Dairy groups are urging U.S. negotiators to stand firm against attempts by the European Union to monopolize common cheese names, warning of severe consequences if restrictions expand on the use of terms such as parmesan, asiago and feta.
The U.S. Dairy Export Council and the Consortium for Common Food Names say the EU is aggressively pursuing geographic indication — called GI — status for common cheese names within its borders and abroad.
The impact of those efforts, left unabated, would cause a dramatic drop in demand for U.S. cheese, causing consumption to fall by 306 million pounds to 814 million pounds and prices to fall 14% in the short term.
Those reductions would result in a loss of $9.5 billion to $20 billion in dairy farm revenue from 2019 to 2021 depending on consumers’ willingness to pay more for cheeses with an EU GI label, according to a new study commissioned by the groups.
The study, by Informa Agribusiness Consulting, examined the hypothetical impact of the EU expanding its GI restrictions worldwide through trade agreements, including a potential agreement with the U.S.
GI is a term identifying a product originating from a specific geographic location, such as Parmigiano Reggiano. But the EU is attempting to restrict common names, such as parmesan, to products made only in the EU.
That would require U.S. cheese makers to stop marketing common cheeses to any market with GI restrictions. Those cheeses would have to be relabeled with names unfamiliar to consumers, resulting in fewer purchases and lower prices for those products, Informa stated.
“The changing consumer demand for U.S. cheeses would have profound and deleterious impacts on the U.S. dairy industry,” the Informa analysts said.
Falling consumption would lower farm gate milk prices from baseline forecasts by $0.97 to $2.14 per hundredweight in the first three years, the study predicted.
“Low milk prices and poor farm margins would exacerbate the ongoing loss of U.S. dairy farms,” the analysts said.
The study also examined long-range impacts if subsequent GI status is approved for popular cheeses such as provolone and mozzarella.
In that scenario, it found dairy farm margins would be significantly below breakeven levels for seven years of the 10-year forecast — forcing greater liquidation of the U.S. dairy herd.
And farm-level revenue losses would continue to mount, reaching as much as a cumulative $71.8 billion over 10 years, the analysts said.
“This threat is serious and mounting,” Jaime Castaneda, executive director of the consortium, said in a press release announcing the study.
“The EU is very clear in its intentions, and the scope of its GI restrictions continues to expand,” he said.
The EU has repeatedly targeted the U.S. dairy industry by undermining the ability to freely use generic cheese names in foreign markets, Tom Vilsack, chairman and CEO of the dairy export council, said.
The U.S. must forcefully oppose any attempt to restrict common names in the U.S., and failing to confront the EU’s aggression in other markets will have a serious impact on the U.S.’ ability to expand exports, he said.