By CAROL RYAN DUMAS
Chinese and U.S. regulators have approved an import dairy certificate that ensures the flow of U.S. dairy goods into the largest dairy importer in the world will continue unabated.
The certificate is an assurance from the U.S. government to the Chinese government that the U.S. dairy products were produced in a regulated, safe and sanitary system and from milk from disease-free animals and are free of residues of hormones, pesticides and antibiotics.
It's one of the critical pieces of documentation required to export to China, said Matt McKnight, USDEC senior vice president of market access and regulatory and industry affairs.
The health certificate had to be renegotiated after China underwent several changes to its food safety laws and guidelines, he said.
"There never was a concern with the safety of our product," as evidenced by China keeping its markets open to U.S. dairy products during the negotiations, he said.
The certificate is a documentation issue, but it was important to resolve the issue due to the uncertainty of Chinese importers. China allowed U.S. dairy exporters to ship under the previous certificate but also notified the U.S. that it could pull that certificate at any time, he said.
That left buyers worried that U.S. supplies could be halted and leave them scrambling to find other suppliers. So they didn't buy to the full capacity of their previous purchases, especially when it came to cheese for China's food service industry, he said.
USDEC estimates the uncertainty of the certificate situation depressed U.S. dairy ingredient sales by 5 percent to 10 percent and cheese sales by as much as 50 percent, due to the food service industry's need for consistent supply and more limited interchangeability of cheeses.
Without a renegotiated certificate in hand, it also limited the ability to grow market share for U.S. dairy exports, McKnight said.
U.S. dairy exports to China are on pace to clear $400 million in 2012, USDEC President Tom Suber said in a press release.
"With the certificate question settled, we expect U.S. dairy export value to China could more than double by 2017. Some or all of those sales could have been lost had it gone unresolved," he said.
The issue dates back to early 2010 when China revised its dairy certificate as part of sweeping efforts to upgrade domestic food safety. USDEC staff worked closely with Chinese officials and a U.S. inter-agency regulatory team to resolve the issue.
"This positive announcement of a new certificate lifts the uncertainty that hung over the Chinese market, thereby encouraging greater U.S. dairy sales," Jerry Kozak, president and CEO of National Milk Producers said in a press release .
National Milk and USDEC credit the Chinese government for allowing dairy trade with the U.S. to continue during the certificate negotiations.
USDA's Agriculture Marketing Service will begin issuing the certificate immediately. Certificates that were issued prior to Jan. 18 will be valid for 60 days from the finalization of the certificate agreement, but will not be accepted in China after March 20.