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Panama's Milk Industry - Domestic Production, Importation, Protective Tariffs, Labeling Issues, etc.

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Keith Woolford    308

In a similar situation, Canada is under fire for protectionist actions which affect the importation of diafiltered milk from the U.S., and it's going to be a major point of discussion in upcoming NAFTA renegotiations.

"In Canada, we've always seen milk just as milk, rather than a series of ingredients that can be used to make other products."

Canada's dairy farmers say diafiltered milk from U.S. costs them millions

High-protein milk product from U.S. crosses border tariff-free, and food processors find it 'addictive'

Our wily neighbours to the south have figured out a clever way of not paying tariffs on a certain — let's say "controversial" — commodity, and Canadian dairy farmers say it's costing them hundreds of millions every year.

The product in question is called diafiltered milk.

Essentially, it's milk that's filtered, flushed with water, and then filtered a second time, with a few other steps along the way. The end product has a high concentration of protein, about 85 per cent, and very little of the fat and lactose that make up natural milk.

The Canadian government allows it to cross the border without a tariff, because if it were dried into a powder, it would have the same amount of protein as the kinds of protein powders allowed to pass through tariff-free under trade agreements. 

Diafiltered milk hasn't been around for long, but it's a very attractive alternative to food processors in Canada, who can buy it much more cheaply than milk produced by Canadian farmers.

'Addicted' to cheap U.S. milk

According to Sylvain Charlebois, dean of management and a professor in food distribution and policy at Dalhousie University in Nova Scotia, it's unclear just how big the market is and how much diafiltered milk is entering Canada. Global trade, he says, is likely negligible, though again those figures are difficult to nail down despite his efforts to calculate them.

Nonetheless, Canadian food processors seem keen to use it when they can. 

"It's a fairly new thing, it doesn't cost a fortune to transport from the U.S. to Canada, and, frankly, some food processors here have started to become addicted to it because it's so economical," he says. 

Diafiltered milk was one of the primary issues raised by dairy farmers from Ontario and Quebec who demonstrated on Parliament Hill this week. 

Dairy protest

One of the key demands of the dairy farmers who protested on Parliament Hill earlier this week was for the government to end the import of diafiltered milk. (Chris Wattie/Reuters)

Maurice Doyon, a professor of rural and agricultural economics at Laval University, estimates that Canadian dairy farmers lose about $200 million per year from food processors buying diafiltrated milk rather than Canadian product.

"You have to remember, for food processors, milk is just the raw material they use to extract the ingredients they want to make their products," he says. "And if that product happens to have a high protein component, then why spend the money on Canadian milk?"

Doyon says, however, that dairy farmers have a legitimate complaint when it comes to diafiltered milk, because, at the border, the protein content is calculated as if the product were dry, like a powder. But at the processing plant, it's still a liquid that is essentially milk. 

"It's a classic case of the right hand of the government doing one thing, and the left hand doing another. It's two different government agencies making decisions about the same product. So the farmers are saying, 'make it one or the other,'" he says.

"If it ended up being classified as milk, then no Canadian producers would continue to import and use it, it just wouldn't make sense."

Milk is more than 'just milk'

Some companies in the U.S. have already pounced on the marketing potential of the current protein craze. Coca-Cola began selling a product called Fairlife in 2015. It's advertised as milk with 50 per cent more protein, 50 per cent less sugar and lactose free. In reality, it's diafiltered milk, Doyon says.

Efforts are being made to stop the use of diafiltered milk in Canada, however. Earlier this month, the Agropur Dairy Co-operative, whose 39 member companies process more than 5.7 billion litres of milk each year, announced it would temporarily stop using diafiltered milk in its products. The trial is set to last for three months, until the end of July.

Agropur argues that should be enough time for the government to begin enforcing Canada's cheese standards, established in 2008, which require processors to use higher quality domestic dairy products. 

Charlebois says the government should also begin prioritizing upgrading Canada's food processing sector to be more competitive on a global scale. The battle over supply management has shifted the focus in the dairy sector away from innovation, he says, leaving it highly underdeveloped.

