The U.S. dairy industry is filling the latent demand gap for exports, but structural improvements in the export process need to be made in order for processors to stay competitive. The United States needs to reform its milk pricing systems (including price supports) and modify the standards of identity.

Those conclusions emerged from a one-hour briefing of the media today by the U.S. Dairy Export Council, the Innovation Center for U.S. Dairy and Bain and Co., a Dallas-based consulting firm.

The U.S. industry is well positioned to be a consistent supplier of exports, said Brett Burgess of Bain and Co., which updated the findings of its 2008/2009 study of the dairy export market.

USDEC president Tom Suber said “we are on the right track,” but called for reforms. USDEC is looking at an unfilled global need for 6.5-7 billion pounds of fluid milk. China, India, Southeast Asia and the Middle East/North Africa are driving the demand. China, though, won’t be able to produce enough milk domestically and will need to import.

While New Zealand dominates the dairy export market, the Bain analysis sees the nation’s exports slowing throughout the rest of this decade and peaking in 2020.

Suber and Burgess said the United States must make reforms and become active exporters. Brazil, Argentina, Ukraine and Belarus are potential export rivals, while producers in Oceania and Europe are aggressively pursuing free trade agreements with developing countries.

Additional information from the “Dairy Globalization Refresh: 2011 Update,” is available on the Innovation Center website.