Finland Strives To Lift Cheese Exports With Stronger Focus On US Market

Volume 130, No. 28, Friday, January 13, 2006

Finland’s farmers and agribusiness firms have faced greater competition from cheese delivered by other European Union countries in the last several years. Finland’s cheese imports in 2005 were nearly a third greater than the 18,379 tons imported in 1999.
 
One action some traders and farmers have taken to offset relatively flat sales at home is to bolster exports of high quality cheese to the United States. Imports of cheese from Finland into the United States increased 30 percent in the first 10 months of 2005, following the upward trend recorded from 2002-04.

The average price for US cheese imports from Finland increased about a tenth in 2005 to a range of $4,000 per metric ton, compared with $3,868 per ton in 2004. 

Finnish traders have focused on shipments of top quality cheese to the US market. 

Some arrangements have been made to provide steady supplies to large supermarket chains. The stores had some special sales of Swiss type cheese from Finland recently with a reduction of about 14 percent from the regular price.

Cheese Exports From Finland Expanded To Nearby EU Countries
The price for imported Gruyere cheese in relatively small packages in some supermarkets may range between $10 and $27 per kilo. Switzerland and Finland are some major suppliers for US imports of Gruyere cheese.
 
Finland had substantial exports of high quality cheese to other members of the European Union in recent years. Denmark and Sweden were major markets for Finnish cheese exports in the last two decades. 

Before Finland joined the EU on January 1, 1995, other members of European Free Trade Association (EFTA) had been important customers. The market for Finnish cheese developed in nearby markets of Sweden and Denmark through the EFTA arrangements remained leading customers when they also joined the European Community. 

Value Of US Imports In 2005 Was About Double The 1997 Level
The value for U.S. imports of cheese from Finland in 2005 was about double the $19 million recorded for the delivery of 5,506 tons in 1997. In contrast to a rise of about 4.5 percent for US cheese imports from all sources in early 2005, imports from Finland increased by 30 percent in value.
 
A sharp reduction for US cheese imports from New Zealand and Lithuania in 2005 contributed to a more enticing opening for Finnish cheese. US imports of cheese from Finland increased from 6,745 tons in January-October 2004 to 8,331 tons in the comparable months of 2005, as the value rose from $26.04 million to $33.95 million.
 
Finnish cheese manufacturers have faced more competition recently in the countries which were part of the EU-15 as of December 2005, before 10 new members joined in 2004. Lithuania is the most active cheese exporter from among the 10 new EU members. 

Opportunities for greater exports of Lithuanian cheese to other EU members, plus the booming Russian market, contributed to the steep setback for US imports of cheese from Lithuania to only about 1,200 tons in 2005, compared with peak deliveries averaging about 13,000 tons during 2001-03.

Finland’s Cheese Exports Go To Many Countries
Finland has some exports of cheese to many countries outside the EU. 
Saudi Arabia, Kuwait, and some other Middle East countries have been customers for Finnish cheese in the recent decade. Russia was a market for 5,000 tons of Finnish cheese in 2001, and shipments to Russia fluctuated during 2002-05.

Cheese Output Rose During 1999-02 And Then Dropped Back 
Output of cheese in Finland increased steadily from 87,602 tons in 1999 to a peak of 98,568 tons in 2002, but fell about 1 percent in 2003, and dropped about 5 percent in 2004. 

The ample supply of oats and rye from domestic sources and adequate corn imports provide a reliable feed supply for dairies. As exports to the United States expand, a rebound for Finnish cheese output may expand. 

Finland’s cheese output averaged about 98,000 tons annually during 2000-03, compared with 82,946 tons in 1997. So much competition from imports by 2004 caused Finnish cheese output to drop to 92,072 tons. 
In the new complex situation, apparently exporting more cheese from Finland to the United States was viewed as a way to cope with the very competitive setting in Finland.

Reduced Exports Contributed To Modest Decline In Output After 2002
Total cheese exports from Finland had reached a peak of 40,202 tons in 2000, valued at $115.2 million. 

So much competition within the EU caused Finland’s cheese exports to drop to 37,196 tons in 2001, and then new trade contacts helped bring exports up a little in 2002 to 37,126 tons. It became apparent in 2003 that expanding cheese exports to other EU markets would be difficult when shipments dropped slightly to 36,530 tons.

Problems in obtaining a rebound for cheese export during 2001-03 contributed to a decline for Finland’s cheese output from the 2002 peak to 92,072 tons in 2004. Help from greater exports to the United States and some other markets apparently contributed to plans for a slight rebound for Finland’s cheese output in the coming year.

Domestic Consumption Fairly Flat
Domestic consumption of cheese in Finland has been relatively flat in the last five years in the range of 80,700 to 82,850 tons. 

Efforts to provide good nutrition for children with government payments for each child apparently contributed to stability for cheese consumption. The population of Finland increased from about 5.15 million in 1998 to about 5.23 million by 2005. 

Greater sales to customers from fast food outlets and pizza shops also contributed to steady cheese demand. It appears that more sales of less expensive cheese are occurring in the domestic market, while Finland’s exports are doing well for some more expensive types of cheese. 

Sales for cheeseburgers at fast food restaurants appear to have contributed to a slight rise in the Helsinki area, but some smaller towns where factories closed apparently had smaller demand. •

John B. Parker was formerly an international economist with the Economic Research Service of the US Department of Agriculture

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