RESTRICTED
WORLD TRADE IDA/CMP/3
23October 1995
ORGANIZATION(95-3178)
International Dairy Agreement
COMMITTEE ONCERTAIN MILK PRODUCTS
Report oftheSecond Session
(19June 1995)
1. TheCommittee onCertain Milk Products helditssecond session on19June1995.
2. TheCommittee adopted thefollowing agenda:
A. Adoption ofreport ofthefirstmeeting
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. Communication from thePermanent Mission ofJapan (IDA/CMP/W/3)
G. Review ofthemarket situation
H. Adoption ofreport totheCouncil
I. DateofnextmeetingIDA/CMP/3
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A. Adoption ofreport ofthefirstmeeting
3. Thereport ofthefirstmeeting wasadopted anddistributed asdocument IDA/CMP/1.
B. Adoption ofquestionnaires (IDA/W/5)
4. TheCommittee agreed toconsider theproposed formats forQuestionnaires 1-5,regarding
information tobefurnished under Article IIIoftheAgreement andRule23oftheRules ofProcedure
(IDA/W/5), atitsnextmeeting.
C. Information required bytheCommittee
(i) Replies toQuestionnaires 1,2and3
5. TheCommittee reviewed thereplies toQuestionnaires 1,2and3.Parties wererequested to
provide alltherelevant information concerning thesecond quarter of1995 by15September 1995.
(ii) Summary tables
6. TheCommittee tooknoteofthesummary tables based oninformation provided uptothefourth
quarter of1994inrespect ofmilkpowders, milkfatandcheese, issued asdocument IDA/CMP/W/4.
(iii) Other information
7. TheCommittee alsotooknoteoftheinformation which theSecretariat hadcompiled on
production, trade, stocks andconsumption ofdairy products intheUnited States.
D. Transactions other thannormal commercial transactions
8. TheCommittee noted thatnonewrelevant information hadbeenreceived bytheSecretariat.
E. Sales under derogation
9. TheCommittee tooknoteofanotification byNew Zealand ofsales under derogation in
accordance withArticle 7:2oftheAnnex onCertain Milk Products (document subsequently issued
asIDA/CMP/W/5).
F. Communication from thePermanent Mission ofJapan (IDA/CMP/W/3)
10. TheCommittee hadbefore itacommunication from thePermanent Mission ofJapan
(IDA/CMP/W/3 andRev.1 -Rev.1 inEnglish only). TheCommittee approved anamendment tothe
"AnnexonCertainMilkProducts-AttachmentC:Japan"inaccordancewiththeprovisionsofArticle3,
paragraph 5,ofsaidAnnex. AProcès-Verbal signed bytheDirector-General oftheWorld Trade
Organization willbeprepared andcertified truecopies willbedistributed totheMembers oftheWorld
Trade Organization.
G. Review ofthemarket situation
11. Parties gavethefollowing reports onthemarket situation intheirrespective countries.IDA/CMP/3
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Switzerland
12. Milkdeliveries totalled 3.07million tonsin1994, anincrease by1.8percentcompared with
1993. However, deliveries wereestimated tohavedecreased by2.3percentinthefirstfourmonths
of1995 compared withthecorresponding months of1994.
13. Comparing thefirstquarter of1995 withthefirstquarter of1994, production ofskimmed
milkpowder decreased by15percentto7,800 tons, while consumption decreased by41percentto
4,100 tons. Exports, which werenilinthefirstquarter of1994, increased to1,100 tonsinthefirst
quarter of1995. Stocks attheendofthefirstquarter of1995, at6,300 tons,were13percenthigher
thantheirleveloneyearearlier.
14. Production ofbutter inthefirstquarter of1995decreased by4percentto10,900 tons. Imports
remained negligible. Stocks attheendofthefirstquarter of1995, at5,000 tons,wereatnormal levels.
