Export markets continue to drive demand for dairy

By CAROL RYAN DUMAS

Capital Press

Dairy exports have been trending upward over the last decade, with 2010 posting near-record sales and 2011 on pace to do the same, said John Kelly, manager of international affairs for International Dairy Foods Association.

Dairy exports in the first nine months of 2011 were valued at almost $3.6 billion, according to U.S. Dairy Export Council. Dairy exports for all of 2010 were almost $3.8 billion.

Year-to-date sales were strong, but have been slowing in the last two months, said Tom Suber, president of USDEC.

Whey remains strong, cheese and powder are sliding a bit, and butter is sliding fast. But it's an expected cyclical decline, unlike the economic crash in 2009, he said. Demand and buying are still strong.

"Volumes in 2012 may not look as strong as 2011 (but) I suspect we'll stay at good levels," he said.

There won't be lingering stocks in New Zealand and Australia to hang over the market. Current production is being taken up quickly. Things should start picking up again in the second quarter of next year, he said.

Up until about seven years ago, the U.S. imported more dairy than it exported. But the tables have turned. The U.S. now exports more than 13 percent of its production, and exports are significantly greater than imports, Kelly said.

There are a number of factors behind increased world demand, but the largest factor is emerging economies. A growing middle class with an increased appetite for animal protein is driving demand, he said.

The Pacific Rim represents the largest growing markets, and the U.S. is uniquely positioned to supply that demand, he said.

"We have the core fundamentals to be a consistent supplier," he said.

The U.S. has the infrastructure to efficiently produce, process and deliver and has the ability to grow, unlike some of its competitors.

"We have the fundamentals to produce maximum amounts of milk without having to increase costs significantly," he said.

"Exports, in general, are becoming more and more important to the (U.S.) industry," he said.

Domestic dairy consumption has leveled off, and the industry is focusing on growth markets overseas to help the industry here at home, he said.

The biggest threats to exports are tariffs and regulatory barriers in foreign markets and a possible legislative push for milk supply management in the U.S., he said.