By Alan Levitt
“We have seen a remarkable transformation over the last decade when it comes to U.S. Dairy exports,” according to Alan Levitt, spokesman for the U.S. Dairy Export Council.
“Up until five or six years ago when I would be having conversation with farmers, a lot of the conversation revolved around why are pursuing exports,” Levitt said. “I would hear we should focus on our home market. Exports are too risky and too inconsistent and overseas buyers can’t afford our product…it’s gratifying that I don’t have those conversations anymore.”
Dairy producers understand that exports are a profitable plan for growth as the domestic market grows one to two percent per year. Farmers can meet those gains with productivity on the farm.
“If a farmer wants to expand with more cows or bring another generation, there has to be markets for additional milk,” Levitt said.
The overseas market has billions of potential customers. Since 2003, U.S. milk production has increased 18 percent, and more than half of that new milk has gone to exports. But can overseas customers afford western products?
“That actually hasn’t been true for years,” he said. “The last seven years world commodity prices are nearly double what they were in the prior seven years.”
The benchmark world dairy prices have averaged five to ten percent higher than U.S. commodity prices over the last seven years. “Exports can and do provide a profitable outlet for this growing U.S. milk supply,” Levitt reported.
Now the U.S. exports about 14 percent of their milk supply. That means about one out of every seven tankers that rolls out of a farmers driveway ends up being turned into a product that is sold overseas.
The U.S. dairy industry is fully exposed to global markets. That means U.S. markets and international markets are tracking each other step for step.
“The conversation I have with farmers has evolved from talking about exports to really talking about globalization,” he said. “Globalization isn’t a synonym for exports. It means the dairy industry is one big global market now.”
It’s true the more the U.S. exports, the more dependent they will be on global markets.
“But it’s also true our markets will be affected overseas whether we export it or not. The place we are at now is trying to prepare ourselves best to accommodate the global market.”
Some of the mindset has changed and the U.S. has broadened its portfolio in giving the world what they need, like producing high demand cheese in some of the key markets…making 82 percent butter for the overseas markets.
“We have a domestic Milk Protein Concentrate (MPC) where not only are we able to export that stuff but we are able to displace imports in some of the high value food applications that MPC is used in,” he said.
The latest exciting development is whole milk powder, where more plants have opened this year with that capacity. “I consider a game changer for the U.S. dairy industry because whole milk powder has been a huge hole in our portfolio up until now, and it’s a huge globally traded product. More whole milk powder is traded than skim milk powder on the world market and we just haven’t made it. But we are going to start making it and that is going to be a big deal for us,” Levitt concluded.
Source: Dairy Business-Dairyline News