15. With regard tocheese, output decreased slightly (by1percent) inthefirstquarter of1995
to29,800 tons, while consumption decreased by3percentto21,900 tons. Exports increased by
4percentto14,600 tonswhile imports decreased by6percentto6,800 tons. Stocks attheendof
thefirstquarter of1994 increased by11percentto30,000 tonscompared to27,000 tonsoneyear
earlier. Thishighlevelofcheese stocks wasofconcern. Itwasdecided totakemeasures inorder
toreduce theproduction ofEmmental andGruyère cheeses by5,000 tons.
Norway
16. Comparing thefirstquarter of1995 withthefirstquarter of1994, skimmed milkpowder
production decreased by34percentto1,500 tons. Consumption decreased alsoby16percentto
1,400tons.Productionofwholemilkpowderincreasedto650tonswhileconsumptionincreasedslightly
to400tons. There werenosubstantial exports orimports ofmilkpowders inthefirstquarter of1995.
17. Butter production was4,200 tons,adecrease by8percent. Domestic consumption increased
slightly. There were noimports ofbutter inthefirstquarter of1995, while exports amounted to
2,200 tons, 88percentmore thanthecomparable period of1994.
18. Productionofcheeseamountedto21,900tons,anincreaseby2percent.Domesticconsumption
increased by1percentto15,200 tons. Imports at500tonsweredown by9percent. Exports increased
by13percentto5,900 tons.
NewZealand
19. While totalmilkproduction wasexpected toexceed previous seasons 'volumes, milkflows
through the1994/95 season were somewhat erratic duetovariable weather patterns. Early season
production wassignificantly ahead inthefirstthree months oftheseason duetogood winter stock
andpasture condition. Inthefirstquarter of1994/95, milkproduction was14percentabove the
corresponding quarter of1993/94. Thiscoupled withearly calving dates meant theproduction peak
waswellahead ofearlier seasons. However, averycoldOctober/November period significantly eroded
thesegains, sothatmilksolids 'production wasdown bymore than3percentbelow thelevelrecorded
toNovember 1993. Thisreduction wasfurther exacerbated byadryperiod from December 1994
through February 1995 where milkflows werestill3percentbelow theprevious season. With the
onset ofautumn, regular rainfall andmildweather sawarecovery inmilkflows, andmonthly levels
from March through Mayfirstlevelled offandrecovered tolevels close toandabove the1993/94
season. Inwhat hasproven tobethesecond highest production season onrecord, finalmilkflowIDA/CMP/3
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wasexpected tobeclose to730million kgs.milksolids or8,620 million litres, 0.3percentbelow
and0.2percentabove theprevious season, respectively.
20. Areview ofthenumber ofcows recorded onanimal registers indicated thattheincrease in
cownumbers between the1993/94 and1994/95 seasons was6.5percent. Thelarger thanexpected
increase isexplained byachange insurvey series andimproved datacollection procedures. Theabsolute
increase incownumbers was160,000. Theincrease inthetotalnumber ofcows wasimportant as
acontribution tomilkflowgrowth. However potential increases inmilkvolume havebeenpartially
offset bythefactthatpercowmilkproduction hasbeenlower through 1994 thanthelevels recorded
in1993, alsocoincident waslower totalmilksolid yields. Climatic conditions remained themajor
contributing factor toshort-term volume changes.
21. Allproduction from the1994/95 season wasfullycommitted tocustomers. Thelower than
expected production inthemiddle oftheseason meant thatformuch ofthelastsixmonths theavailability
ofuncommitted supplies were extremely tight.
22. Regarding dairy product manufacture andsupply, export sales volumes were estimated at
1.1million tonsofproduct, anincrease by7percentfrom thelevel in1993/94. Theproduct mix
remained inlinewiththeNewZealand Dairy Board 'sapproach ofpursuing avalue-added business,
which meant increased production anddiversification incheese andmilkpowders. Incomparison with
theproduct mixforlastseason, butter andotherfatbearing product production decreased by14percent
from305,000 tonsin1993/94 to263,000 tonsin1994/95. Whole milkpowder production wassteady.
