Take a look at the dairy sales opportunities outside of the United States and
you will see a much different picture. U.S. manufacturers and marketers looking
across the border and across the ocean have found significant opportunities.
And new markets keep popping up.
Much of the U.S. export sales growth over the past decade has been driven by
ingredient sales—dairy products destined for further manufacturing or for use
as animal feed. But consumer-ready products are also being moved to customers
and consumers around the world.
Various whey products, nonfat dry milk, skim milk powder and lactose capture
most of the headlines for stories about exports, but fluid milk, cheese, ice
cream, yogurt and infant formula are also finding customers outside of the
United States.
During 2006, we moved $1.89 billion worth of milk and dairy products to
customers outside of the United States. This is double the value moved during
1999 when a fairly large percentage of the shipments were actually given away
or subsidized by the government. Last year, Cooperatives Working Together (a
farmer-funded program) paid bonuses to help move a small percentage of the
exports shipped.
For example, CWT helped 13.9 million pounds of cheese leave the country;
exports totaled 157 million pounds. Whole milk powder shipments were aided and
a large percentage of butterfat exported required help, but all other exports
were unaided and commercial. Less than 2% of the 2006 exports were assisted
either by the government or CWT.
For perspective: Cheese exports last year moved abroad at an average price of
about $1.56 per pound; the block cheese price at the Chicago Mercantile
Exchange averaged $1.2385.
By in large, U.S. exports are ingredients; U.S. imports are valued-added
cheeses and other pricey products. So, the dollar value of exports continued to
lag that of imports. Volume is another story.
On a milk solids basis, U.S. dairy exports totaled 2.092 billion pounds and
accounted for 9.3% of this country’s milk production. On a milk solids basis,
exports were more than double the volume of imports.
Just a few years ago, Uncle Sam was buying and removing surplus nonfat dry milk
from the marketplace to help support milk prices. Some years, hundreds of
millions of pounds were stashed away in caves near Kansas City and in other
crooks and crannies around the country.
For the past three years, U.S. exports of nonfat dry milk and skim milk powder
have totaled at least 600 million pounds annually; 632 million pounds during
2006. This represents about 42% of the dried nonfat milk powder produced during
the year. Of the 1.1 billion pounds of dry whey manufactured in the United
States last year, 500 million pounds were sent to customers around the
world.
Export volumes could have been greater; we simply didn’t have enough product to
fill all of the orders. World demand was so strong that domestic trade faced
shortages; shortages that persist to this day.
With world economies in a major growth
mode, this will likely be the case for many years to come. Milk producers in
this country should take a hard look at their schizophrenia. Are they going to
kill cows and shrink their business or make milk and market products for a
growing world appetite? They can’t have it both ways for much longer.
Personally, I opt for a growing milk production and dairy export business.
Hopefully, you agree. If not, ask some of the millions who have been
“downsized” out of other businesses. Then, you too, will opt for growth.
There is a home away from home for U.S. dairy products.
For archived Jerry Dryer articles visit
www.dairyfoods.com.
