased by7percent.
25. Inthesecond quarter of1995, imports ofskimmed milkpowder increased by23percentto
29,100 tons. Compared totheprevious quarter, theaverage import price ofskimmed milkpowder
forhuman consumption roseby6½percentandthatforanimal feedroseby19½percent. Compared
tothesame period oftheprevious year, theaverage import price ofskimmed milkpowder forhuman
consumption roseby31½percentandthatforanimal feedroseby32percent.
26. Butter imports decreased by87percentto83tonsinthesecond quarter of1995. Theaverage
import price inthesecond quarter of1995 roseby38percentcompared totheprevious quarter.
Compared tothesame period oftheprevious year, theaverage import price ofbutter roseby
52½percent.
27. Compared withthesame period oflastyear, natural cheese imports increased by23percent
inthesecond quarter ofthisyearwhile processed cheese imports increased by14½percent. The
import price ofnatural cheese roseby4½percentcompared totheprevious quarter, while thatof
processed cheese roseby9percent. Theimport price ofnatural cheese andprocessed cheese rose,
respectively, by8and19½percent, compared tothesame period oftheprevious year.
28. Specific dairy products, suchasbutter andskimmed milk powder, usedtobesubject to
quantitative import restrictions. Such dairy products, however, were tariffied, asof1April 1995,
inaccordance withtheUruguay Round Agreement onAgriculture. TheLivestock Industry Promotion
Corporation (LIPC) handles in-quota imports ofdesignated dairyproducts forgeneral use,which, under
thecurrent access opportunities, amount to137,202 tons(whole milk equivalent basis). Inthis
connection, 18,000 tonsofskimmed milkpowder were imported before June1995, and3,000 tons
ofwhey andmodified whey werescheduled tobeimported bytheLIPC tomeetthecommitted current
access level. Inaddition, apartfromthecommitted opportunities, 17,000 tonsofskimmed milkpowder
were imported before August, inresponse tothestrong summer demand.WT/SPEC/15
Page7
European Community
29. Since theprevious meeting oftheCommittee inJune1995 theCouncil ofMinisters adopted
the1995/96 price package. Thefinalagreement didnotinclude the2percentprice reduction inthe
butter intervention price proposed bytheCommission.
30. Themarket situation inthedairy sector oftheEuropean Community continued toimprove
inrecent months, resulting infurther reductions ininternal aidlevels andinexport subsidies. Dairy
cownumbers intheEC-12 declined between June1994 andJune1995 byabout 1½percentto
20.7million head. Milk yield percow, however, wasestimated tohaveincreased byabout ½per
centin1994 to5,200 kgs., andamore substantial increase wasforecast for1995. Milkprices paid
toproducers inanumber ofmember States were lower in1994 thanin1993. Prices continued to
fallintheearly partof1995 butinthepasttwomonths theyhadbegun toincrease again.
31. Production intheEC-12 dairy sector inthefirstseven months ofcalendar year1995 andin
thefirstthree months ofquota year1995/96, compared tothecorresponding period ofcalendar year
1994 andquota year1994/95, wasasfollows:
January-July 1995 compared April-July 1995 compared
toJanuary-July 1994 toApril-July 1994
Milk deliveries +2.0% +2.0%
Production
Skimmed milkpowder +2.5% +4.5%
Other milkpowders +4.0% +3.0%
Butter +5.0% +2.5%
Cheese +4.0% +3.5%
32. Production intheEC-15 dairy sector inthefirstseven months ofcalendar year1995compared
tothecorresponding period ofcalendar year1994, wasasfollows:
January-July 1995 compared to
January-July 1994
Milk deliveries +2.0%
Production
Skimmed milkpowder +1.5%
Other milkpowders +4.5%
Butter +4.0%
Cheese +3.5%WT/SPEC/15
Page8
33. Thebutter market remained buoyant. Themarket price wasabout 5percentabove the
intervention priceofECU328.2/100 kgs.orabout 17percentabove theeffective support level. Butter
consumption intheCommunity increased byabout 1percentin1994andthisupward trend continued
into1995. Thestrong demand forbutter subsidized foruseinthepastry andice-cream sectors led
totheaidlevel being further reduced byECU 2/100 kgs., bringing thetotalreductions in1995 to
ECU 21/100 kgs. Thelevelofaidonbutter wasnowatECU 125/100 kgs. Thevolume ofbutter
allocated totheindustry in1995 wasabout 334,000 tonsorabout 7percentmore thanin1994, but
partofthatincrease wasduetothenewmember States.