Theproduction ofwhole milkpowders including nutritional products andinfant milkpowder totalled
343,000 tons, anincrease of10,000 tonsover1993/94. Cheese production increased onlyslightly
from193,000 tonsin1993/94 to194,000 tonsin1994/95. Skimmed milkpowder produce rosefrom
141,000 tonsto145,000 tonsandcasein production fellfrom 79,000 tonsto68,000 tons.
23. With regard tothecurrent market situation, spottrading prices formajor products were all
dramatically higher thantheywereatthebeginning ofthe1994/95 season. Formilkpowder andbutter,
theincrease wasoftheorder of50percent. Forthese products, prices wereat,ornear, record levels.
There were, however, twoimportant aspects ofthisincrease inprices which needed tobetaken into
account. Theincrease wasinterms oftheUSdollar, thevalue ofwhich fellsteadily, notonlyrelative
totheNewZealand dollar buttoother currencies aswell. Much oftheincrease hadtherefore been
nominal rather thanreal. Thelargest partoftheincrease, andmostoftherealincrease, occurred in
arelatively shortperiod inJanuary andFebruary aftermajor commitments ofcurrent season production
hadbeenmade tocustomers.
24. Themovementofin-marketpricingwasstilllaggingbehindthemovementofspottradingprices.
Thiswasespecially thecaseforcheese andcasein. Theincrease inprices hasbeentheresult ofa
combination ofreduced availability ofbutter andskimmed milkpowder fromtheNorthern Hemisphere
withmilkproductionstaticandsurplusstocksabsorbeddomestically;reductionsinbonusesandsubsidies
paidonexport products ranging fromUS$60/ton forskimmed milkpowder toUS$460/ton forbutter;
thefallinthevalue oftheUSdollar which hadtheeffect ofkeeping European export prices highwhen
expressed inUSdollars; lessthanexpected supply availability fromAustralia andNewZealand (and,
formilkpowder, reduced availability fromEastern European suppliers) andasteady off-take inimport
markets, when taken asawhole.IDA/CMP/3
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25. Theindicative export prices inthesecond quarter of1995 were asfollows:
US$pertonf.o.b.
Skimmed milkpowder 1,950-2,400
Whole milkpowder 1,900-2,300
Butter 1,500-2,350
Butter oil 1,650-2,400
Cheese 1,950-2,250
26. Regarding theoutlook, themarket hadreached acrucial juncture. Itwasnotyetinastable
equilibrium. Fortheshort termatleast, thegood balance ofthemarket waslikely tobemaintained.
There werenoovershadowing surpluses. Ontheother hand, prices werevulnerable tofurther fickle
movements incurrency values; particularly toastrengthening oftheUSdollar which would lower
European prices. Astheyearprogresses thescaling backofdomestic subsidy programmes inEurope;
theavailability ofthenewseason 'ssupplies from Australia andNewZealand; andtheattraction to
themarket ofadditional United States supplies (especially ofbutter) werelikely toresult ineasier market
conditions.
27. Spottrading prices ofbutter andbutter oilnowreached levels ofUS$2,300/ton f.o.b. butonly
limited volumes were transacted atthese levels. These prices were unlikely tobesustainable other
thanintheshortterm, inlargepartbecause oftheavailability ofbutter fromtheUnited States (without
subsidy) atprices currently down toUS$1,600/ton f.o.b. Consequently, inthesecond halfoftheyear
itwaslikely thatspottrading prices would come backbelow US$2,000/ton f.o.b.
28. Skimmed milkpowder prices rosetoUS$2,100/ton f.o.b. withwhole milkpowder prices now
slightly ahead ofthese levels. Themarket waslessvulnerable tobeing undermined byUSsupplies
thanwasthecaseforbutter, though itwasmore exposed toeasier supply conditions fromtheEuropean
Union.
29. Themovement inexport prices forcheese inthelastyearwasmuch lessdramatic thanfor
otherproducts. Asforcasein, in-market pricing hadlagged aconsiderable distance behind thepotential
forimproved returns created byhigher European export prices. Intheyearahead, thecurtailment
ofsubsidized exports ofcheese should provide much brighter export market andpricing prospects than
waslikely tobefaced byother products.
