What the powerful US dairy lobby thinks about NZ's infant formula import bids

NZ infant formula imports are "not needed" long term, says a US dairy industry voice. Photo / 123RF

The US dairy industry's voice in Washington has scotched speculation it is blocking New Zealand efforts to help relieve America's acute infant formula shortage and get a toehold in the lucrative market - but is clear it would oppose our product imports long-term.

The US National Milk Producers' Federation also told the Herald it was lobbying the US government to adjust policy to allow the US to become an infant formula exporter to create a supply surplus buffer should a shortage occur again.

"We have not asked the FDA (US Food and Drug Administration) to block New Zealand applications," said NMPF senior vice president trade policy, Shawna Morris.

"We've been on record for a while now that while we are still facing a short-term acute crisis of formula availability we support the government doing whatever needs to be done to bring back, short-term, supplies of this product."

Morris said US infant formula production had been in line with domestic market needs.

"If, instead, US production was higher and we too were in exports like New Zealand and some European countries you would have some natural buffer... so our recommendations have been that the US government really needs to look at what policies are making it more difficult to produce infant formula here in the US, and how those can be adjusted so the US can be more of an exporter and so create a cushion, should something like this, a rare occurrence, occur in the future."

Infant formula exports earned New Zealand $1.8 billion in 2020, but returns are forecast by the Ministry for Primary Industries to fall below $1.5b this year and in the next two years, before rising back to around $1.8b in 2026.

The US dairy lobby's flagged interest in infant formula exporting comes as the US recorded a 17 per cent jump in its cheese exports in the first half of 2022. The US Dairy Export Council reported US cheese had been relatively affordable on the global market, with the gap between prices on America's CME market and New Zealand prices on Global Dairy Trade supporting gains in US market share in Japan and Korea, two of the most highly contested cheese markets.

Meanwhile, Fonterra says unlike the a2 Milk company, it has not yet received an advisory from the FDA that its application to export infant formula to the US has been deferred.

Fonterra applied to the FDA in late May for an "enforcement discretion" waiver to sell infant formula into the US, which that month began considering imports after a major US manufacturer, one of only three in that country, was forced to stop production over a food safety issue.

A2 Milk's share price sank this week on news of the deferral advice.

Fonterra's James McVitty, Americas manager trade strategy, sustainability and stakeholder affairs, said the farmer-owned cooperative, the world's biggest dairy exporter, had received no such advice yet.

But neither has it received approval to export infant formula to the US.

But McVitty noted the US had accepted under the emergency orders paediatric base powders made by Fonterra at its plant in Darnum, Australia.

"We continue to support other infant formula manufacturers approved for sale in the US with base infant formula powder ingredients.

"We are now working through the process to ensure this is a long-term viable solution which includes meeting any additional US requirements for ongoing supply should permission be granted for our customers."

NMPF's Morris said she did not know why the FDA had accepted emergency supply applications from some other countries and companies and not yet from at least New Zealand companies that she knew of.

"It's not that the (US) dairy industry is standing in the way of this. I can't comment on the grounds for which the FDA thought some have fallen short."

Asked if her powerful lobby organisation was opposed in any way to New Zealand infant formula importing, she said it was supportive of short-term steps - whether by regulation or tariff changes - to ensure product the FDA felt comfortable with was allowed into the US market.

"We certainly are not at all supportive of long-term policy change. We do not have a long- term production disruption here in the US this year as a reason to put in place regulatory or tariff changes that extends into the future."

Asked for the NMPF's view on the safety and quality of New Zealand infant formula product, Morris said it was up to the FDA to evaluate product specifics and how they squared up against US requirements.

To the question of whether the NMPF was under pressure from its constituents to take a stand against infant formula importing from New Zealand, Morris said "it is simply not needed".

"We've had a very short-term, very abnormal issue. What we have dealt with this year is not a shift longer term - there's no basis for a long-term policy shift."

Fonterra's McVitty said the FDA had limited resources and Fonterra understood it had been prioritising submissions from companies offering larger volumes and with existing distribution networks for infant formula in the US.

Two months on, Fonterra still waiting for US verdict on infant formula offer. Photo / File

Fonterra understood many companies had been waiting for responses.

The FDA last week said it had approved emergency imports totalling an estimated 18.4 million cans.

It said it would "exercise enforcement discretion" until November 14 to increase infant formula supplies in the US.

It did not intend to require imported product in the market after that date to be removed.

To date, the FDA has approved imports from Australia, Ireland, the UK, Singapore, Spain, and Germany and Mexico (Nestle).

The only New Zealand acceptance was Danone NZ in late June, when 555,000 cans - equivalent to around 16.5m 8oz bottles - were approved.