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Rabobank: Opportunities abound for U.S. dairy exports

Published on December 31, 1969 3:01AM

Last changed on September 9, 2013 6:51AM




Capital Press

With consumption of dairy products growing globally and growth in the U.S. domestic market slowing, it's time for the U.S. industry to look overseas.

That was the message a Rabobank strategist brought to clients during a dinner presentation Tuesday in Twin Falls, Idaho.

Growth of dairy consumption in the U.S. has slowed considerably due to smaller population growth and a slowing of the economy, said Tim Hunt, Rabobank dairy strategist.

At the same time, consumption is rising quickly in countries that find it difficult to produce their own milk, particularly China, Southeast Asia and Mexico, he said.

"It's creating opportunity offshore at the same time the market is slowing down in the U.S.," he said.

But foreign customers don't necessarily want the dairy products traditionally produced in the U.S., and many U.S. processors haven't gotten to know foreign buyers or what they want, he said.

"U.S. exports are rising but they're often sold at a discount on the world market; it's not what they (buyers) want," he said.

For example, no one outside the U.S. wants orange cheese, and the U.S. still produces a lot of nonfat dry milk while foreign customers want skim milk powder and whole milk powder, he said.

Some U.S. companies are reorienting themselves to the export market, building some plants and tweaking others. The size of those investments vary, he said.

Revamping U.S. processing to meet world demand and capture sales is a big investment -- in effort, time and money -- but it's one the U.S. industry needs to make, he said.

The industry is slowly coming to grasp the opportunity, strengthening marketing relationships and investing in facilities, but in some cases there are still doubts about the sustainability of exports and U.S. competitiveness, he said.

"Every investment entails risk, but it is well worth it," he said.

The time for change has come. It's time for the U.S. to bloom, meet the demands of the world and stop selling at discount, he said.

"The U.S. can choose just to service the domestic market but at the expense of growth," he said.

Even if the U.S. doesn't want to grow through exports, U.S. exports affect U.S. milk prices. And with 10 percent to 15 percent of U.S. milk production going to exports, it's important to capture the value of that excess milk, he said.

It's important that dairymen are aware of the global opportunities because some are co-op members that will elect those who will vote whether to invest in export opportunities, he said.

In addition, dairymen who understand the future of the industry are better equipped to make decisions on their own investments, he said.

"Like it or not, it's a global economy," said Jon Nelson, a Jerome, Idaho, dairy producer, adding that he agreed the U.S. needs to change manufacturing to capture more of the global market.

There's much more the U.S. could do with its milk in the way of exports and value-added products, said Louis Bettencourt, a Wendell, Idaho, dairyman.

Exports are becoming increasingly important as the U.S. begins to fill a larger role in supplying regions that can't meet their dairy needs, said Tara Russell, sales and marketing director for Idaho Milk Products, Jerome, Idaho.

IMP was established to take advantage of the value-added market and produces milk protein products widely accepted in the global marketplace, she said.

The company sees opportunity in the global arena and will continue to develop value-added products for specific applications, she said.


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