30. Despite improving international prices, NewZealand 'sexport terms oftradedeteriorated with
thefirmappreciation oftheNewZealand dollar. Despite hedging, theriseoftheNewZealand currency
costtheindustry anestimated NZ$0.35/kg. milksolids. Thefinalprice announced forthe1994/95
season forproducers wasNZ$3.00/kg. milkfat.ThiswasNZ$0.40 above theadvance setatthe
commencement oftheseason. Theadvance price ofNZ$2.65/kg. setforthe1995/96 season was
25centshigher thanlastseason 'sopening price. TheNewZealand Dairy Board expected afinalprice
ofbetweenNZ$3.00-NZ$3.10reflectingconfidenceinfirmpricingthroughthefollowingtwelvemonths.
Japan
31. Production ofmilkhadgradually recovered since November 1994, when themilkproducers '
organization changed themilkproduction target toal.9percentreduction levelforfiscal year1994
compared tothe2.9percentreduction level offiscal year1993. Thetotalproduction ofrawmilk
during thefirstquarter of1995 followed thesame trend asthatof1994. Duetotheincrease inthe
demand fordrinking milk, anddespite thestrong demand forskimmed milkpowder, skimmed milkIDA/CMP/3
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powder production declined compared tothesame period oftheprevious year. Inorder tocopewith
thissituation, theLIPC (Livestock Industry Promotion Corporation) imported 17,000 tonsofskimmed
milkpowder between November 1994 andMarch 1995. Regarding butter, thedecrease indomestic
consumption contributed tobutter stocks remaining atahighlevel.
32. Comparingthefirstquarterof1995withthesameperiodof1994,totalmilkproductionincreased
slightly by0.3percent. Thedemand fordrinking milkincreased by2.3percent,however milkused
forprocessing dairyproducts decreased by1.9percent. Theproduction ofwhole milkpowder increased
by11.1percentwhile production ofbutter andskimmed milkpowder decreased, respectively, by
15.5and5.5percent. Demand forcheese wasstillgrowing anditsproduction increased by5.3percent.
33. Inthefirstquarter of1995, imports ofskimmed milkpowder, including imports bytheLIPC,
increased by65percentto31,000 tons. Compared totheprevious quarter, theaverage import price
ofskimmed milkpowder forhuman consumption fellslightly by2.4percentandthatforanimal feed
roseby13.5percent. Compared tothesame period oftheprevious year, theaverage import price
ofskimmed milkpowder forhuman consumption roseby8.8percentandthatforanimal feedrose
by10.1percent.
34. Butter imports increased by12.8percentto1,600 tonsinthefirstquarter of1995. Theaverage
import price inthefirstquarter of1995 roseby14.7percentcompared totheprevious quarter.
Compared tothesame period oftheprevious year, theaverage import price ofbutter roseby
4.2percent.
35. Compared withthesame period oflastyear, natural cheese imports increased by3.5percent
inthefirstquarter ofthisyearwhile processed cheese imports increased by33.3percent. Theimport
price ofnatural cheese fellby2.1percentcompared totheprevious quarter, while thatofprocessed
cheese remained stable withariseofonly0.3percent. Theimport priceofnatural cheese andprocessed
cheese rose, theformer by6.8percentandthelatter by15.2percent, compared tothesame period
oftheprevious year.
Hungary
36. Inthefirstquarter of1995, there werenosignificant changes intheHungarian dairy market.
Thelongdecline experienced during previous years seemed toend,however signs ofanewsustainable
growth were stillawaited.
37. Inthefirstquarter of1995, butter production expanded compared tothefirstquarter of1994
butwasstillunder thevolume ofproduction inthefirstquarter of1992. Exports ofbutter, which
werenilinthefirstquarter of1994, increased to1,000 tons. Theaverage export price wasslightly
above US$2,000 perton.
38. Production andconsumption ofcheeses stabilized inthefirstquarter of1995 atafairly high
levelcompared tothatofprevious years. However, there wasadecline intrade incheeses.
