FAO: Policy developments affecting the dairy sector

Policy developments affecting production, domestic marketing and consumption of milk and milk products

COVID-19-related production and income support policies

  • Canada, in April 2021, approved the federal budget in more than two years, affirming commitments to safeguard the sectors impacted by the COVID-19 and build a resilient, equitable economy. The Government allocated approximately USD 5.2 billion for agriculture, including direct investment and programming-related expenditure in the agriculture, forestry and fisheries sectors and extended support for temporary foreign workers in meeting mandatory quarantine requirements
    upon arrival.
  • The European Union, in January 2021, extended until 31 December 2021, the State Aid Temporary Framework (SATF) adopted in March 2020 to support the economy in the context of the COVID-19 pandemic. The European Commission also expanded the scope of the SATF by increasing the ceilings for specific support measures and
    allowing the conversion of some repayable instruments into direct grants until the end of 2022. This way, European Union member states can use the flexibility of state aid rules to support their economies while limiting distortions to competition.
  • India, in June 2021, established the Animal Husbandry Infrastructure Development Fund, allocating INR 150 billion (around USD 2 billion) for incentivizing investments by individual entrepreneurs, private companies, micro, small and medium enterprises, farmer producer organizations (FPOs) to establish dairy and meat
    processing and value addition infrastructure and animal feed plants. The Indian Government also approved a Production Linked Incentive Scheme for Food Processing Industry, a scheme focusing on dairy products such as mozzarella cheese, ice cream, milk-based beverages and Indian traditional sweets. The total outlay was INR 109 billion (around USD 1.5 billion) from 2021 to 2027.
  • Japan, in July 2021, announced the Milk for Further Processing Stabilization  Program (Narashi program), which triggers subsidies for eligible milk traded during the Japanese fiscal year 2020 (April–March). The Government activated the  programme in 14 years and targeted subsidizing 3.2 million tonnes at USD 0.007 per kg from 1 September 2021. The aim is to cover the price differential between fresh milk and milk for further processing, which arose when demand fell due to the closure of schools and restaurants during the COVID-19 pandemic.
  • The United States of America, in March 2021, signed the American Rescue Plan Act of 2021, also called the COVID-19 Stimulus Package or American Rescue Plan, a USD 1.9 trillion economic stimulus bill with an allocation of USD 10.4 billion for agriculture, including the dairy sector, covering debt forgiveness, purchase and distribution. In addition, the US government announced an expansion of the CFAP to cover additional payments for eligible cattle and row crop producers. Other  production and income support policies
  • Canada, in April 2021, allocated USD 230 million, committing funds through 2029 to compensate for ceding market access commitments to poultry, eggs and dairy processors under the Comprehensive Economic and Trade Agreement with the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In August 2021, Canada increased funding for the AgriRecovery Framework to CAD 500 million (around USD 400 million) to cover additional costs
    farmers had to pay due to droughts and wildfires. The funding includes an initial allocation of CAD 100 million (approximately USD 80 million), announced on 6  August 2021, covering direct assistance to livestock and agricultural producers for additional costs of obtaining livestock feed, transport and water.
  • Colombia, in January 2021, fixed monthly minimum wage and transportation aid for
    perishable agricultural and livestock products, considering the consumer price index for 2020 and a constitutional requirement. 
  • Cuba, in April 2021, announced the cancellation of a ban introduced in 1963 on cattle slaughter and sale of bovine meat and dairy products without state permission as part of agricultural reforms. Under the new arrangement, the Government
    allowed freedom for farmers to sell livestock products after meeting state quotas and the conditions that this would not reduce the cattle herd.

    The European Union, in June 2021, accepted the provisional deal agreed with the European Parliament on the key elements of the Common Agricultural Policy (CAP) reform, covering the period 2023–2027. The new policy emphasizes the social dimension of agriculture, including adequate employment conditions for workers, the adoption of ‘greener farming practices,’ support for smaller farms, and performance-based CAP that allows member states freedom to implement tailor-made interventions based on strategic planning. In December 2021, the European Union adopted the CAP agreement, which will begin in 2023.
  • The Philippines, in May 2021, signed a five-year partnership with the private sector to develop the dairy industry through the Dairy Training and Development Program. The aim is to improve milk quality and increase cow productivity and farmers’
    market access.
  • Türkiye, in May 2021, announced that the Turkish Grain Board would provide corn and barley for livestock producers at subsidized prices (TRY 1 950 per tonne, USD 233 per tonne) to offset the increase in feed prices and the decline in profit margins for meat and milk producers. 

