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August 1, 2019

Vilsack Discusses USMCA, Trade in China and Opportunities in Japan (2)

 |  By: Clinton Griffiths

TV: Well, the reality is we had a record year last year in exports. Our volume is down a bit this year, in part because of China and in part because of African swine favorite and in part because of the intervention stocks that the EU has been sitting on, and in part because of sanctions against Venezuela. There are a variety of factors beyond our control. Having said that, the value is up, we're selling about $100 million more product for six months, and we did last year. And the reason for that is that we're seeing increased sales. And the reason for that is that we're aggressively promoting both ingredients and cheese in these markets. And we're seeing receptivity in South Korea, Japan and Southeast Asia.

CG: What are you most excited about for the future? I mean, we talked a lot about these, I don't want to say they're developed markets, but markets that we know like Japan and like China, but what other opportunities do you see out there where we might be able to really move some product in the next 10 years?

TV: Well, the ratification of USMCA gives us the opportunity to continue to preserve our markets in Mexico which continue to grow, and potentially give us a little more additional market access in Canada. So that's a good thing. The Middle East and North Africa, we continue to see interest in our cheeses, we are doing some creative marketing, in a number of the North African countries, and the Middle East, pop up stores encouraging cheese sales. This is interesting, Indonesia is currently having a spat with the EU over palm oil and the environmental impacts in producing palm oil. They are now trying to divert away from their reliance on EU and dairy and they are encouraging U.S. to come and potentially increase sales. So you know, there's tremendous opportunity in in the global economy, even if it's slowing down a bit, there's still middle classes being created. Younger populations in the Southeast Asian countries that are interested in in the need for dairy proteins. New health and fitness focus with whey protein in places like Japan, and the world's demand for cheese just continues to grow. The amount of cheese that's consumed in this country compared to Japan, we have we have so much upside potential in these in these Asian countries, as they get to learn more about American specialty cheeses. As they get to learn more ways to use pizza, as they have a young generation that wants to eat on the go. Tremendous opportunity. We just have to be patient. We just have to continue to deepen our relationships with folks in these countries and continuing to produce the great quality that we have.

CG: One of the things I saw from your meeting over in China is you did get to spend a little time with U.S. ambassador to China and former Iowa Governor Terry Branstad, how was that meeting?

TV: Very positive. It was interesting, I suggested to the ambassador that he find time in a visit the upcoming to Shanghai to visit Costco. The Costco store opened up in Shanghai and there was just an influx of thousands of people wanting to become Costco members. We have a promotion with Costco in China to promote U.S. cheese through their brand, the Kirkland brand. So there's a tremendous opportunity to increase cheese through that membership driven organization. We're doing the same thing in South Korea and in Japan, and we're also expanding opportunities in Mexico. He was excited about that opportunities out there was that might be a good way of showcasing us dairies show showcasing the support for us dairy and at the same time, encouraging Chinese consumers to give U.S. cheeses a chance.

CG: As we look at some of the things that's going to be upcoming this fall, USMC as high on my radar, do you think we have a good chance of getting that pulled together?

TV: I do. And here's why clean the look, if you look at this, I think there are two questions that a member of Congress has to ask himself or herself. One, is this agreement enforceable? Can they be assured that whatever the provisions are, that they're going to be followed through? And I think there's been a concerted effort by the administration, by Mexican officials and others to reinforce the notion that yes, they're serious about labor, and yes, they're serious, bad environment. And then secondly, the question is, is this deal better than the current situation with NAFTA? And I think clearly for American agriculture, for poultry, for wheat for dairy, and for most of the commodities, it's absolutely either maintains the status quo or is an improvement. So, on balance, this agreement is better than NAFTA. Is it perfect? Obviously not. There's no such thing as a perfect trade agreement. But it's better. And I think if you're satisfied that it's better and satisfied that it's enforceable, than I think you end up having to vote for it. And I think it's gonna pass.