"In Canada, we've always seen milk just as milk, rather than a series of ingredients that can be used to make other products. It's a pretty unsophisticated system, and now it's coming back to haunt our dairy farmers.



Edited by Keith Woolford

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Imported Milk Gains Market Share in Panama

Nestlé's announcement that it will stop buying C-grade milk from producers from Veraguas reflects the growing loss of market share for local milk to imported products.

Wednesday, May 17, 2017

Growth in imports of milk and its substitutes continues to take away market share from Panamanian milk producers. In the case of Nestlé Panama, the company reported that "imports of milk substitutes by third parties has caused a decrease in the consumption of certain lines of their dairy products. "For this reason, the company will stop buying 16 thousand liters of C milk per week from producers from Veraguas. 

Regarding the increase of imports of milk, substitutes and other dairy products in the country, "...From May 1, 2016 to March 27, 2017, 897 thousand kilograms of evaporated milk was imported from Peru, Costa Rica and the United States, according to figures from the Customs Authority."

See also "Purchases and Sales of Dairy Products in Central America"

Euclides Diaz, from the National Cattlemen's Association told Prensa.com that "... in the country, imported milk is being marketed as evaporated milk, when in fact it is a flavored and colored drink that simulates milk ...   While in Panama evaporated milk is processed using fresh cow's milk, the imported canned ones are made from a combination of several substances, and a minimum portion corresponds to cow's milk. This makes it possible, according to Diaz, to lower production costs and lower consumer prices."


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Panama Suspends Imports of Peruvian Milk

Arguing that the labeling does not really reflect the content of the product, the Panamanian government has suspended the entry of evaporated milk from the Pura Vida brand, from Grupo Gloria from Peru.

Friday, May 26, 2017

The decision was taken by the Panamanian Food Authority (Aupsa) after the National Association of Cattlemen reported that the market was trading imported milk that was sold as evaporated milk "... when in fact it is a flavored and colored drink which imitates milk."

Read also: "Central American Trade in Milk and Dairy Up 4%"

"... Resolution 015-AG-2017 states that Pura Vida evaporated milk contains in its labeling illustrations and statements which may lead to misconceptions about the nature of the product, in such a way as to induce the consumer to assume that it is a food product which is a totally dairy product, which contravenes the standard."

Prensa.com reports that "...The label specifies that its ingredients contain soy lecithin, stabilizers, vitamins A, C and D, a minimum portion of partially skim milk, soy milk and milk essence."

See resolution issued by the Aupsa. (In Spanish)



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Milk producers want imports cut


MILK  producers  in the Azuero  region have called on  President , Juan Carlos Valerla, to reduce imports  of the product  or they will disappear in the midst of an economic meltdown

The request comes  after  hearing that they will get 35 cents a liter for milk from July 7.

Paublino Vásquez, a milk producer in the province of Los Santos, s aid that Varela has to lower imports, renegotiate treaties and put  more money into  the agricultural sector.

He said that the milk sector is the one that moves the economy of the Azuero region and the state  has to provide support, otherwise it’s not worth having a dialogue table and it will become a socio-economic problem.

Vásquez, said that 34,000  tonnes of dairy products including milk derivatives like dried milk and  cheese  are being imported



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Panama to Increase Import Tariffs for Dairy Products

The Cabinet Council approved a decree that seeks to increase import tariffs of dairy products, such as substitute milk and mozzarella cheese, from 15% to 30%.

Wednesday, August 9, 2017

From a statement issued by the Presidency of Panama: 

The Cabinet Council approved a decree that seeks to increase import tariffs on dairy products, such as substitute milk and mozzarella cheese, from 15% to 30%. 

This initiative corrects a distortion that originated in 2012 when there was a drastic drop in import tariffs on these products. 

The Minister of Agricultural Development, Eduardo Enrique Carles, stressed that this measure is necessary, since in 2012 a direct reduction to 15% was made on tariffs for products such as shredded or powdered mozzarella cheese, substitute milk and other cheeses.

In addition, this contributes to improving conditions of the productive sectors in the country, which made it necessary to modify the National Import Tariff, in order to have a positive impact on the competitiveness of these sectors.



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