The politics of cheese
I enjoy a wide variety of dairy products. And I especially like cheese. All sorts of cheese: hard, soft, sharp, mild, pungent, curds, sliced, shredded, cubed, balled, spread, powdered, creamed and whipped.
A little tossed into my breakfast omelet; a slice, perhaps two, on my sandwich at lunch; a touch grated or sprinkled into my salad and/or over my pasta and/or drizzled on my veggies at supper. And then, of course, there’s pizza, cheesy burritos, mac and cheese, cheesecake, cheese Danish, wine and cheese. I can go on.
According to the U.S. Bureau of Labor Statistics, the average retail price for a gallon of milk, nationally, hit $2.97 last year, the lowest it’s been in 10 years. For consumers, that’s great news. For dairy farmers, though, it means hard times, as they struggle with what looks like yet another year of low prices. Unfortunately, profits continue to elude the people actually producing the food.
To make things worse, there’s currently a surplus of more than 1.4 billion pounds of cheese in this country, the largest cheese surplus ever reported by the United States Department of Agriculture. And they’ve been keeping records for more than a century.
The last time the United States had this much cheese in storage was in the 1980s, when the surplus reached 1.2 billion pounds. At that time, the Federal government implemented a program to prop up the dairy industry by buying up most of the oversupply and distributing it to needy Americans through food distribution programs.
New York is the country’s fourth largest cheese producing state. More than 860 million pounds of cheese were produced here in 2017. That’s 45 pounds of cheese for every man, woman, and child in the state. And while that may sound like a lot of cheese for one person to devour, cheese consumption in the US, in 2017, was 39 pounds per person. Cheddar and mozzarella were the most popular varieties (and have been, for years.)
Total U.S. cheese production in 2017 was 12.7 billion pounds. In that same year, global sales from cheese exports totaled $30.4 billion. This country was the sixth-largest exporter, with international sales of $1.5 billion; 4.8% of total worldwide sales.
Andrew Novakovic is the E.V. Baker Professor of Agricultural Economics at Cornell University’s Charles H. Dyson School of Applied Economics and Management. He’s also Dyson’s director of Land Grant Programs. His interests and expertise are in understanding the economics of agricultural and food product markets, with a particular focus on dairy foods. In a recent interview with National Public Radio’s Jeremy Hobson, for the program, Here and Now, Professor Novakovic explained that the glut is, to a certain extent, “just the amount of milk being produced on farms,” but that, “part of it is changes in the domestic use of that milk.”
He cited trade as another factor, and called that situation “a self-inflicted wound.” He was referring to growing concerns among experts about allies raising tariffs on American products and signing trade deals without the United States, in response to U.S. trade measures that President Trump put into place to correct agreements that the president believes are inherently unfair and hurt American companies and workers.
As of September 2018, annual cheese shipments to Mexico were down more than 10% and shipments to China were down 63 percent, according to the U.S. Dairy Export Council (USDEC), a non-profit, independent membership-based trade group. Last year, both countries placed new or additional tariffs on U.S. dairy products.
During the NPR interview, Novakovic told Hobson that the “disruption has been particularly difficult for the cheese industry,” and noted that “Mexico is far and away our biggest customer and one of the few foreign customers we can serve with a truck instead of with a boat,” adding “If we could get ourselves back in a better trade situation, that would help quite a bit.”
In March 2018, the European Commission, an institution of the European Union responsible for proposing legislation, implementing decisions, upholding EU treaties and managing the day-to-day business of the EU, announced that “practically all trade in goods between the EU and Mexico will now be duty-free,” including those in the agricultural sector. The decision, essentially, provided European exporters of cheese, as well as poultry, pork, pasta, and chocolate, preferential or tariff-free access to the Mexican market.
At the same time, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, the 11 remaining members of theTrans-Pacific Partnership trade deal (President Trump withdrew the United States from the TPP on his first day in office), formally entered into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or TPP11, a revised trade pact intended to reduce tariffs between participating nations. The CPTPP opens up six new markets for Mexican goods and creates the world’s third largest trade bloc after the EU and the North American Free Trade Agreement. Uncertainties relating to NAFTA persuaded Mexico to seek new trade agreements and export markets.
Soon after that, the EU and Mexico, as part of a revised EU/ Mexico Global Agreement on trade, approved labeling restrictions, which provide preferential access for many European-produced cheeses. For example, asiago cheese can no longer be labeled and sold as asiago, unless it comes from the alpine region of northern Italy, where it originated. American-made asiago can still be exported to Mexico, but it must be sold using another name.
An Informa Agribusiness (agribusinessintelligence.informa.com) analysis commissioned by USDEC and released last August predicts Chinese tariffs on U.S. dairy products will cost U.S. dairy farmers $12.2 billion by 2023 if they remain in place. More information can be found online at usdec.org.