Jul 10, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin

Exports Are Ripe Opportunity for U.S. Dairy

February 23, 2012
By: Catherine Merlo, Dairy Today Western and Online Editor google + 

Processors emphasize role of global markets in the industry’s future.


TEMECULA, Calif. - Three U.S. dairy processing executives today stressed the tremendous opportunity that exports hold for the U.S. dairy industry.

Officials with Hilmar Ingredients, Leprino Foods Company and California Dairies Inc. (CDI) each emphasized the importance of foreign markets as they addressed some 120 attendees at Western United Dairymen’s 2012 Convention being held here this week.

The processors – each with dairy processing plants in California -- pointed to the world’s growing population, increasing appetite for proteins and limited dairy supplies from other countries as catalysts for U.S. dairy export growth.

“World dairy demand cannot be met by current production,” said Mike Reidy, Leprino senior vice president. “The U.S. is in a unique position and needs to capitalize on it to take advantage of the window of opportunity as customers come to our market. We need to make sure we don’t miss out on it.”

The world’s population will increase to 9 billion by 2050, up from today’s 6 billion, said Andrei Mikhalevsky, CDI’s new CEO. “Demand for food and water will be astronomical,” he said.

Seventy-five percent of the demand growth is taking place in China, India, the Middle East, Africa and Southeast Asia. As consumers’ diets in countries like China become more Westernized, foreign customers are buying more cheese. Companies like Domino’s, Pizza Hut and Papa John’s also are seeing explosive growth. 

“That’s been helping drive the growth in export markets,” Reidy said.

In Asia, infant formula sells as a premium product, said Mikhalevsky. That offers infinite possibility for the U.S., which is looked upon as safe supplier. Emerging markets are also looking for whole milk powder, whey, skim milk powder, cheese, butter and value-added dairy products that can fulfill specialty needs, such as infant nutrition.

“The export market is opportunity, not an unloading ground, for U.S. dairy products,” said Kevin Hogt, vice president and general manager of Hilmar Ingredients. But, he added, “international markets demand significant investments.”

Hilmar has seen its export market increase from 22 to 44 countries in the last five years. Its top markets include Japan, China, Korea, Mexico, the Netherlands and Vietnam.

New Zealand remains a major dairy product supplier to China, but the U.S. share is growing rapidly, Reidy said. He also said the good news is that U.S. dairy exports are rising while dairy imports into the U.S. are falling.

Reidy referred to findings by Bain & Company, which looked at markets for the U.S. dairy industry in 2009 and again in 2011. In 2009, Bain & Company projected a 7-billion-pound gap between expected world milk production and demand by mid-decade. A re-analysis by Bain & Co., released last fall, reaffirmed its original findings and showed the world supply-demand gap is even wider than originally anticipated, with the U.S. a likely source to fill it.

“The Bain report is telling America to wake up,” Reidy said. “A window of opportunity is here. Jump on it because it won’t be here forever.”

Mikhalevsky concurred. “We must act now,” he said. “Competition will grow, especially from South America and Eastern Europe. Increased trade won’t come to the U.S. by default.”

“Buyers are willing to stay with the U.S. but [the U.S. dairy processing industry] needs improvement,” Reidy said.

The biggest threat to America’s export opportunity is “enacting policies that convey we’re not committed to being a consistent supplier,” said Reidy.

The U.S. must focus on intelligent trade policy, such as the free trade agreements recently enacted with Korea, Colombia and Panama. The U.S. must also work on market access as well as research and insights to understand what foreign customers want. U.S. dairy producers must develop effective risk management strategies to help them cope with market volatility and remain viable milk suppliers. Processors must innovate and produce differentiated products for international markets. For example, that might mean products with lower salt levels, Reidy said.

Hilmar Cheese handles 12% of the milk produced in California and 12% of Texas’ milk output. At its two cheese plants in Hilmar, Calif., and Dahlhart, Texas, the company produces cheese and whey, among other dairy products.

Leprino is the world’s largest mozzarella producer. It just built its 10th U.S. plant, located in Greeley, Colo. The company also operates a cheese plant in Lemoore, Calif.

CDI accounts for 43% of California’s milk production and 9% of U.S. milk output. It operates six dairy processing plants in the Golden State.

See Comments


 
Log In or Sign Up to comment

COMMENTS (2 Comments)

Rob Wonderlich - Ollie, IA
Our processors need to make products to world wants in order for us to keep increasing our exports of dairy products. We cannot expect to completely "Americanize" the rest of the world's diet to increase our share.Also with the financial problems faced by many governments around the globe I would expect currency values to play a big role in our ability to increase dairy exports.
8:09 PM Feb 25th
 
Rob Wonderlich - Ollie, IA
One of the biggest problems with the future for U.S. dairy exports is the refusal of our processors to make products the world wants. We cannot expect to completely "Americanize" their diets. I would expect also wide swings in currency values in the near future to also play a role in our ability to increase exports.
8:02 PM Feb 25th
 



Name:

Comments:

Receive the latest news, information and commentary customized for you. Sign up to receive Dairy Today's eUpdate today!

 

MARKETS

CROPSLIVESTOCKFINANCEENERGYMETALS
Market Data provided by Barchart.com
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions