Whole and Non Fat Dry Milk Annual

An Expert's View about Food , Beverages and Tobacco in Chile

Posted on: 13 Nov 2011

Chile’s dairy production is expected to increase again this year as weather has been favorable for grass production which is the basic feed input for milk production.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 10/13/2011 GAIN Report Number: CI1038 Chile Dairy and Products Annual Whole and Non Fat Dry Milk Annual Approved By: Rachel Bickford, Agricultural Attaché Prepared By: Luis Hennicke, Agricultural Specialist Report Highlights: Chile?s dairy production is expected to increase again this year as weather has been favorable for grass production which is the basic feed input for milk production. Executive Summary: Chile?s milk production is expected to increase again in 2011 (Jan-Dec). As a result of good weather conditions, an important factor for pasture production, Chile?s basic feed input, favored feed and milk production. The industry is projecting continued expansion for next years? milk production as large producers are increasing operation and most farmers continue improvements in technology and animal genetics. Commodities: Dairy, Milk, Fluid Select Production: Chile?s total milk output increased 7.7 percent from 2.35 billion in 2009 to 2.53 billion liters in 2010. The increase in production is mainly due to the excellent weather conditions during last spring (Sept- Dec 2010) and summer with enough rain and sun which favored the production of grass. Abundant grass also allowed farmers to conserve enough and of a good quality hay and silage which favored milk production during this past winter months (Jun ? Sep 2011). Over 80 percent of the milk production herd is fed in grazing fields, supplemental feed is used mainly by large producers and during the winter months. Excellent meteorological conditions during the spring 2011 and summer of 2011 (January through March) mentioned earlier, also allowed the industry to increase total milk reception by 5.7 percent during the first 8 months of 2011, when compared to the same period of last year. TABLE - Dairy Production Total Fluid Dry Butter Cheese Farmers Yogurt Conden. Rec?d by Milk Milk Cheese Milk Industry Year --Million Liters-- --------------------------Thousand Kilograms-------------- 1980 592 127 32,566 4,016 13,902 3,868 15,054 7,835 1990 890 138 45,126 6,448 24,513 5,422 0,939 8,325 1995 1,358 225 61,418 6,651 40,816 5,873 67,663 8,674 1997 1,497 271 65,726 9,582 43,712 7,106 79,423 10,219 1998 1,530 269 70,877 11,159 46,528 7,631 82,243 13,244 1999 1,470 279 60,597 11,007 44,777 7,034 100,203 15,742 2000 1,447 275 59,669 9,855 44,718 7,167 106,624 24,400 2001 1,637 291 71,464 11,836 50,417 7,150 95,249 25,418 2002 1,605 296 67,710 11,551 53,075 7,480 127,057 24,190 2003 1,563 293 61,867 10,849 53,037 7,555 139,344 30,558 2004 1,676 289 63,633 13,084 58,849 8,296 159,828 38,698 2005 1,723 298 62,792 14,655 67,176 10,507 189,436 39,645 2006 1,818 319 69,491 17,157 62,072 9,088 157,980 43,426 2007 1,871 330 74,204 18,229 61,745 8,579 162,505 45,287 2008 1,972 323 102,955 16,765 57,369 7,960 178,215 41,501 2009 1,773 341 73,431 17,102 56,526 8,139 191,933 33,255 2010 1,896 367 82,321 21,086 64,558 8,349 198,825 36,829 2010* 1,139 244 46,272 13,283 39,914 5,307 129,205 22,308 2011** 1,203 246 51,555 13,023 43,779 6,045 144,657 20,295 Note: Year 2010* January through July Year 2011** January through July Source: Ministry of Agriculture Chile currently has an estimated 16,000 dairy farmers with approximately 650,000 cows in production, of which 80 percent are considered small producers and the whole dairy industry employs directly and indirectly an estimated 35,000 persons. Trade: Other Latin American countries are the main destination for Chile?s dairy exports, headed by Mexico with 23 percent and Venezuela with a 16 percent of total Chilean dairy exports. Close to 40 percents of these are whole and non-fat dry milk. Milk Product Export by Country of Destination January - July Countries Value (Thousand US$ FOB) Participation 2010 2011 % México 32,645 29,445 23.2 Venezuela 14,277 20,645 16.2 Brazil 8,415 14,046 11.1 U.S. 8,460 10,447 8.2 Peru 7,273 8,973 7.1 China 3,265 7,583 6.0 So. Korea 1,208 5,580 4.4 Colombia 493 5,486 4.3 Costa Rica 4,642 4,919 3.9 Algeria 1,090 3,985 3.1 Others 10,152 15,984 12.6 Total 91,920 127,093 100.0 Source: Ministry of Agriculture Argentina was again the main supplier of dairy products during 2009. The US is Chile?s second supplier of dairy products. Milk Product Imports by Country of Origin January - July Countries Value (Thousand US$ FOB) Part. 2010 2011 % Argentina 17,444 34,996 49.5 EE.UU. 6,853 19,364 27.4 New Zealand 2,121 5,903 8.3 Uruguay 2,215 2,480 3.5 Brazil 2,068 2,307 3.3 Canada 76 1,446 2.0 Peru 1,008 1,068 1.5 France 618 813 1.1 Netherlands 155 654 0.9 Denmark 291 307 0.4 Others 990 1,383 64.7 Total 33,839 70,721 100.0 Source: Ministry of Agriculture The dairy industry?s export exceeds imports in volume and value. In CY2010 the trade balance expressed in fluid milk equivalent increased when compared to the previous year. Trade balance, January - July 2011 Volume (M.T. Thous.Ltrs) Expressed in fluid milk equivalent (Thous. Liters) Item 2008 2009 2010 2011 2008 2009 2010 2011 IMPORTS UHT Products 205 0 0 103 205 0 0 103 NFDM 4,960 3,147 818 4,643 56,990 36,159 9,399 53,348 Whole dry milk 311 1,111 125 2,618 2,612 9,332 1,050 21,991 Cream 0 1 1 0 0 1 1 0 Evaporated milk 621 869 811 636 3,105 4,345 4,055 3,180 Condensed milk 349 303 273 95 942 818 737 257 Yogurt 3,911 1,920 1,280 1,672 3,911 1,920 1,280 1,672 Butter 163 558 982 722 163 558 982 722 Cheese 4,507 5,305 3,894 5,996 45,070 53,050 38,940 59,960 Caramel milk & others 1,935 1,772 1,840 1,417 4,257 3,898 4,048 3,117 Dairy drinks 3 1 13 17 3 1 13 17 Total 117,259 110,083 60,505 144,367 EXPORTS UHT Products 333 1,411 269 573 333 1,411 269 573 NFDM 1,454 53 1,521 1,616 16,706 609 17,476 18,568 Whole dry milk 8,107 9,918 6,712 11,287 68,099 83,311 56,381 94,811 Cream 131 152 146 117 131 152 146 117 Evaporated milk 2 17 13 2 10 85 65 10 Condensed milk 22,010 13,521 15,958 16,057 59,427 36,507 43,087 43,354 Yogurt 21 24 24 25 21 24 24 25 Butter 835 519 1,303 1,703 835 519 1,303 1,703 Cheese 7,965 5,451 6,454 6,470 79,650 54,510 64,540 64,700 Caramel milk & others 2,210 2,156 2,079 1,914 4,862 4,743 4,574 4,211 Dairy drinks 45 35 35 21 45 35 35 21 Total 230,119 181,906 187,899 228,092 Balance Jan- July 112,860 71,823 127,395 83,725 Source: ODEPA. Stocks: Policy: Although Chile bound its dairy product import duties (HS 04.02, 04.05, 04.06) at 31.5 percent in the Uruguay Round, a flat import tariff of 6 percent is applied on nearly all imported dairy products. Additionally, a value-added tax of 19 percent is charged at the consumer level on all goods, domestic or imported. Chile has reduced import duties only for Colombia and the United States for whole and non- fat dry milk as a result of the Free Trade Agreements with these countries. U.S. non-fat dry milk has entered duty free since 2007 and whole dry milk since 2011. Colombia will have duty free access for both, whole and non-fat dry milk by 2012. For all other countries that have signed agreements with Chile, dairy products are excluded from the tariff reduction schedule. As a result of Chile?s trade agreements, the dairy industry expects to keep increasing its export market share. The US ? Chile FTA provides for a 3,500 metric ton duty free quota for Chilean dairy products. This volume increases 10 percent each year until Chile gains duty free access in 2016. The agreement with the EU offers a duty free quota of 1,500 Tons, with a yearly increment of 5 percent. The agreement reached with South Korea gives only a 1,000 Metric Ton duty free quota for whey powder, but there is an agreed upon reduction in the high duties for dairy products like yogurt and cheese in 10 years. Duties applied to these products are 40 and 38 percent respectively. No preferences were agreed for dairy products in the Chile-Japan trade agreement. In order to increase domestic consumption of milk and milk products the GOC, processers and producers continue with a promotional campaign, which is evenly financed by the three parties. These three players have formed and finance an association (Promolac) that manages the contributed funds in promotional campaigns, mainly through TV and printed media. U.S. import quotas Tariff-free dairy products (metric tons) Year Milk powder Condensed milk Butter Cheese 1 828 489 300 1,432 2 866 523 321 1,532 3 948 560 343 1,639 4 1,014 599 368 1,754 5 1,085 641 393 1,877 6 1,161 686 421 2,008 7 1,243 734 450 2,149 8 1,330 785 482 2,229 9 1,423 840 515 2,460 10 1,522 899 552 2,633 11 1,629 962 590 2,817 12 Unlimited Quotas allocated in order of arrival. Dairy: Chile's tariff reduction schedule in trade agreemen (1)ts Country of origin 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Whole milk powder 0402.2118 Australia 4,284% 3,426% 2,568% 1,710% 0,852% 0% 0% 0% 0% 0% Bolivia Goods released from duties Canada Current general tariff of 6%. Goods excluded from relief China Free Colombia 2,04% 1,02% 0% Korea Free Costa Rica Current general tariff of 6%. Goods excluded from relief. Cuba Current general tariff of 6%. Goods excluded from relief. Ecuador Current general tariff of 6%. Goods excluded from relief. El Salvador Current general tariff of 6%. Goods excluded from relief. US 0,75% 0,00% Guatemala Current general tariff of 6%. Goods excluded from relief. Honduras Free India Current general tariff of 6%. Goods excluded from relief. Japan Current general tariff of 6%. Goods excluded from relief. México Current general tariff of 6%. Goods excluded from relief. Panamá Free Peru 3,00% 1,98% 1,02% 0,00% Venezuela Current general tariff of 6%. Goods excluded from relief. EFTA Island Norway Current general tariff of 6%. Goods excluded from relief. Switzerland Mercosur Free P4 6% 6% 5% 4% 3% 2% 1% 0% European Union Current general tariff of 6%. Goods excluded from relief. NFDM 0402.1000 Australia 4,284% 3,426% 2,568% 1,710% 0,852% 0% 0% 0% 0% 0% Bolivia Free Canada Current general tariff of 6%. Goods excluded from relief. China Free Colombia 2,04% 1,02% 0% So. Korea Free Costa Rica Current general tariff of 6%. Goods excluded from relief. Cuba Current general tariff of 6%. Goods excluded from relief. Ecuador Current general tariff of 6%. Goods excluded from relief. El Salvador Current general tariff of 6%. Goods excluded from relief. US Free Guatemala Current general tariff of 6%. Goods excluded from relief. Honduras Free India Current general tariff of 6%. Goods excluded from relief. Japan Current general tariff of 6%. Goods excluded from relief. México Current general tariff of 6%. Goods excluded from relief. Panamá Free Peru 3,00% 1,98% 1,02% 0,00% Venezuela Current general tariff of 6%. Goods excluded from relief. EFTA Island