Jim Dickrell is the editor of Dairy Herd Management and is based in Monticello, Minn.
Dairy Exports on Torrid Pace
Nov 04, 2013
The numbers for our overseas shipments this year are incredible. Can we sustain these levels?
USDA’s August report on dairy exports is almost unbelievable. Compared to August 2012, the United States exported 45% more dairy products on a value basis.
China was the big buyer, up a whopping 170% over a year ago. The Middle East and North Africa were up 108%, and Southeast Asia was up 55%.
On a milk solids basis, that means 17.5% of total U.S. milk production was exported in August. And with imports hovering at 2.8%, that means we had net outbound sales approaching 15%. Incredible.
Year-to-date, the numbers are nearly as impressive. On a value basis, the U.S. is up 23% in exports sales and up 26% in volume. Again, incredible. You can read more here.
Not to be a downer, but this torrid rate of sales raises the question: Can we sustain such a pace? For the last couple of months, we’ve been exporting more than 17% of our milk solids. It’s unreasonable to expect this pace to continue each and every month, says Alan Levitt, U.S. Dairy Export Council director of communications and market analysis.
There will be months, perhaps quarters, where world market conditions aren’t as conducive to such a sizzling pace. But Levitt is hopeful this rate is sustainable long term.
In some sense, it has to be. Even a few percent loss of sales means that powder and cheese and whey and lactose will sit in U.S. warehouses, threatening domestic prices big time. Remember 2009?
The critical issue is whether U.S. exporters, now benefitting from the boom, will be willing and able to defend their market share if demand softens or New Zealand or Europe really crank up production.
The other issue is U.S. domestic consumption. Most worrisome is fluid milk’s decline. In 1975, per-capita consumption of fluid milk and cream was 260 lb. Today, it’s about 195 lb. and still declining. That’s a 25% loss in 35 or so years. That, too, is stunning.
And whatever milk doesn’t get consumed as fluid and cream must go into the vat, the churn or the dryer—and made into cheese, yogurt or other dairy ingredients. In other words, it goes from our highest value, Class I product to some of our lowest. And this ups the ante on exports.
Two weeks ago, I reported negotiators are finishing up talks on the Trans Pacific Partnership. We won’t know the details of those negotiations for some time. And it will take years for governments to approve the deal, and even more to phase in the agreement. But we’re still in a better position to have the deal nearly done.
As I reported in my previous column, inking the TPP could be as important to American dairy’s place in the world as the NAFTA agreement was decades ago. NAFTA showed us what was possible. TPP could cement our place in world markets for decades to come.
We need to be there. The alternative, watching exports levels month to month and hoping for the best, is just too spooky.