Sartori Cheese global markets head seeing rising demand

The head of global markets for Sartori Cheese sees great potential for expanding product exports, despite certain trade barriers and distribution issues.

“Cheese demand is there and it’s growing, and continues to be growing significantly,” said Sam Allison, global markets manager for the Plymouth-based cheese producer. He spoke during a webinar hosted by the Madison International Trade Association.

He noted U.S. milk production has been growing in recent years and is now outpacing domestic demand, with over 75 percent of the country’s milk production growth in 2020 going toward exports. As worldwide demand also continues to rise, Allison said the United States’ top two competitors for cheese production — the European Union and New Zealand — are “running into challenges” with increasing their production levels.

“There’s a lot of opportunity out there,” Allison said.

Sartori Cheese is a fourth-generation family-owned company that’s been making cheese since 1939, with facilities in Plymouth and Antigo. The company has developed relationships with local dairy farms, most of which are within 50 miles of their production facilities. Allison explained that using fresh milk in the production process is critical for making good cheese.

He said global exports support a big part of the company’s growth, and retail exports are largely focused on Canada and Europe, followed by Mexico, Australia and China.

“There’s a wide variety of specialty cheese understanding and development in those markets,” he said.

Still, he highlighted trade barriers standing in the way of expanding exports to these countries, including supply chain problems hindering distribution on a global scale. He also explained that exclusive regional product names, or “protected geographical indicators,” can create issues for exporters. For example, parmesan cheese is a generic name, while the name Parmigiano-Reggiano is restricted to the regions of Italy where the cheese was traditionally produced.

“It’s an ongoing non-tariff barrier that we run into, as the Europeans work very hard to build [geographical indicator] protections into the trade agreements that they make around the world, so that only Italian producers can sell parmesan to those markets,” he said. “Then they end up missing out on the great parmesan that comes from our facilities here in Wisconsin.”

Over the past decade or so, Allison noted perceptions of U.S. cheeses among European consumers have been improving. Market research has found that opinions have shifted dramatically for the better, he said.

But while Wisconsin enjoys a strong reputation for cheesemaking quality within the United States, Allison explains that many buyers around the world don’t associate Wisconsin with cheese at all, which can pose a challenge.

“It’s a big mystery, and that’s really important for cheese producers. When you’re selling a specialty product, the romance, the origin story — all of those things are a big part of the experience for the consumer,” he said. “Being able to share that is critical.”

He also touched on the pitfalls of getting pulled into discussions on American national politics while selling U.S. products, noting “it can be very polarizing.”

“It’s very easy when you’re overseas to get yourself trapped into a conversation about Mr. Trump or Mr. Biden. When you’re trying to sell cheese, that’s the last thing that you want to do,” he said. “We’ve really tried to focus on Wisconsin, and telling that story, because I think it’s something that’s a huge, huge opportunity.”

U.S.-EU agreement on steel and aluminum tariffs expected to reduce prices for manufacturers

— Manufacturing groups say the agreement between the United States and European Union to ease tariffs on steel and aluminum will help reduce prices for the industry.

The Biden administration announced over the weekend that it had reached a deal with the EU in hopes of addressing supply chain issues and lowering the cost of certain goods. Federal officials reportedly said the agreement would retain steel and aluminum tariffs on European nations while allowing limited volumes of these metals produced in the EU into the United States without tariffs.

Tim Wiora, executive director and CEO of WMEP Manufacturing Solutions in Madison, says the agreement is expected to “help ease prices and stabilize them for some types of steel.” He said the move “will help, but is not the final answer,” as continued trade issues with China are having a more significant impact on manufacturers in Wisconsin.

The Milwaukee-based Association of Equipment Manufacturers says it welcomes the agreement, arguing the steel and aluminum tariffs have harmed the U.S. economy by increasing the price of production for agriculture and construction equipment and costing the industry thousands of jobs.

“This new agreement will help address steel shortages and soaring prices that have hurt

equipment manufacturers, while also addressing overcapacity from China and preventing leakage of Chinese steel into the U.S. market,” said Dennis Slater, president of the international trade group. “We hope that both sides will build on the momentum from today’s agreement to remove the remaining obstacles to free and fair trade.”

Slater says Biden deserves “a lot of credit” for reaching an agreement that “while not perfect, goes a long way in restoring free and fair trade across the Atlantic.”

Along with easing U.S. tariffs on steel and aluminum from the EU, the agreement will also reportedly resolve retaliatory tariffs imposed by the EU on U.S. products including bourbon and motorcycles.

