It takes a major issue to knock a new US Farm Bill off the top of dairy leaders’ minds, but one topic has done it: phenomenal dairy exports.
“It’s only five or six years that we’ve been a player in exports, but we’ve come a long way in that time,” Patty Stroup, Nestle’s head of procurement in global milk products, told a packed meeting room at IDFA’s Dairy Forum January 28. “In the next 10 years, the US will be the major player in world markets.”
Excitement over global trade in dairy products was palpable at the warm-weather meeting, coming off record dairy exports in 2013. The US Dairy Export Council reports that through the first 11 months of 2013, the value of US dairy exports was on pace to approach $6.7 billion, with volume representing nearly 16 percent of total US milk solids produced. Nonfat dry milk, cheese, high-value whey protein concentrates and isolates, lactose and fluid milk were all on pace for record highs in 2013.
At the Dairy Forum, Tim Hunt, global dairy strategist with Netherlands-based Rabobank, reviewed world dairy production and sales, calling 2014 “a very opportune time for the US dairy industry.” The main competitor selling dairy products into China and other Asian nations, New Zealand, may see 2.5 percent milk production growth in coming years, he noted, but cost of production for milk coming from New Zealand is “neck and neck” with California and lower feed costs in the US should place US milk production costs lower in 2014.
Recent product contamination issue with New Zealand means “the glow is off the halo,” Hunt said. Meanwhile, he listed outside perceptions of US dairy strengths:
• A stronger economic recovery than other major dairy nations
• A “safe” place to build a business
• A clear source of ingredients and milk supply
• A market with upside potential for dairy sales growth
• A dairy market capable of further business consolidation
Andrei Mikhalevsky, president and CEO of California Dairies, joined the chorus of positive export outlooks at the Dairy Forum. There’s “no doubt” that the US dairy industry is “all in” on exporting, he said. The US does not command every category, he noted, but processors are now “fully committed” to serving export markets.
Patty Stroup agreed. “There are many products in world trade that we do not do – whole milk powder, casein, instantized powders. But a lot of US companies have made the decision that they are all in,” she said. Stroup added that US dairy processors don’t necessarily have to consider making high-end products, “we need to make the high-spec products, the particular products in the form the global market needs.”
Tim Hunt from Rabobank tempered predictions for US export growth by noting weak economies and soft dairy sales around the world at this time. The European Union, 20 percent of world dairy consumption, is currently eating fewer dairy products in a sluggish economy with higher unemployment. The BRIC countries (Brazil, Russia, India, China) representing 35 percent of world dairy consumption are growing dairy consumption about 2 percent per year, with the exception of China which saw dairy sales rise an estimated 11 percent last year.
Interestingly, milk production is declining in Russia and China. Domestic milk production in China, Hunt said, remains impacted by the melamine contamination issue that emerged in 2008. In addition, corn prices are high in China, small farms are in decline and the aggressive construction of large dairies hasn’t curbed milk production declines as high as 6 percent in 2013.
In the face of emerging US export strength, the EU is aggressively using geographic indicators to “claw back” cheese names. In recent years, the EU has protected the name “feta” exclusively for Greece and “parmesan” for the makers of Parmigiano Reggiano in Italy. In January, Denmark petitioned the EU to control the cheese name “havarti” in Europe.
“Having these single-name cheeses clawed back is inappropriate,” Sue Taylor, VP dairy policy and procurement for Leprino Foods, told an audience at the Dairy Forum. Taylor and fellow panelists noted that an even greater concern is the addition of these GI protections to trade agreements the EU is forging with nations around the world.
The current Transatlantic Trade and Investment Partnership talks between the EU and the US must be careful not to include GIs for these single name cheeses such as feta, parmesan and havarti, the panel said. Consultant Craig Thorn, with DTB Associates, said that he believes the answer lies in compromise. “We could make it easier for European manufacturers to register GI cheeses in the US,” he said, “but agree that the US can continue to use common, single-named cheeses” in commerce.
As a driver of the US “dairy economy,” the newly minted Farm Bill pales in comparison to the promise of exporting wholesome, quality US dairy foods. Tim Hunt told Dairy Forum listeners, “Asia is excited about US export growth and wants to build safe supply chains. The US holds the potential to be a larger supplier to global markets.” JU
John Umhoefer has served as executive director of the Wisconsin Cheese Makers Association since 1992. You can phone John at (608) 828-4550; Fax him at (608) 828-4551; or e-mail John Umhoefer at
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