Price policy measures

  • Canada, in February 2021, fixed annual support prices for butter and skim milk powder at CAD 8.72 per kg (around USD 6.9) and CAD 4.53 per kg (around USD 3.6), respectively.
  • Colombia, in March 2021, increased the support price for milk by 3.5 percent, considering key market variables, especially input costs, the producer price index, import demand and inventories. 
  • Türkiye, in March 2021, announced that the Meat and Milk Board, an affiliated government entity that regulates domestic meat and milk prices, would purchase raw milk directly from producers to guarantee a minimum price.
  • Ukraine, in July 2021, announced the reinstatement of the value added tax (VAT) rate from 14 percent to 20 percent for imports into the territory for certain types of agricultural products, including whole milk powder and live animals. The aim is to reduce the risks from higher food prices and create equal conditions for agricultural producers and the processing industry. Policies affecting milk marketing and food safety standards 
  • China (mainland), in March 2021, notified the WTO SPS Committee of   an  addendum to the National Food Safety Standard, Good Manufacturing Practice for Powdered Infant Formula (0G/SPS/N/CHN/1159/Add.1), replacing the existing national food safety standard framework introduced in 2010. The most notable change affecting the dairy sector is the inclusion of formula food for infants and children, their technical requirements of production, food safety controls, testing for products and their manufacturing facilities and equipment.
  • The European Union, in March 2021, opened its public intervention stocks for butter and skim milk powder for the window between 1 March and September 2021. The public intervention scheme provides a safety net when a significant market imbalance occurs by purchasing a maximum of 50 000 tonnes of butter and 109 000 tonnes of SMP, complying with specific quality requirements at a fixed price, and selling back to the market via a tendering procedure.
  • Singapore, in April 2021, notified the World Trade Organization (WTO) Committee on Technical Barriers to Trade (TBT) of the Nutri-Grade Beverage system – a scoring system. This scheme established nutrition labels based on sugar and saturated fat thresholds for pre-packaged, non-alcoholic beverages and classifies food products into four categories (A to D) and will be operational by 30 June 2022. Displaying score labels on the package front is mandatory, and advertising for products scoring C and D is prohibited. The new measure would affect many prepacked beverages, including milk-based drinks.

Institutional and organizational measures

  • Australia, in May 2021, urged dairy farmers and processors to be aware of rights and obligations under the Dairy Code of Conduct (DCC) ahead of the 1 June deadline for publishing the milk supply agreements. The new compulsory code aims to
    establish a fairer process for entering into contracts between milk farmers and processors, dispute resolution and mediation. It also prohibits unilateral  retrospective payment step-downs, except under exceptional circumstances, once farmers and processors have entered into agreements. The new code also empowers the Australian Competition and Consumer Commission (ACCC) to monitor the conduct of farmers and processors to support compliance.

Policy developments affecting international trade

Tariff and tariff-rate quotas

  • Brazil, in November 2021, reduced import tariffs on 8 225 products until 31 December 2022, including milk (12 percent to 10.8 percent), and butter, milk cream and yoghurt (16 percent to 14.4 percent). The tariff reduction aimed to contain the adverse effects of the COVID-19 on the national economy.
  • Ethiopia, in August 2021, raised import tariffs on butter, cheese and yoghurt from 30 percent to 35 percent, and reduced import tariffs on milk powder from 20 percent to 5 percent. The policy aimed to increase domestic producers’ competitiveness by increasing tariffs on locally-produced commodities while lowering tariffs on raw materials. The Government introduced the new policy while releasing a revised edition of the customs tariff book, covering more than 8 000 tariff line items. 
  • The European Union, in March 2021, suspended all tariffs related to agriculture, including dairy products, linked to the Airbus and Boeing trade disputes with the United States for four months to allow both parties to concentrate on resolving the ongoing trade dispute. US tariffs were introduced in October 2019 when the EU failed to end subsidies for Airbus. Since then, the United States has applied an additional 25 percent duty on a wide range of EU dairy products, mainly cheese and butter. 
  • Indonesia, in June 2021, exempted import duties for several dairy products, including butter, cheese, milk, cream and whey, from 22 June 2021 until 31 December 2021. The duty exemption aimed to provide relief to industrial sectors or services affected by the COVID-19-related market restrictions, which use imported goods and materials.
  • Japan, in April 2021, announced tariff-rate quota (TRQ) volumes for dairy products for the Japanese fiscal year (JFY) 2021 (April to March), including natural cheese for processing, skimmed milk powder, evaporated milk, butter and butter oil, and certain whey products. The TRQ for natural cheese increased by 19 percent from JFY 2020, while TRQs for the other products were unchanged. 
  • Switzerland, in June 2021, raised the tariff quota for butter at preferential tariff by 1000 tonnes for the year 2021, aiming to guarantee supply until the end of the year and avoid shortages that have existed on the Swiss market since mid-2020. 
  • Thailand, in January 2021, eliminated import tariffs and import quotas under Special Safeguard measures for Australian and New Zealand dairy products, such as whole milk powder, whey, cheese and anhydrous milk, under the Thailand Australia Free Trade Agreement and the Thailand New Zealand Closer Economic Partnership.

