Imposing unjustified European Union policies regarding geographical indications (GIs) on the U.S. could cost the U.S. dairy industry billions of dollars, slash domestic cheese consumption, close family farms and eliminate thousands of rural jobs, according to a new Informa analysis released by U.S. dairy industries and the Common Food Names Consortium (CCFN).
More than half of U.S. cheeses are under names that are registered or pending GI status in the EU. Common cheese names like parmesan, gorgonzola, asiago and feta are a key target of Europe’s GI agenda, despite U.S. cheese makers having won international competitions with these cheese varieties. Others, such as mozzarella and provolone, have faced threats in various global markets and could be at risk of future restrictions by EU GI policies.
Europe’s policies on GIs would trigger a major contraction in consumption of U.S. cheeses while at the same time driving up costs for U.S. consumers to keep buying the same staple products, the report notes. As American families shift to single-source imported cheese, shoppers will see their costs to purchase familiar products rise, while U.S. cheese makers will see their markets dwindle.
Consumption of domestic cheese could fall by as much as 21%, or 2.3 billion lb., over 10 years. A consumption decline of that magnitude would equal up to $5.2 billion in lost in cheese sales.
Nate Donnay, director of dairy services at Informa, said the analysis found that farm-gate revenues would drop $24.6 billion over 10 years and that farm-gate margins would be driven into negative territory for six out of the 10 years as dairy farmers lose up to 15% of their revenue; the equity drain would drive some farmers out of business and stunt growth. The revenue impact could range up to a cumulative $59 billion loss.
“The damage Europe’s GI agenda could do to the U.S. dairy industry is severe,” noted Jim Mulhern, president and chief executive officer of the National Milk Producers Federation, which represents dairy producers and cooperatives. “By 2025, our dairy farmers would lose up to 15% of their income, and the U.S. dairy herd would shrink by up to 9%, or 850,000 cows. Thousands of dairy farmers would be forced out of business.”
According to the study, consumers will choose imported cheeses with names they recognize over domestic products with names they don’t recognize. As a result, plummeting demand for domestic cheese would put numerous U.S. cheese manufacturers — particularly specialty cheese manufacturers — out of business.
“Under Europe’s GI policies, U.S. manufacturers would face a choice of abandoning markets for cheeses like feta and parmesan or selling them under names like ‘crumbly white cheese’ or ‘hard grated cheese,’” said Connie Tipton, president and CEO of the International Dairy Foods Assn., which represents dairy processors domestically and internationally. “It’s not hard to imagine the problems those name changes would create, and this report finally quantifies those impacts.”
This harm would not be limited to just the dairy sector. As the impacts on dairy ripple through industries like transportation and veterinary services, the study found that the U.S. economy could lose up to 175,000 jobs. Also, consumers would face higher prices, fewer choices and confusion in the supermarket as familiar cheese names are replaced by unfamiliar ones.
GIs recognize the unique nature of specialty food products identified with a specific geographic area. They restrict the use of the names of these products only to those that originate in the designated area. By allowing consumers to easily recognize these unique food products, GIs serve a necessary and useful purpose. In the U.S., for example, both Washington apples and Idaho potatoes are appropriately protected by GIs.
“While there are legitimate and agreed-upon uses for geographic indications, the European Union’s approach has become another tool to block market access for American products using common food names,” Sen. Pat Roberts (R., Kan.) said. “This study shows what has been apparent for some time. If the U.S. gives in to the EU’s demands on GIs, it will have a significantly negative impact on the U.S. economy – from the dairy farmer to the local grocer to the consumer at home.”
Mulhern said he was encouraged by a letter to U.S. Trade Representative Ambassador Michael Froman written by Senate Finance Committee chairman Orrin Hatch (R., Utah) and House Ways & Means Committee chairman Kevin Brady (R., Texas), who said the EU's global crusade on GIs should not take common food names “hostage.”
"Europe's continued expansion of geographical indications in ways that protect terms long considered generic upends the entire concept of GIs," said Tom Suber, president of the U.S. Dairy Export Council, which represents the interests of dairy producers and processors in global trade and is the founding organization of CCFN. "Instead of protecting the names of a few specialty foods linked to specific areas, the EU uses GIs to eliminate competition for its producers."
CCFN executive director Jaime Castaneda said the U.S. must aggressively oppose the carving up of markets and refuse to bestow monopolies on a few privileged European suppliers. “The use of common names by the U.S. dairy industry — and, indeed, all other sectors relying on typical food terms — should be aggressively preserved both for domestic and international use."