European Community
39. Themarket situation inthedairy sector oftheEuropean Union remained firmwithdemand
adequate tomeetavailable supplies. Supplies ofmilkincreased following thestartofthe1995/96 quota
yearbutthese newsupplies were quickly absorbed. Thebutter andskimmed milkpowder markets
remained veryfirmwhile some adjustments weretaking place inthecheese sector. Milkprices paid
toproducers were tending downwards inanumber ofmember States, withsome exceptions duein
parttocurrency movements. Thefallinproducer prices wasduetotheimplementation ofinstitutionalIDA/CMP/3
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pricecuts(3percentonbutter inJulyandAugust 1994) andtoincreased competition between dairies
withintheEuropeanUnionformarketsharebecauseofthefuturereductionsinsubsidizedcheeseexports.
Thereductions ininternal supports forbutter destined forpastry andice-cream manufacture andfor
skimmed milkusedinthemanufacture ofcasein aswellasthereduction inexport subsidies werefactors
contributing tothisprice situation.
40. TheCouncil continued itsnegotiations onthe1995/96 price package anditisexpected that
aconclusion would bereached soon. TheMinisters accepted theCommission 'sconclusions thatthe
milkquota system wasnowbeing satisfactorily applied inGreece andItaly. Thequota system was
therefore applied presently throughout theUnion.
41. Milkdeliveries intheEC-12 increased sharply inthebeginning ofthenewquota yearinApril.
Production intheECdairy sector inthefirstthree months ofcalendar year1995 compared tothe
corresponding period ofcalendar year1994, wasasfollows:
January-March 1995 compared to
January-March 1994
Milk deliveries +2.0%
Production
Skimmed milkpowder +1.0%
Other milkpowders Nochange
Ofwhich:
Whole milkpowder -2.0%
Butter +8.0%
Cheese +2.5%
42. Milkdeliveries andproduction patterns intheEC-15 forthefirstthree months of1995 were
similar totheEC-12. Milkdeliveries fortheEC-15 werealso2percentupon1994; butter production
was7to8percentabove 1994, skimmed milkpowder production was1.7percentup,whole milk
powder production was2percentdown andcheese production 2.4percentupcompared tothefirst
quarter of1994.
43. Since January 1994, there hadbeen amove away from whole milk powder towards
butter/skimmed milkpowder andcheese. Theoutput ofcheese wascontinuing toincrease.
44. Thebutter market remained buoyant. Themarket price atECU 328/100 kgs., wasabout
10percentabove theeffective support level. Thestrong demand forbutter withsubsidies foruse
inthepastry andice-cream sector ledtoreductions intheaidlevels inthepastmonths. Theaidlevel
hadbeenreduced from ECU 145/100 kgs.inMarch toECU 127/100 kgs.inJune. Thevolume of
butter requested under thisscheme in1995uptoJuneamounted to215,000 tonscompared withabout
208,000 tonsin1994, anincrease ofabout 3percent.
45. Theskimmed milkpowder market wasalsobuoyant withprices atabout ECU 219/100 kgs.
orabout 6percentabove theeffective support level. Some 45,000 tonsofskimmed milkpowder
weresoldfrom intervention fortheanimal feedsector from January toJune1995. During thefirst
fourmonths of1995 thevolume ofskimmed milkusedbythecalffeedandcasein sectors fellby
1.8percent. There wasanincrease inuptake inthecasein sector andadecrease intheuptake inthe
calffeedsector. TheCommission tookadecision toreduce thecasein aidlevelfromECU 7.5/100 kgs.
toECU 6.75/100 kgs.ofliquid skimmed milkusedinthemanufacture ofcasein. Thisreduction will
become effective before theendofJune1995.IDA/CMP/3
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46. Thestocks ofdairy products inintervention stores remained atverylowlevels. However,
therewasaseasonal build upofpublicly financed private butter stocks. Thetotalbutter stocks (public
andprivate) werecurrently at89,000 tons. Present skimmed milkpowder stocks wereat26,000 tons.
Thevolume ofcheese subject toprivate storage contracts wasrelatively stable at97,000 tons.
