The long-term prospects for dairy processors and dairy producers look promising because of opportunities at home and abroad. In the short-term, however, the dairy industry faces uncertainty with its trading partners. Now is the time for CEOs of dairy businesses to be vocal in support of free trade and against barriers.
The reasons why the future looks bright are detailed in the report “USDA Agricultural Projections to 2026” by the U.S. Department of Agriculture’s Office of the Chief Economist, World Agricultural Outlook Board.
At home, USDA sees domestic demand for dairy products growing “at a strong pace.” It expects that commercial use of dairy products will rise faster than the growth of the U.S. population over the next decade. There’s good news for cheesemakers. Demand for their products will rise because Americans are eating more prepared foods at home and dining out.
Trends abroad will have a favorable impact on dairy foods and ingredients. Incomes are rising in developing countries and thus “diets become more diversified, and meat, dairy and processed foods consumption increases. This shifts import demand toward animal feed and high-value food products,” according to the USDA.
Developing countries spur U.S. exports
USDA predicts “a slow and steady increase in the value of U.S. agricultural exports.” Reasons for this optimism are that developing countries will maintain a higher growth rate than developed countries. On the one hand, that will drive exports. On the other hand, a strong U.S. dollar reduces export demand, although “U.S. export values are expected to surpass the 2014 record level in the second half of the decade,” according to the report. Where’s that one-handed economist Harry S Truman sought?
“Commercial exports of U.S. dairy products are projected to grow over the next 10 years, led by the exports of goods with high skim-solids content, such as nonfat dry milk and whey products. By 2026, dairy exports are expected to reach 4.9% of milk production on a milk-fat milk-equivalent basis and 21% on a skim-solids milk-equivalent basis,” the chief economist wrote.
So much for the long term. As for the here and now, U.S. dairy processors have some work to do in their long-running battle with the European Union over the use of geographical indications (GI), like Parmesan and Feta. In March, The Consortium for Common Food Names issued a statement urging the Trump Administration to “aggressively oppose” unacceptable GI policies that force non-Europeans to rebrand familiar products with unfamiliar names, like “hard-grated cheese” (for Parmesan) or “ground meat sausage” (for bologna).
What’s in a name?
With a new administration in the White House and new members in Congress, the CCFN feels it needs to educate lawmakers and rules writers. Consortium Senior Director Shawna Morris testified before the office of the U.S. Trade Representative.
“The EU’s approach is designed to steal commonly used names from those who built markets for those products and instead monopolize use of those terms in foreign and domestic markets,” Morris said.
In the EU’s free trade agreement with Canada, the EU insisted on GIs for generic terms such as Muenster and Asiago cheese. Morris laid “considerable fault” on Canada for going along with the terms of the agreement, saying Canada caved in “to the siren song of securing greater market access to the EU and in the process abandoning its due process procedures for IP and prior market access commitments.”
Fence mending with Mexico
As U.S. dairy interests keep an eye on our northern neighbor, they are also looking at our southern one. The U.S. dairy industry exports $1.2 billion worth of dairy products to Mexico, making it our No. 1 export market.
Leaders of U.S. dairy organizations were at a conference in Mexico in March and they did their best to mend fences, in a manner of speaking.
“We have always seen Mexico as a partner first and a customer second,” U.S. Dairy Export Council President and CEO Tom Vilsack told Mexican dairy leaders at the National Dairy Forum in Mexico City.
“Mexico is our friend, ally and most important trading partner,” said Jim Mulhern, president and CEO of the National Milk Producers Federation.
Darci Vetter knows a few things about trade. She is the former chief agricultural negotiator for the U.S. Trade Representative. Addressing the International Sweetener Colloquium this year, she urged food and beverage companies to demand a seat at the table on trade negotiations in the new administration.
She said U.S. producers of protein-rich foods, including dairy, will be at a disadvantage as other countries covered by the Trans-Pacific Partnership agreement (rejected by the United States) begin to consume more protein. Australia and New Zealand could fill the void.
U.S. dairy processors and producers need international trade if they are to continue to grow and be strong. Grab that seat at the table and play a role in writing policy.