Cheddar cheese is one U.S. dairy product whose export pace has quickened since March, thanks partly to the Export Assistance Program managed by Cooperatives Working Together (CWT).
By late May 2010, CWT had assisted its members in making Cheddar cheese export sales totaling 15,652 metric tons (34.5 million pounds) to 17 countries on four continents.
That's almost five times as much as allowed each year under the federal Dairy Export Incentive Program (DEIP), says Jim Tillison, CWT's chief operating officer.
Although very little of the CWT-assisted cheese exports had yet been shipped, CWT believes its efforts are helping "open markets for the long-term sale of U.S. cheeses overseas,” Tillison says.
Tillison is encouraged by the progress of exports so far. "We hope to see a year in 2010 as we saw in 2008,” he says.
In March, CWT reactivated its Export Assistance Program, which had lain dormant since 2008. Although its previous efforts included whole milk powder, butter, butterfat and other cheese varieties, 2010's focus has been on Cheddar cheese.
That's because economic analysis indicated that sizable U.S. inventories of Cheddar cheese were hampering a recovery in producer milk prices. Assisting its members with exports of American-type cheeses provided the most immediate way to boost prices in the short and long term, CWT says.
Since CWT conducts a weekly bidding process for the exports, those spot cheese sales are likely to continue increasing – and not just for 2010.
"Those spot sales can evolve into long-term, sustainable business relationships,” says Margaret Speich, vice president of communications and membership for the U.S. Dairy Export Council (USDEC).
"The primary objective of CWT export assistance is to help CWT member cooperatives establish relationships with key buyers and markets, thus complementing USDEC's marketing programs that are designed to facilitate relationships between overseas buyers and U.S. suppliers,” she says.
Speich points out that CWT is not a government program. It's funded from voluntary contributions from dairy farmers. As such, "it does not face the same restrictions as DEIP and is not limited in the quantity of dairy products it can provide assistance,” she says.
In 2008, the last year it was used, CWT's Export Assistance Program helped aid in the sale of 87 million pounds of dairy products (the milk equivalent of 2 billion pounds), including 3.3 million pounds of cheese, to 30 countries.
Here's how CWT's Export Assistance program works:
CWT member-cooperatives who seek assistance submit a bid specifying the product to be exported, the product quantity, the end customer, the country where the customer is located and the amount of assistance per metric ton of product needed to make the sale.
CWT and USDEC staffs evaluate each bid received against world market conditions and the world product prices. If they determine that the requested assistance is reasonable, the bid is accepted.
CWT pays export bonuses to the bidders only when delivery of the product is verified by the submission of the required documentation.