34. Theskimmed milkpowder market wasalsobuoyant. Themarket price wasabout 11percent
above theintervention price. Small volumes ofskimmed milkpowder weresoldfrom intervention
fortheanimal feedsector since June, bringing thetotalamount soldin1995 toabout 50,000 tons.
There werenofurther stocks available forsalefortheanimal feedsector. During thefirsteightmonths
of1995, thevolume ofskimmed milkusedbythecalffeedandcasein sectors increased by1percent.
There wasanincrease of28percentinup-take inthecasein sector andadecrease of13percentin
theup-take inthecalffeedsector. InOctober 1995, theCommission tookadecision tofurther reduce
thecasein-aid levelby7½percentfromECU 6.75/100 kgs.toECU 6.25/100 kgs.ofliquid skimmed
milkusedinthemanufacture ofcasein. In1995 todate, thecasein-aid levelhadthusbeenreduced
by17percent.
35. Thecheese market remained weaker thanin1994duetoincreased production andcompetition
between manufacturers formarket share within theEuropean Community.
36. Thestocks ofdairy products inintervention stores remained atverylowlevels. Public stocks
ofbutterwerecurrentlylessthan20,000tons.Presentskimmedmilkpowderstockswereat14,000tons.
Thevolume ofcheese subject toprivate storage contracts wasat116,000 tons.
37. Theexport performance ofEC-12 in1995waspositive. Traders apparently made serious efforts
toexport before 1July1995when theEuropean Union implemented theUruguay Round Agreement
inthemilksector. Forthefirstseven months of1995, thepercentage changes intheexports bysome
member States compared withthecorresponding datafor1994 were thefollowing:WT/SPEC/15
Page9
Percentage change
Firstseven months of1995 compared tothe
Firstseven months of1994
Fresh products +12%
Condensed milk +26%
Skimmed milkpowder +187%
Whole milkpowder + 1%
Butter +182%
Butter oil + 3%
Cheese + 1%
38. Export refunds fordairy products were decreased substantially in1995. Since theprevious
meeting inJune, export refunds werereduced by10percentforskimmed milkpowder, by7½percent
forcondensed milkandby10percentforcertain cheeses. These reductions contributed tothestrong
world market situation. However, anumber offactors which contributed tothestrong internal market
situation intheEuropean Community in1995 andtothestrong world market situation might notbe
present in1996. Forexample, demand from Russia forECbutter andcheese, strong demand from
Japan forskimmed milkpowder, thelower thanexpected deliveries inOceania andtheverylowstocks
ofdairy products intheEuropean Community andintheUnited States. Thehighworld market prices
in1995might influence producers 'decisions for1996especially intheUnited States andalsoinother
major dairy exporting countries. These factors willneedtobemonitored closely intheremainder
of1995 andin1996.
39. TheEuropeanCommunity'scalculatedexportpricesforthethirdquarterof1995wereasfollows:
US$pertonf.o.b.
Skimmed milkpowder 2,200-2,380
Whole milkpowder 2,200-2,480
Butter 2,300-2,550
Butter oil 2,450-2,750
Cheese 2,300-2,500
Bulgaria
40. Therepresentative ofBulgaria informed theCommittee thathiscountry hadrecently ratified
theInternational Dairy Agreement.WT/SPEC/15
Page10
41. Itappearsthattherecentnegativedevelopmentsandtrendsinthedairysectorwerenowrelatively
slow, andtheopportunity forrecovery wassoonpossible.
42. Production ofskimmed milkpowder wasstillinsignificant andimports inthesecond quarter
of1995 amounted to500tons, mainly fromUkraine, Poland, Lithuania, theRussian Federation, the
Netherlands andGermany. Exports reached only100tons, thedestinations being Albania, Romania
andTurkey. Production ofwhole milkpowder inthesecond quarter of1995, at800tons,wasdouble
theoutput inthecorresponding quarter of1994. Imports amounted to400tonsfromGermany, Sweden,
theRussian Federation, France andtheNetherlands. Exports were insignificant.
43. Production ofcheese, at16,000 tons,increased by15percentcompared tothesecond quarter
of1994. Imports amounted to300tonsfrom Turkey, Denmark, Estonia, Germany, France and
Lithuania. Exports ofcheeses, at1,200 tons, were thehalfoftheexports inthesecond quarter of
1994 andfarbelow thelevels oftheprevious years. Oneofthereasons forthissharp dropwasthe
poorquality control ofcheese production intheprivate sector. TheGovernment would soonintroduce
obligatory licensing forproducers andexporters ofdairy products. Themaindestinations forcheese
exports were theUnited States, Lebanon, Australia, theformer Yugoslav Republic ofMacedonia,
Germany, Albania andtheRussian Federation.