Norway Current general tariff of 6%. Goods excluded from relief. Switzerland Mercosur Free P4 6% 6% 5% 4% 3% 2% 1% 0% European Union Current general tariff of 6%. Goods excluded from relief. Description and Coding System, 8-digit level. This code can be different in each country. Dairy: tariff reduction schedule of the partner countries in trade agreements (1) Country of or 3 2014 2015 2016 2017 2018 2019 ig 10 2011 2012 201in 20 Whole milk powder 0402.2118 Australia Free Bolivia Free Canada Current general tariff of 264.9%. Goods excluded from relief China 5% 4% 3% 2% 1% 0% C 13,20olombia % 6,80% 0% So. Korea Current general tariff of 180,4%. Tariff reduction will be negotiated after Doha. Costa Rica Current general tariff of 65%. Goods excluded from relief. Cuba Free Ecuador Current general tariff of 25%. Goods excluded from relief. El Salvador Current general tariff of 15% y 20% depending on container. Goods excluded from relief. $0,0/ $0,0/kg $0,0/kg $0,0/kg $0,0/kg $0,0/ $0,0/ $0,0/ $0,0/ $0,0/ kg o over over over over kg kg kg kg kg ver US 1,243 1.330 ton 1.423 9 ton 1.522 1.62 ton ton $1 $0.873/k $0 ton ,655/k $0.436/k .09 2 g g $0 - - - ,218 - -/ g /kg kg Guatemala Current general tariff of 15%. Goods excluded from relief. Honduras Current general tariff of 15% y 20% depending on container. Goods excluded from relief. India Current general tariff of 60%. Goods excluded from relief. Japan Current general tariff of 35%. Goods excluded from relief. M urrent general tariff of 63%. Tariff preference of 30% import permit con with preferential treatment éxico C otherwise a tariff is applied. Panamá Current general tariff of 62%. Goods excluded from relief. Peru Pay of additional variable levies to the advalorem tariff. In July of 2013 will enter free of duty. Venezuela Current general tariff of 20%. Goods excluded from relief. EFTA Island Current general tariff of 30%. Goods excluded from relief. Norway Current general tariff of 23,99 Nok/kg. Goods excluded from relief. Switzerland Current general tariff of 1340 Fr/100kg. Goods excluded from relief. Mercosur Free P4 Free European Un Current general tariff of 130,4 euro/100kg - 135,7 euro/100kg. Goods excluded from relief. ion NFDM 0402.1000 Australi Free a Bolivia Current general tariff of 10%. Product without preference. Canada Current general tariff of 201% but not less than $2,82/kg. Goods excluded from relief. China 5% 4% 3% 2% 1% 0% Colombi a 13,20% 6,80% 0% So. K Current general tariff of 180,4%. Tariff reduction will be negotiated after Doha. orea Costa R Current general tariff of 65%. Goods excluded from relief. ica Cuba Free Ecuador Current general tariff of 25%. Goods excluded from relief. El Salvado Current general tariff of 20%. Goods excluded from relief. r US $0,0/kg $0,0/kg $0,0/kg $0,0/kg $0,0/kg $0,0/ $0,0/ $0,0/ $0,0/ $0,0/ over over over over over kg kg kg kg kg 734 ton 785 ton 840 ton 899 ton 962 ton 49,6cent/ 39,68cen 29,76cen 19,84cen 9,82cent kg t/kg t/kg t/kg /kg Guatem a of 15%. Goods excluded from relief. la Current general tariff Hondura Current general tariff of 15%. Goods excluded from relief. s India Current general tariff of 60%. Goods excluded from relief. Japan Current general tariff of 35%. Goods excluded from relief. M ent general tariff of 63%. Tariff preference of 30% import permit with preferential treatment otherwise a éxico Curr tariff will be applied. Panamá Current general tariff of 62%. Goods excluded from relief. Peru Pay of additional variable levies to the advalorem tariff. In July of 2013 will enter free of duty. Venezue Current general tariff of 20%. Goods excluded from relief. la EFTA