Market access 

  • Algeria, in September 2021, announced import bans on several animal-derived food products, including yoghurt, ice cream and dessert cream, as part of a strategy to develop and improve domestic dairy production to reduce imports. The five-year roadmap (2020-2024) aims to encourage modern industrial agriculture, using new technologies, digitization and innovative techniques. The roadmap also encourages camel and goat breeding in Saharan areas and small dairy farms in mountainous areas.
  • Brazil, in June 2021, published the approved sanitary and phytosanitary requirements to export milk, dairy and other agricultural products to Mexico. With this approval, Mexico authorized 18 Brazilian establishments to export dairy products, including whole milk, powdered milk and cheese, to Mexico.
  • China (mainland), in September 2021, announced an extension of Section 301 tariff
    exclusions for some agricultural products, including whey for feed and alfalfa, from the United States and Canada for another year. Accordingly, the Government extended tariff exclusion for the 81 products subject to the Section 301 retaliatory
    tariff through 16 April 2022.
  • The Russian Federation, in September 2021, extended countersanctions on products from countries that applied economic sanctions against the Russian Federation, including milk and dairy products, until December 2022. The Russian
    Federation announced the countersanctions in August 2014 in response to sanctions imposed by the United States, Canada, the European Union, the United Kingdom, Norway and Australia in retaliation for the country’s annexation of Crimea. 

Trade agreements

  • Canada, in April 2021, the entry into force a trade agreement with the United Kingdom to mitigate possible trade disruption associated with the United Kingdom leaving the European Union and thereby the Comprehensive Economic and Trade
    Agreement (CETA). It recognizes that the rights and obligations between the two countries as provided for by CETA should continue following the departure of the United Kingdom from the European Union at the end of the transition period, subject to the provisions of this agreement. Canada imports cheese from the United Kingdom under tariff rate quotas.
  • Japan-the United Kingdom, the Comprehensive Economic Partnership Agreement (CEPA) entered into force on 1 January 2021. The agreement enabled the United Kingdom to maintain most of the agricultural market access terms under  the Japan-EU Economic Partnership Agreement (EPA). However, the United Kingdom lost access
    to 15 of the 25 TRQs. The United Kingdom can use the remaining 10 TRQs, but preferential tariffs are applied only to the volume remaining after subtracting EU-27 imports.
  • United Kingdom – Australia, in June 2021, announced the agreement to allow tariff-free imports of all Australian agrifood products within 15 years. The objective is to eliminate tariffs for most products, but with tariff rate quotas and safeguard measures for periods ranging between 5 and 15 years for the most sensitive products, notably butter, cheese and some meat products. In December 2021, the United Kingdom signed an agreement with Australia to gradually increase
    tariff-free dairy product quotas in equal instalments for five years. For cheese and butter, immediate duty-free access will be granted at 24 000 tonnes and 5 500 tonnes, rising to 48 000 tonnes and 11 500 tonnes, respectively. The agreement will
    allow annual duty-free access for 20 000 tonnes of other dairy products.

Other trade-related measures

  • Australia, in February 2021, announced the allocation of AUD 72.7 million (around USD 56 million) to help Australian agribusinesses to expand their export markets as part of the Agri-Business Expansion Initiative. The support includes direct exporter support services, greater access to market intelligence, and matched grants for government and industry associations to work together on the market expansion.
  • China (mainland), in March 2021, implemented mandatory traceability requirements for all food products transported via the cold chain, including
    dairy products, to expand its efforts to prevent COVID-19 from entering the country through imported foods. In April 2021, China introduced legislation titled the “Regulation on the registration and administration of overseas producers of  imported food”, making it mandatory for all overseas food manufacturers, processors and storage facilities to be registered with the Chinese authorities to export to China.
  • Indonesia, in April 2021, issued a new questionnaire for foreign dairy establishments seeking approval to export dairy products to Indonesia. For exporting milk and milk products to Indonesia, the exporting country must be free from foot and mouth disease (FMD), brucellosis and tuberculosis. As for processed milk products, on-site reviews are required to establish export eligibility from those with FMD-endemic countries.


FAO. 2022. Dairy Market Review: Overview of global dairy market and policy developments in 2021. Rome.

Food and Agriculture Organization of the United Nations (FAO)

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