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US Dairy Import Increase Also Needs Context
Last week in this space, we attempted to provide some context for the decline in US dairy exports thus far in 2015. This week, we’ll try to provide some context for the increase in US dairy imports thus far in 2015.
As reported on our front page two weeks ago, the value of US dairy imports in April, $244.1 million, was up 7 percent from April of 2014. And the value of US dairy imports during the first four months of 2015, $993.6 million, was up 12 percent from the first four months of 2014.
And in 2014, US dairy imports had reached a record $2.995 billion, up 13 percent from 2013 and up some $828 million just since 2010.
So is this recent surge in US dairy imports a reason for panic? Is the US dairy market being overrun by imported products?
No, not really. It should be remembered that, up until 2007, the US actually ran a dairy trade deficit, and a pretty big one at that. For example, dairy imports first topped $2 billion in value back in 2004, when exports were valued at $1.45 billion, for a dairy trade deficit of $662 million.
The US dairy trade deficit actually widened the following year, to $715.6 million.
But in 2007, when US dairy exports surged to just short of $3 billion ($2.978 billion, to be exact), imports did set yet another record, reaching $2.514 billion, but the US ran a dairy trade surplus of almost half a billion dollars.
And the US has run a dairy trade surplus every year since then. That even includes 2009, when, thanks to the global financial crisis, US dairy exports fell by more than $1.5 billion. The US was still able to record a dairy trade surplus of about $71 million that year.
Since then, the rise in US dairy exports has been steady if not spectacular, while import growth has been a bit erratic, including a small decline in 2013. And so, when both US dairy exports and dairy imports set new records last year, the US also recorded an astonishing dairy trade surplus of $4.1 billion.
During the first four months of 2015, despite a drop in exports and a rise in imports, the US still ran a dairy trade surplus of $922 million. That’s pretty impressive, except in the context of the last few years.
What about trends in the largest dairy import category (in terms of both volume and value)? Cheese imports during the first four months of this year, at 119.8 million pounds, were up 23 percent, or 22.7 million pounds, from the first four months of 2014. And cheese imports in 2014, at 362.8 million pounds, were up more than 38 million pounds from 2013.
But there are several points worth remembering here. First, while current trends indicate that US cheese imports could reach 400 million pounds this year, they’ll still be well short of their levels several years ago.
Specifically, US cheese imports first topped 400 million pounds in 1999, when they reached 435.7 million pounds. They reached a record high of 475.6 million pounds in 2002, and topped 400 million pounds every year from 1999 through 2007.
But cheese imports declined for eight straight years after reaching that record high in 2002, bottoming out at 305.5 million pounds in 2010, their lowest level since 1992 (which was also the last year in which cheese imports were under 300 million pounds).
So if cheese imports do happen to reach 400 million pounds here in 2015, well, that would mean that cheese imports topped 400 million pounds for the first time since 2007, and also that cheese imports are still 75 million pounds or so below their all-time record.
Also worth remembering is that the US has historically been a net importer of cheese. For example, back in 2002, when cheese imports reached that record high of 475.6 million pounds, US cheese exports totaled 118.6 million pounds, for a cheese trade deficit of 357 million pounds.
In 2007, the last year in which cheese imports topped 400 million pounds, the US ran a cheese trade deficit of about 217 million pounds.
Three years later, the US ran its first cheese trade surplus in many years; exports of 381.3 million pounds exceeded imports by 76 million pounds. And the cheese trade surplus continued to grow, reaching an amazing 448.4 million pounds last year.
Despite a double-digit percentage decline in cheese exports and a double-digit percentage increase in cheese imports, the US still managed to run a cheese trade surplus of almost 143 million pounds during the first four months of 2015.
One other point about US cheese imports: back in 2002, when cheese imports totaled 475.6 million pounds, US cheese production totaled 8.55 billion pounds. Thus, imports equalled about 5.6 percent of domestic output.
Last year, when cheese production totaled 11.45 billion pounds, cheese imports totaled 362.8 million pounds, equal to about 3.2 percent of domestic output.
During the first four months of 2015, cheese imports totaled 119.8 million pounds, while cheese production totaled 3.8 billion pounds, so imports equalled about 3.1 percent of US cheese output.
Thus, even when posting fairly significant increases, cheese imports are equal to a smaller and smaller percentage of total cheese production.
US dairy imports, on a value basis, will in all likelihood set a new record here in 2015, and will probably top $3 billion for the first time ever. That’s pretty impressive.
But from a historical perspective, the US continues to run impressive dairy trade surpluses, including for the most significant imported product, cheese. In that context, this year’s import increase isn’t quite as significant.
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