44. Butter production wasstillataverylowlevel, i.e.about 600tonsinthesecond quarter of
1995, unchanged ascompared tothesecond quarter of1994. Imports ofbutter decreased by86percent
toreach only200tons, mainly from Germany andFrance. Exports were insignificant.
Hungary
45. Inthesecond quarter of1995, skimmed milk powder production increased significantly.
However, bothdomestic consumption andexports remained stable compared totheprevious quarter.
Consequently, stocks attheendofJune1995 registered asubstantial increase.
46. Production anddomestic consumption ofbutter decreased slightly while exports declined
substantially, primarily totheRussian market. Export prices ofbutter weredeclining butwerestill
wellabove theIDAminimum export prices. Stocks attheendofJune1995 werehigher thaninthe
beginning ofthesecond quarter duetothedropinexports.WT/SPEC/15
Page11
47. Ageneral improvement inthecheese sector wasregistered. Production anddomestic
consumption hadfurther improved compared totheprevious quarter. There wasasignificant expansion
inexports, mainly toMediterranean destinations, accompanied bystrengthening export prices.
Australia
48. Milk production intheseason 1994/95 beginning on1July1994, totalled justover
8,200 million litres, 2percenthigher thantheprevious season butlower thaninitial estimates. The
lower thanexpected production wasduemainly toseasonal conditions andsome reduced useoffeed
grain, which reflected lower relative profitability duetobothhigher purchase costsandlower farmgate
prices formanufacturing milk. Despite improved market returns, total1994/95 butter/butter oil
production decreased by6percentto135,000 tons. Skimmed milkpowder production declined by
5percentto197,000 tons. Thisreflected increased casein output andongoing increases inproduction
ofliquid skimmed milks, especially liquid skimmed concentrate. Following recent plant investment
andmarkettrends,wholemilkpowderproductionwasagainhigherin1994/95.Ataround109,000tons,
production wasalmost 18percenthigher than1993/94. Cheese production in1994/95, at211,000 tons,
wasalmost 10percentlower than1993/94, duetolower thanexpected lateseason production and
weaker relative export market returns compared tobutter andmilkpowders.
49. Theinternational market situation remained verypositive. With theEuropean Community
entering itsseasonally lowproduction period, andspring production notyetpeaking inAustralia and
NewZealand, product availability forspottrade wasscarce. Thiswasparticularly soforbutterfat,
withverylowstocks andavailability world-wide.
50. Theindicative export prices inthethirdquarter of1995 were asfollows:
US$pertonf.o.b.
Skimmed milkpowder 2,150-2,300
Whole milkpowder 2,300-2,400
Butter 2,250-2,500
Butter oil 2,600-2,750
Cheese 2,150-2,250WT/SPEC/15
Page12
Canada
51. There were twomajor policy changes thattookplace intheCanadian dairy sector in1995:
thepooling ofspecial classes ofmilkandthereduction inthefederal direct subsidy onindustrial milk.
52. Canadian provincial authorities hadintroduced special classprices toreplace levies because
oftheinclusion ofproducer-financed levies asexport subsidies intheUruguay Round outcome. Special
pricesforcertainspecialuses,i.e.foodingredients,hadbeenappliedsince1August1995.Therevenues
onthese sales were being pooled monthly across allmilkproducers toequalize producer financial
participation nationally inthesame wayastheprevious levysystem did.Theimpact ofthese changes
onproduction andconsumption wasexpected tobeminimal. Theonlychange might come from a
larger participation from theprocessing industry, butthere wasnoindication thatthiswould indeed
happen.
53. TheFebruary 1995 federal budget indicated thatthefederal dairy subsidy wastobereduced
by30percentovertwoyears. Effective 1August 1995, thesubsidy wasdecreased by15percent
fromCan$5.43 perhl.toCan$4.62 perhl.,andtoCan$3,80 perhl.effective 1August 1996. Total
subsidy payment wasestimated tofallfromtheprevious Can$228 million toCan$194 million in1995/96
andtoCan$160 million in1996/97. Consultations withinterested parties inCanada werecontinuing
onthefuture oftheremaining subsidy after1996.
FAO
54. FAO recently completed itsquantitative assessment oftheimpact oftheUruguay Round 's
Agreement onAgriculture onmajor agriculture markets. Theprojections utilized average production,
trade andconsumption intheperiod 1987-89 asabaseperiod against which theprojected changes
to2000 were compared. Theapproach toFAO'sassessment wastocompare theoutcome inthe
year2000 intheabsence oftheUruguay Round ("Baseline 2000") withtheoutcome incorporating
Uruguay Round provisions ("Uruguay Round 2000").