urrent general tariff of 30%. Goods excluded from relief. Island C No Current general tariff of 22,87 Nok/kg. Goods excluded from relief. rway Switzerl Current general tariff of 323 Fr/100kg. Goods excluded from relief. and Mercosu Free r P4 Free Europea n 5,4 eur/100kg. Goods excluded from relief. Union Current general tariff of 118,8 eur/100kg - 12 Notes: (1) Based on the Harmonized Commodity Description and Coding System, 8-digit level. This code can be different in each country. (2) Whole powdered milk with fat content below 35%. For products with more than 35% fat is applied tariff of U.S. $ 1,556 per kilo. (C) It applies duty-free quota to 11 year life of the agreement. For amounts exceeding the duty-free quota entitlements would be maintained over years 1 to 7 and will remove tariffs from year 8 in five equal steps and made those goods duty free to count from January 1, 2012 Commodities: Dairy, Dry Whole Milk Powder Production: Close to 75 percent of Chile?s production of dry milk is whole milk powder. Production of whole dry milk increased in CY2010 when compared to both the previous year in line with a larger total milk production. For 2011 production of whole dry milk is expected to increase slightly as a result of a predicted increase of milk output. Total milk production will expand as weather has been more favorable for grass production which is the basic food in most milk production regions. For 2012 the industry predicts another slight increase in production. Consumption: Dry milk is available for sale in all Chilean supermarkets and smaller grocery stores. Families that do not consume large quantities of milk or lack refrigerators to keep UHT fresh after opening prefer dry rather than fluid milk. Ultra high heat treated milk (UHT milk) is very common in Chile because you can store the containers for long time without refrigeration, but once opened the containers have to be kept in refrigerators. Government food programs also account for a significant proportion of dry milk consumption. Government tenders for dry milk may be filled by either domestic or imported product. During the winter months the industry reconstitutes fluid milk from dry milk produced during the summer, in order to produce dairy products that have a constant demand throughout the year. Trade: Chile?s whole dry milk imports depend on domestic production and the exchange rate. Although, Chile's milk processing industry projects are to increase its export markets in the coming years as they become more competitive and the price incentive increases, industry sources indicated that this will not happen if the exchange rate with the US dollar keeps deteriorating. The exchange rate has fallen again from CH$494 per dollar to CH$467 per dollar from August 2010 to August 2011. Chile?s main export markets are in Latin America, particularly Venezuela, Peru, Colombia and Mexico. Production, Supply and Demand Data Statistics: Dairy, Dry Whole Milk Powder Chile 2010 2011 2012 Market Year Begin: Jan 2010 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012 USDA Official New Post USDA Official New Post USDA Official New Post Beginning Stocks 10 10 9 14 10 Production 63 63 68 65 68 Other Imports 1 1 1 3 1 Total Imports 1 1 1 3 1 Total Supply 74 74 78 82 79 Other Exports 14 9 14 18 15 Total Exports 14 9 14 18 15 Human Dom. Consumption 51 51 52 54 55 Other Use, Losses 0 0 Total Dom. Consumption 51 51 52 54 55 Total Use 65 60 66 72 70 Ending Stocks 9 14 12 10 9 Total Distribution 74 74 78 82 79 1000 MT Export Trade Matrix Country Chile Commodity Dairy, Dry Whole Milk Powder Time Period Jan-Dec Units: M.T. Imports for: 