47. Theinformation onexport volumes for1995 available totheCommission wasscarce. The
indications forthefirstmonth ortwomonths of1995 inasmall number ofmember States, werethat
skimmed milkpowder, butter andbutter oilexports showed some recovery while cheese exports
decreased. However, datafor1994 wasnowcomplete. Theabsolute volumes exported in1994 and
thepercentage changes compared withthecorresponding datafor1993 were thefollowing:
Quantity Percentage change
('000tons) 1994/93
Fresh products 328 -0.3%
Condensed milk 286 -18.5 %
Skimmed milkpowder 138 -51.2 %
Whole milkpowder 586 +0.7%
Butter 83 -20.9 %
Butter oil 58 -24.7 %
Cheese 510 -1.8%
48. Export refunds fordairy products weredecreased on12May1995bybetween 3percentand
5percent, except forbutter andcheese. Export refunds were again reduced attheendofMayby
afurther 3percentforselected powders andcondensed milks andby5percentforcheese.
49. Theworld market fordairyproducts remained firmasof1July1995when theEuropean Union
willimplementtheUruguayRoundAgreementonthemilksector.Anumberoffactorswerecontributing
tothisfirmsituation, mainly thetightsupply situation andthereasonable attitude oftheEuropean Union
andtheUnited States withregard toexport andsubsidy policies. World market prices wererelatively
strong inUSdollar terms buttheUSdollar washistorically weak. TheCommittee willneedtomonitor
these factors closely forthenextsixtoninemonths.
50. TheEuropean Union 'scalculated export prices forthesecond quarter of1995wereasfollows:
US$pertonf.o.b.
Skimmed milkpowder 2,100-2,260
Whole milkpowder 2,150-2,450
Butter 2,220-2,500
Butter oil 2,350-2,700
Cheese 2,250-2,375
Australia
51. Milkproduction in1994/95 should totalaround 8,200 million litres. While thiswasanincrease
ofaround 1.5percenton1993/94 production, itwasslightly below theinitial estimate of
8,300 million litres. Thelower thanexpected production wasduetoavariety offactors including
drought conditions inseveral milkproducing regions andhigher feedgrain prices duetodrought
conditions ingraingrowing regions ofAustralia. Most dairying regions experienced verygoodautumn
conditions thereby providing asolidbaseforbothlate1994/95 andearly1995/96 seasonal production.IDA/CMP/3
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Assumingthatreasonableseasonalconditionswillcontinue,itwasexpectedthat1995/96milkproduction
willbearound 8,500 million litres, anincrease ofaround 3.5percentover1994/95 output. Other
important factors influencing 1995/96 production include: easing infeedgrain prices; increased farm
gateprices formanufacturing milkduetothecontinued upward trend inworld prices formostmajor
traded dairy products; some increase inthenational dairy herd; and,general productivity gains.
52. Production ofmost manufactured products wasslightly lower in1994/95 thanin1993/94.
Thiswasduetothelower milkfatandprotein content ofmilkin1994/95 caused bythealtered feed
regimes indairying regions affected bythedrought. Theexception waswhole milkpowder which
recorded ariseinproduction asaresult ofrecent increased production capacity andimproved market
opportunities.
53. Domestic demand fordairy products increased in1994/95 duemainly toimproved economic
conditions inAustralia. Themarket hasalsobeensupported byfurther newproduct development and
associated marketing effort. Demand opportunities alsoremained strong inthenon-retail sector, buoyed
byincreased growth inboththefastfoodandfoodservice/catering sectors. After several years in
which percapita consumption ofliquid milkremained virtually unchanged, therewasaslight increase
in1994/95. Thisreflected increased marketing effort andgenerally altered business strategies as
processors responded toalessregulated operating environment.