55. Attheworld level, virtually nochange inmilkdemand andproduction isexpected toresult
fromtheUruguay Round. However, onaregional basis, theAgreement isprojected tostimulate higher
production inOceania following increased export opportunities, which willbeoffset byacontraction
inEurope andtheareaoftheformer USSR. Similarly, theRound isexpected tohaveaslight positive
impact onproduction inLatin America.WT/SPEC/15
Page13
56. Theoverall leveloftradeinmilkandmilkproducts isnotexpected tobeaffected bytheUruguay
Round; however, there willbesome redistribution interms ofregion oforigin anddestination. The
reduced volume ofsubsidized exports fromseveral developed countries will,tosome extent, beoffset
byincreased commercial exports fromOceania. Growth inexport opportunities isalsolikely topromote
theexpansion ofshipments bysome developing countries, especially inLatin America. Adecrease
intheproportion ofsubsidized exports ofmilkandmilkproducts isexpected toresult inhigher prices,
which could restrain imports bymany developing countries. Incontrast, imports bysome developed
countries could beincreased asaresult ofminimum access agreements under theUruguay Round.
57. Over thenextfiveyears, demand formilkandmilkproducts willcontinue togrow inthe
developing countries, inparticular inthose areas withhigher ratesofeconomic growth. South and
South-East AsiaandLatin America could seethestrongest growth indemand. Production should grow
inthose areas where demand isstrongest. Interms ofvolume ofmilkproduced, noteworthy growth
canbeexpected intheIndian sub-continent, China andthesouthern-cone countries ofLatin America.
Inmostdeveloping countries, greatscope exists forincreasing milkyieldperanimal. Restricted export
supplies relative toimport demand ontheinternational market should ensure thatcurrent highprices
fordairy products aregenerally maintained overthenextfewyears. Forthedeveloping countries,
thiswould make domestic production more competitive withimports and,forsome, openupavenues
forexport.Amongthedevelopingcountries,theprincipalbeneficiariesofincreasedexportopportunities
areexpected tobethecountries ofSouth America; inaddition, India mayfurther develop itsexports
ofskimmed milkpowder. Despite increased milkproduction amongst thedeveloping countries and
some growth inexports, thisgroup ofcountries asawhole isexpected toremain asubstantial net
importer ofmilkproducts. Thequantity ofmilkproducts given asfoodaidtodeveloping countries
hasdeclined during thefirsthalfofthe1990's;however, difficulty inmeeting Uruguay Round
commitmentstoreducesubsidizedexportscouldresultinisolatedincreasesoffoodaid.Theinternational
promotion, andpopularity, ofitems suchaspizza, yogurt andice-cream willstimulate consumption,
especially inthose regions where milkandmilkproducts donotformpartofthetraditional diet,such
asinSouth-East Asia.
58. Under asituation where international supplies areinshort supply, higher-income developing
countries (South EastAsiaandLatin America) willincreasingly bethefocus fordairy exports, while
shipments tolower income countries (Africa, south ofSahara andsome Middle Eastcountries) may
bereduced. Thetargeting ofhigher income countries, should beaccompanied byageneral switch
tohigher value-added dairy products andincreased trade inproducts forretail salerather thanbulk
commodities forprocessing. Similarly, anincrease inmilk products tailored tothedemand inWT/SPEC/15
Page14
higher-income developing countries isalsoexpected. Anexample ofonesuchproduct would bethe
NewZealand Dairy Board 's"Imulin" -alowfat,lowlactose milkpowder targeted athealth-conscious
Asian adults witharelatively highleveloflactose intolerance. Similarly, strong growth incalcium
enriched milkpowder isexpected inSouth EastAsiawhere consumers areconcerned thatalackof
thismineral intheirdietscancause osteoporosis. Finally, many international dairy companies have
establishedprocessingplantsindevelopingcountries.Inthepast,suchplantswereoftenorientedtowards
thereprocessing ofbulkproducts. However, more recently, suchventures havetended toincorporate
thepromotion ofdomestic milkproduction intotheiroperations, forexample, through theestablishment
ofdemonstration farms andtheintroduction ofimproved breeding stock. Should international prices
remain high, itislikely thatsuchinternational processors willinthefuture seektosource more of
theirsupplies locally.
G. Oral report totheCouncil
59. TheCommittee agreed thatanoralreport ofthediscussions ofthepresent session would be
submitted totheCouncil. Thisreport wasincorporated inthereport oftheCouncil (IDA/5).
H. Date ofnextmeeting
60. Itwasnoted thattheCouncil would consider thecalendar ofmeetings.