US dairy industry to rethink export plans

By Neil Merrett

- Last updated on GMT

Related tags: Cent, Milk

The US dairy industry is having to change its attitudes towards
export markets, amidst growing international demand for both
finished products and ingredients, an industry organization has

The US Dairy Export Council (USDEC) told that manufacturers in the country were now having to strategically develop their operations in both its established and emerging export markets to ensure long term survival. USDEC's comments follow the publication of new research by banking group Rabobank, which state that the country's dairy exports grew by 24 per cent during 2007, amounting to 11 per cent of the industry's total milk output for the year. This figure was up from just five per cent in 2002, according to the figures. Future growth ​ Deborah Perkins, managing director of Rabobank's food and agribusiness research arm, said that further growth was now expected in 2008, permitting production levels continue to grow above domestic consumption. "Historically, exports have been assisted by government support, but the recent growth has been based on commercial merits,"​ she stated. While USDEC's own figures suggest that only 9.5 per cent of total US milk production was exported on a total solids basis during 2007, the council did concede that this still represented significant growth for the industry either way. "[US dairy groups] understand that exports are no longer just a future opportunity or a part-time hobby or a place to dump what they have sitting in their warehouse when supplies start piling up,"​ the group stated. "Instead, they have an obligation to move milk solids overseas."​ According to the council, the country's producers have long been exporting dry ingredients for processing like whey and lactose, but there has also been a recent surge in demand for its cheese and butterfat as well. "Historically, about two-thirds of US dairy products have been dry ingredients - whey, lactose, nonfat dry milk/skim milk powder - in large part because of their storability,"​ the council stated. "However, since last summer, US exports of cheese and butterfat have increased dramatically. ​ Between September to January, exports of US-made cheese increased by 52 per cent from the same period the previous year to 47,616 metric tonnes (mt), according to USDEC figures. The country's sales of butterfat to foreign markets increased by ten times over the previous year to 32,536mt. Export markets ​ The neighbouring markets of Mexico and Canada were found to be the most significant destinations for the US' dairy shipments due to their geographic proximity and financial advantages linked to tariffs. Mexico alone has seen a 20 per cent increase in US imports annually since 2002, although the changing global market place is resulting in improving profitability for exports to Europe and the Asia, Pacific region also, USDEC said. The council said that from last summer onwards, the value of exports to the markets of the EU and Australia was up by 79 per cent to $152m (€97m) and 133 per cent to $37m (€23.6m) respectively. In China, the volume of whey and lactose imported from the US rose by 70 per cent, while more developed consumer markets in the region like Japan and South Korea were increasingly purchasing higher-value dairy products, the council added. "Historically dairy has not been a part of the Asian diet,"​ the council stated. "Buta growing recognition of the health benefits of dairy - not just through mainstays like milk but also through functional products like yogurt and fortified dairy drinks - has bred a new generation of lifelong dairy consumers." ​ Further growth was expected within these markets in particular according to the export council. In Asia, the high birth rates were proving another area for the industry to tackle, according to USDEC. "More than 43 million babies a year are born inChinaandIndiaalone, plus millions more in Southeast Asia, and parents of these infants increasingly have the purchasing power and desire to feed infant formula, weaning foods and toddler foods containing dairy components,"​ the group stated.

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