Jochen Zeitz, chairman, president and CEO of Milwaukee-based Harley-Davidson, calls the agreement a “big win” for the company and its customers, employees and dealers in Europe.

“We are excited that this brings an end to a conflict that was not of our making, and in which Harley-Davidson had no place,” he said in a statement. “This is an important course correction in U.S.-EU trade relations that will allow us to further Harley-Davidson’s position as the most desirable motorcycle brand in the world.”

See the release from AEM: https://www.wisbusiness.com/2021/association-of-equipment-manufacturers-hails-u-s-eu-agreement-on-steel-and-aluminum-tariffs/

See the Harley-Davidson statement: https://investor.harley-davidson.com/news-releases/news-release-details/statement-harley-davidson-eu-tariff-resolution

Federal officials taking comments on reinstating certain tariff exclusions

— A lawyer with Michael Best Strategies says companies that import from China would benefit from submitting comments as federal officials consider reinstatements of certain tariff exclusions.

“This is an invaluable opportunity for Wisconsin companies who import from China to be able to engage in,” said Sarah Helton, a partner with the Madison-based consulting firm, in a recent interview. “Having the opportunity to engage in the process to get the exclusion from that tariff is significant.”

Ambassador Katherine Tai, the U.S. trade representative, announced earlier this month that the agency would begin a targeted exclusion process for tariffs on certain products. The agency began accepting comments Oct. 12 through an online portal regarding the reinstatement of 549 exclusions, and the window to submit comments will be open until Dec. 1.

According to Ngosong Fonkem, a trade compliance lawyer with the Chicago-based law firm Page Fura, the new process is limited in scope to imported products that had previously been granted an exclusions, and only those that were extended through the end of 2020.

“As with past exclusion processes, the USTR proposal would permit importers, many of whom are Wisconsin businesses to apply for relief from Section 301 duties on certain imports from China that range from 7.5 percent to 25 percent,” Fonkem told WisBusiness.com in an email.

As the office of the USTR evaluates reinstating these exclusions, officials will consider whether the product or a comparable one is available from a U.S. supplier or another country other than China, domestic capacity for U.S. production, global supply chain changes since September 2018 related to the product or industry, and other factors.

Denise Bode, who heads the federal policy practice at Michael Best Strategies, said “a number of our clients” are impacted by the tariffs. Helton added the tariffs are “an inhibitor” of growth in the Midwest’s manufacturing sector. They explained the Michael Best team has filed thousands of exclusion applications over the years, including under prior presidential administrations. Bode says a large portion of those were for Wisconsin-based companies “or those that do business” in the state.

Along with the factors listed above, Bode said the USTR will take into consideration if China has subsidized any of the products on the list in order to better compete with specific U.S. products or industries. In prior successful exclusion applications, she said the firm was able to make the case that the tariff would result in “severe economic harm” to the importing company in question.

“We hope that those that were subject to exemptions before and have the opportunity to apply do apply,” Helton said. “We estimate that if people don’t weigh in asking for the exclusions, they’re going to lose that opportunity … That’s why it’s so important to be aware this is happening and to engage in it.”

See more details, including the full list of eligible products: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/october/ustr-requests-comments-reinstatement-targeted-potential-exclusions-products-china-subject-section

Groundbreaking held for new ag export facility in Milwaukee

— State and local officials have broken ground on a new $35 million agricultural export facility at Port Milwaukee, marking the largest one-time investment in the port in over 60 years.

The DeLong Company is providing $7 million in funding for the project, while Port Milwaukee is contributing $5.7 million, according to a fact sheet provided by city officials. Another $15.89 million is being provided by the U.S. Department of Transportation’s Port Infrastructure Development Program, and about $6.15 million is coming from the state DOT’s Harbor Assistance Program.

The new maritime export facility will be located on the west side of Jones Island, where yesterday’s groundbreaking event was held. According to the fact sheet, it will be one of the first facilities on the Great Lakes – St. Lawrence Seaway to handle agricultural products through truck, rail and international shipping vessels.

Products to be exported from the new facility include soybeans, corn and grain grown in Wisconsin, as well as dried distillers grains with solubles, an animal feed supplement.

The new export center is meant to “open Wisconsin’s maritime and agricultural economies to new international markets, the fact sheet shows. It’s expected to be up and running by April 2023.

See a fact sheet on the new facility, including details on the site’s redevelopment: https://www.wisbusiness.com/wp-content/uploads/2021/10/DeLong-Facility-Fact-Sheet.pdf