54. Asof1July1995, theMarket Support Scheme (which hadoperated since 1986) willcease.
Itsreplacement, theDomestic Market Support Scheme, aimstoprovide thedomestic dairy industry
withthesameoverall levelofbenefit astheMarket Support Scheme. Themainchanges include altered
dairyindustryleviesandthepaymentoftheschemebenefitsdirecttofarmers.UndertheMarketSupport
Scheme, thebenefits werepaidtomanufacturers andwerepassed ontofarmers aspartofmanufacturers '
farm gateprice formanufacturing milk. Under thenewscheme, there willbenomonies paidto
manufacturers involved inexporting. Thechange totheDomestic Market Support Scheme hasnot
resulted inincreases ineither domestic market prices orfarmgatereturns -rather themechanism has
beenaltered, withincreased transparency tothenetbeneficiaries, i.e.farmers.
55. International dairy prices (with theexception ofcheese prices which haveremained stable)
havecontinued torisesteadily from historically highlevels inMarch, despite theseasonal peakin
EUmilkproduction having beenreached inMay. Thesteady price increases wereduetocontinuing
strong demand from Asia, verylowEUandUSstocks, aweak USdollar, unavailability ofproduct
fromAustralia andNewZealand forspottrade andtheimpact ofsubstantial EUexport subsidy cuts
in1994-95.
56. Anumber offactors haveinfluenced higher butter andanhydrous milkfat(AMF) prices,
including tightEUandUSmarket conditions reflected inverylowbutter stocks; theimpact of
substantial EUexport subsidy cutsof17.2percentforbutter in1994-95; continuing weakness of
theUSdollar against major EUcurrencies. Currently world butter prices were intherange of
US$2,000-US$2,200 perton(US$650-US$850 above theIDAminimum price), while AMF prices
ranged fromUS$2,300-US$2,400 perton(atleastUS$675 above theIDAminimum). EUpublic stocks
wereathistorically verylowlevels, andstood at27,684 tonson1June1995. Similarly, USpublic
stocks were historically lowat4,851 tonsasof19May1995.
57. Skimmed milk powder (SMP) wascurrently trading ataround US$2,300 pertonor
US$1,100 pertonabove theIDAminimum price. Powder prices haveresponded tosolidinternational
demand andverylowEUandUSpublic stocks. EUpublic stocks ofSMP stood at31,658 tonson
1June1995, while USstocks totalled 10,146 tonson19May1995. InJapan, manufacturing demand
forSMP wasstrong andstocks were low. Thestrong SMP demand resulted intheLIPC calling a
Junetender of17,000 tonsfordelivery intwotranches inJulyandAugust. Product unavailabilityIDA/CMP/3
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inAustralia andNewZealand resulted inproduct being sourced fromEurope, withtheexception of
899tonsfrom Canada.
58. Whole milkpowder (WMP) prices maintained theirstrength and(incontrast tothesituation
inrecent times) were actually higher thanSMP prices. WMP prices were currently intherange of
US$2,300-US$2,400 perton,which wasfromUS$1,050-US$1,150 pertonabove theIDAminimum
price. WMP price increases thisyearwere duetovarious factors including higher milkfatprices,
lower NewZealand production (andhence exports) andstrong demand fromRussian andAsian markets.
Demand inAsian markets resulted from growing consumer demand forWMP sachets fordrinking
milkpurposes inpreference tothetraditional reliance onsweetened condensed milk.
59. Incontrast toworld prices fortheother major traded dairy products, world prices forcheese
remained stable. BulkCheddar wascurrently trading intherange ofUS$1,950-US$2,000 perton,
which wasatleastUS$450 pertonabove theIDAminimum price. Thestabilization ofworld cheese
prices wasdue,inpart,tohigher production intheEU. EUmanufacturers haveinvested heavily in
cheese-making facilities reflecting itsvalue asadomestic growth sector, unlike butter/SMP. For
economic reasons (capacity utilization) itwasmore viable tokeepcheese plants running thanswitching
tobutter/SMP despite thelatter'scurrent higher returns.
H. Adoption ofreport totheCouncil
60. TheCommittee agreed thatasummary report ofthediscussions atthepresent session would
besubmitted totheCouncil. Thisreport wassubsequently circulated asIDA/CMP/2.
I. Date ofnextmeeting
61. Thenextregular session oftheCommittee willbeheldon18-19 September 1995, subject to
confirmation bytheSecretariat.