2009 2010 2010 (Jan-Aug) 2011 (Jan-Aug) U.S. 582 U.S. 582 U.S. 209 U.S. 428 Others Others Others Others Venezuela 8791 Brazil 2675 Brazil 2675 Brazil 2800 Algeria 2150 China 1350 China 950 China 2000 Peru 972 Venezuela 1023 Venezuela 800 Venezuela 2577 China 400 Cuba 825 Cuba 525 Algeria 1125 Colombia 251 Algeria 750 Dominican Rep. 500 Colombia 1075 Mexico 175 Dominican Rep 500 Algeria 450 Cuba 700 Guatemala 113 Peru 326 Peru 326 Peru 527 Dominican Rep 50 Russia 225 Turkey 100 Syria 175 Senegal 50 Colombia 150 Guatemala 79 UA Emirates 150 So. Africa 50 Turkey 100 Senegal 50 Guatemala 144 Total for Others 13002 7924 6455 11273 Others not Listed 284 276 139 364 Grand Total 13868 8782 6803 12065 Import Trade Matrix Country Chile Commodity Dairy, Dry Whole Milk Powder Time Period Jan-Dec Units: M.T. Imports for: 2009 2010 2010 (Jan-Aug) 2011 (Jan-Aug) U.S. 0 U.S. 0 U.S. 0 U.S. 0 Others Others Others Others Uruguay 1400 Argentina 1073 Argentina 304 Argentina 2355 Argentina 232 Uruguay 102 France 50 Uruguay 150 France 25 France 63 Germany 1 N. Zealand 35 N. Zealand 17 France 26 Total for Others 1657 1255 355 2566 Others not Listed 5 2 0 226 Grand Total 1662 1257 356 2792 Commodities: Dairy, Milk, Nonfat Dry Production: Chile?s NFDM production rose in 2010, as milk output increased. Production in 2011 is expected to fall slightly in spite of an increase in total milk production as was indicated by the industry. Consumption: Chile?s food industry determines to a great degree the consumption level of NFDM in Chile. Leading products made from NFDM are chocolate, ice cream and yogurt. The consumption rate of these products is in line with Chile?s economic growth. For 2005 and beyond, utilization is expected to continue to increase, but at a slower rate. Trade: The US continues to be an important supplier of NFDM (non fat dry milk) for Chile. Competitive US prices for NFDM is the main reason for US milk imports, according to industry sources. Production, Supply and Demand Data Statistics: Dairy, Milk, Nonfat Dry Chile 2010 2011 2012 Market Year Begin: Jan 2010 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012 USDA Official New Post USDA Official New Post USDA Official New Post Beginning Stocks 2 2 1 1 1 Production 16 19 17 17 17 Other Imports 5 3 5 5 5 Total Imports 5 3 5 5 5 Total Supply 23 24 23 23 23 Other Exports 2 3 0 2 2 Total Exports 2 3 0 2 2 Human Dom. Consumption 20 20 21 20 20 Other Use, Losses 0 0 Total Dom. Consumption 20 20 21 20 20 Total Use 22 23 21 22 22 Ending Stocks 1 1 2 1 1 Total Distribution 23 24 23 23 23 1000 MT Export Trade Matrix Country Chile Commodity Dairy, Milk, Nonfat Dry Time Period Jan-Dec Units: M.T. Imports for: 2009 2010 2010 (Jan-Aug) 2011 (Jan-Aug) U.S. 0 U.S. 0 U.S. 0 U.S. 100 Others Others Others Others Peru 100 Mexico 1000 Mexico 875 Brazil 1408 Venezuela 75 Brazil 931 Peru 439 Venezuela 100 Aruba 8 Peru 460 Brazil 250 Peru 11 Venezuela 275 Venezuela 200 Aruba 2 Trinidad & Tobago 54 Japan 18 Japan 18 Haiti 1 Haiti 1 Total for Others 183 2739 1783 1521 Others not Listed 0 2 0 23 Grand Total 183 2741 1783 1644 Import Trade Matrix Country Chile Commodity Dairy, Milk, Nonfat Dry Time Period Jan-Dec Units: M.T. Imports for: 2009 2010 2010 (Jan-Aug) 2011 (Jan-Aug) U.S. 674 U.S. 2724 U.S. 1109 U.S. 3470 Others Others Others Others Argentina 2464 Argentina 395 Argentina 345 Argentina 1159 Uruguay 1366 Uruguay 200 Uruguay 125 Canada 300 France 68 France 23 Netherlands 51 Uruguay 50 Brazil 25 Total for Others 3830 663 493 1585 Others not Listed 24 76 76 2 Grand Total 4528 3463 1678 5057
Posted: 13 November 2011

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