Partnerships, innovation, branding among keys to surviving dairy’s challenges

Tom Vilsack

Capital Press

BOISE — Milk producers who leverage existing partnerships and think broadly stand the best chance to succeed whether or not market conditions improve soon, speakers said Nov. 7 as Dairy West’s two-day annual meeting kicked off in Boise.

Former U.S. Agriculture Secretary Tom Vilsack said exports — recently about 17 percent of U.S. milk produced and increasing — remain an opportunity for producers who work well with partners and know how to talk about their own product’s quality.

Sara Dorland, managing partner at Ceres Dairy Risk Management, said milk producers should continue to innovate while cultivating relationships with partners ranging from suppliers and community members to lenders, regulators, and checkoff programs that collect a portion of producer revenue to fund marketing and research.

“It’s tough to look at more investment when prices are down, but that is what we are going to have to do to pull ourselves out of this,” she said.

Milk prices have been down for reasons including trade disputes slowing cheese and whey exports recently, higher milk production and additional production capacity, a decline in consumption of “cheese food” such as barrel cheese, and trading in greater volumes on the price-driven Chicago Mercantile Exchange, Dorland said.

She expects milk to sell for $15.50 to $16.50 per hundredweight in 2019, up by 3 to 5 percent from recent prices. Prices remain 30 to 40 percent below those of 2014, when demand was up substantially and feed costs were higher, she said.

“The current market is difficult, but long term I am bullish,” Dorland said.

U.S. producers are efficient, and produce a high-quality product for the world, she said.

“We are going to continue to have export opportunities,” said Vilsack, president and CEO of the U.S. Dairy Export Council and a Feeding America board member.

As the world adds population and creates a larger middle class, global consumption of protein including milk is expected to increase, he said.

U.S. dairy producers and their partners can gain an edge by establishing brand identity and clearly communicating how their products stand out in the larger market, Vilsack said.

The Dairy Export Council recently added more staff based in other countries. The employees are tasked to show U.S. dairy products’ strengths and how the products can be best used.

“All of this is designed to drive, more deeply, U.S. presence,” Vilsack said.

He said he remains optimistic despite current challenges — from trade agreements and milk-alternative products to Europe working through an oversupply of milk — because U.S. producers can efficiently supply safe, high-quality products.

Constant innovation is needed, Vilsack said. And milk producers should be more vocal about their commitment to environmental sustainability, which separates U.S. producers from much of their global competition, he said.

“We are up to the challenge,” he said. “We’ve got a story to tell and markets to go to.”

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