Global dairy competitors have greatly increased their overseas shipments to meet the product’s growing demand.
Global demand for whole milk powder (WMP) is sizable and growing, yet the U.S. plays little or no role in meeting that demand.
“That needs to change,” says Marc Beck, executive vice president of strategy and insights for the U.S. Dairy Export Council (USDEC). “To be a consistent global supplier, we need to produce what the marketplace wants and where volume opportunities exist.”
In the August edition of its “Export Profile” newsletter, USDEC notes that over the last 10 years, New Zealand has nearly doubled its WMP exports to 1.1 million tons. Argentina and Uruguay saw their combined export volume rise 52% to more than a quarter-million tons. In all, global WMP trade topped 2 million tons in 2011 at an estimated value of more than $7 billion.
China/Hong Kong is the world’s top WMP buyer, with imports rising more than 150% to 370,836 tons from 2002-2001, according to Global Trade Information Services.
Demand in other nations, including Algeria and Southeast Asia, also continues to rise.
WMP opportunity lies not only in expected rising demand but in existing business, Beck says. China now gets about 95% of its WMP from New Zealand.
“That puts Chinese buyers at substantial risk because of the nature of New Zealand’s production, which can be severely disrupted by weather,” says Brad Gehrke, USDEC’s director of global trade analysis. “Global dairy markets are so finely balanced between demand and supply that there is little room for error. Natural disasters like drought can result in major repercussions on supply chain security.”
In the past, several factors kept U.S. dairy manufacturers from pursuing WMP markets. Among those were U.S. dairy policy and the investment required to produce quality WMP. But the industry mindset is changing, according to USDEC.
Several U.S. WMP projects are under consideration. Among them, Dairy Farmers of America (DFA) announced earlier this year that it would build an $85 million plant in Fallon, Nev. The new DFA plant will be capable of making more than 40,000 tons of WMP and other dairy ingredients annually. The plant is expected to be up and running by July 2013.
“The more diversified we are in our product offerings, the more we will be able to shift to meet the needs of the marketplace,” says USDEC’s Beck. “WMP is a growth category and a large category. It is a strategic imperative that we play there. Our industry’s growing interest is a positive and welcome development.”