a2 Milk faces US challenges on claimed benefits, CPTPP benefits to start soon, huge new Canterbury dairy expansion

By Guy Trafford

a2 milk began its foray into the USA market in 2015 and is now sold in over 6,000 stores, including the retail giant Walmart. Given the battles a2 has had to absorb over the years, particularly in New Zealand with Fonterra, it wouldn’t have been surprising if there was some push back from the more conventional milk producer companies - that is, those not selling A2 milk.

Well, it may have taken three years but a legal challenge has finally been mounted against the kiwi company. Coming from the US National Milk Producers Federation and with support from the US National Advertising Division, a2 is being challenged over its claims that A2 milk is kinder on the digestive system and is referring them to the Federal Trade Commission.

a2 have stated that the challenges are unfounded and are based upon a flawed study. With all the ‘discussions’ the company has had over the last decade they will be well prepared to rebuff any challenges.

Given the USA A2 is sourced from within the US a challenge seems to provide no winners as the a2 story has brought many potential consumers back to drinking milk and the horse seems to have well and truly bolted

Minister for Trade David Parker ratified the CPTPP agreement last week and then Canada and now Australia has signed This brings the number of nations that have formally ratified the agreement to six out of a potential 11 countries that have indicated that they will sign up. The new signee’s join Mexico, Japan and Singapore who have already signed up and triggers the implementation of the treaty in 60 days time. Reductions in tariffs and improved access for exports should start to be seen in 2019.

While this is occurring, Britain, which is grinding its way through the Brexit negotiations, has also mooted that there is potential for them to join the TPP. However, as was seen in New Zealand, there are plenty who do not agree with the concept of the TPP. Apart from weakening Britain’s relationship with the EU campaigners fear the TPP will:

• Entrench the ‘corporate court’ system that gives multinational corporations special powers to bully and sue governments
• Undermine food standards – threatening to allow chlorine-washed chicken and steroid-fed beef into the UK, lowering the quality of food and jeopardising farmers’ livelihoods
• Undermine public services across the world – threatening the NHS and the ability of the developing countries in the deal to build their own public services
• Give more power to big tech companies to use and abuse our data, and prevent developing countries from building their digital sectors, which are vital for their development
• Move Britain closer to a US-style system of deregulation that would make it harder to work closely with the EU

This is a similar list to what was discussed in New Zealand, given the importance of Britain to New Zealand’s lamb and dairy trade how things pan out will be of interest to exporters. Given the UK geographic location some new names for the agreement might need to be conjured up in the unlikely occurrence they do join. In the meantime, the Brexit negotiations have severely split the British government and the public appear to have had enough with over 1 million signing a petition calling for a new referendum and 700,000 marched in London also calling for a new referendum.

Brexit’s effects on NZ trade are very uncertain due to the range of different scenarios that could be played out but a big concern is regarding how existing trade quotas into the EU (including the UK) will be dealt with. At the moment there appears to be a lot of water to flow under the bridge before any agreements get reached and the calls for Britain to remain in the EU are getting louder as the chaos ensues.

Just when everybody thought Canterbury, in particular, had reached “peak cows” Ngai Tahu Farming have announced that they will be lifting their number of dairy farms in Te Whenua Hou dairy development, out of pine forest, from eight to 14 dairy farms with cow numbers reaching 14,000. Chief executive of farming Andrew Priest said its 6,757ha Te Whenua Hou dairy development, north of the Waimakariri River, would continue as trees were cleared from Eyrewell Forest. An interesting observation he made was that in their experience the numbers on nitrate leaching modelled by Overseer™ are close to double what is being found coming through into the 45 lysimeters they have through the block. Yet more uncertainty for farmers to deal with.

The prices for dairy products fell again in the latest Oceania International Dairy Market News with only butter bucking the trend with a 5.4% lift, the other products fell by between -.9% to -2.4% with WMP dropping -2%.