After failing to secure its cheese importing license, Fonterra USA insists it has other avenues to reach its multi-million-dollar U.S. cheese market.
When Fonterra moves, the dairy market takes notice. And even when New Zealand’s powerhouse dairy exporter fails to move, it makes news.
Fonterra’s Jan. 29 announcement that New Zealand’s worsening drought will drive down its milk receipts by 3.3% for the 2014-15 marketing year likely helped spur last week’s upward jump in Class III futures prices, say market analysts.
Now comes more news about Fonterra. News reports out of New Zealand and Asia this week say that Fonterra’s Illinois-based subsidiary, Fonterra USA, failed to secure a license to import cheese from its plants in New Zealand.
The company cites “human error” as the reason, saying it missed a deadline to apply for licenses to import New Zealand cheese into the U.S. in 2015, according to dairyreporter.com.
The missed deadline could cost Fonterra USA an estimated $11 million as a result of losing its multi-million-dollar cheese market in the U.S., says stuff.co.nz. That could be an under-estimate. A Wall Street Journal report today says New Zealand’s cheese exports to the U.S. totaled around $24 million U.S. dollars last year.
Fonterra USA insists the financial impact will be “limited” and its 2015 sales “will not be impacted.” Fonterra reportedly has made commercial arrangements with other New Zealand license holders to ensure it meets its 2015 New Zealand cheese orders in the U.S.
Alan Levitt, with the U.S. Dairy Export Council, isn’t too concerned about Fonterra’s U.S. license setback.
“I’m taking them at their word that this was just a human-error oversight,” Levitt says. “I don’t think it will have any impact on U.S. dairy producers. [Fonterra officials say] they’ll be able to get their cheese into the United States via other licenses. So, I assume it’s a wash.”
Fonterra USA has 10 joint venture manufacturing sites across the U.S. At home in New Zealand, Fonterra Cooperative Group counts 10,500 dairy farmers as its members. The cooperative exports 95% of its dairy products.