By Tom Suber, President, U.S. Dairy Export Council
Anniversaries are filled with tradition.
Tradition, for example, says that on a 20th anniversary, the requisite present is china.
On this, the 20th year since the founding of the U.S. Dairy Export Council (USDEC) in 1995, that would be a most welcome gift to our members, featured in the anniversary video below.
Tradition, of course, is talking about the china you pull out for special dining occasions. I’m thinking more along the lines of the gift of China returning to the dairy import market more aggressively.
We have been coping with a market imbalance (due in part to curtailed Chinese purchasing) for some months now. Not the best way to celebrate 20 years.
However, another anniversary tradition bids us to look back on how we got here. And when you do that, when you look at the entirety of the U.S. dairy industry’s evolution over the past two decades, the picture grows much more positive.
Putting things in perspective
The USDEC staff has combed through 20 years of industry communication we wrote for Cheese Market News and other venues, and we have located some citations that put things in perspective.
Through three-quarters of 2015, we are facing some of the toughest market conditions we’ve faced over the last 20 years, but market cycles are nothing new.
Case in point from 1998, in the midst of the Asian financial crisis, we remarked: “Even as the drumbeat of bad news from overseas pounds our ears, it’s important to remember that the events bruising the world’s economies are all just business cycles. Our challenge lies in understanding what these cycles mean, how long they’ll last, how they shape our fundamental strategies, and how we can minimize their immediate effects while maximizing the opportunities they present.”
At the time, that was a fairly bold suggestion, considering the concept of a broad U.S. dairy export initiative was still in its infancy. But that philosophy not only helped U.S. suppliers emerge stronger from the Asian economic crisis, it helped them rebound again a decade later when the Global Financial Crisis took a 40 percent bite out of U.S. dairy export value.
Commitment to exports has paid off
In September 2009, we noted: “U.S. dairy suppliers can look at the last eight months in a couple different ways. They can make a knee-jerk reaction that export markets are unpredictable and not worth the effort. Or they can look at nearly a decade of steady export expansion and virtually unanimous projections that, in the years ahead, worldwide demand will grow faster than available supply.”
U.S. suppliers chose the latter option, and U.S. dairy exports surged by more than 300 percent to $7.1 billion from 2009-2014.
Indeed, the last 20 years have been a story of resilience.
In those early days, we would often cite the need for a steady presence in overseas markets, as noted in December 1997: “If processors rely on the export market simply to dispose of surpluses, they will become suppliers of last resort, whose opportunities depend on production shortfalls in other countries.”
Those types of reminders lessened over time as U.S. suppliers heeded the call to commit to overseas markets, to invest in making products to overseas specifications, to devote sales and service resources to overseas business, and to build international knowledge and experience.
Growth aided by USDEC initiatives
USDEC has consistently sought to assist that growth with education and insights for specific countries, regions and products.
A cheese example was noted in November 2001: “Much work is still needed to introduce cheese into the Chinese diet... As happened in Mexico, chefs (and consumers) in China associate the United States with processed cheese. In Mexico, early consumer and professional resistance to American cheeses was overcome with education and sampling programs at point-of-purchase. Suppliers will need to demonstrate the use of U.S. cheeses in entrees, sandwiches, appetizers and desserts and to initially promote... varieties compatible with consumer tastes.”
We haven’t just paid lip service to such notions, but backed them with programs aimed at informing emerging-market end-users about U.S. cheese varieties and cheesemaking capabilities, or instructing end-users on the functionality, applications and nutritional benefits of whey proteins, or investigating methods to improve U.S. milk powder quality to meet the tight specs of overseas buyers. And we also backed them with extensive and ongoing efforts to maintain market access and expand opportunity through beneficial trade agreements.
Such initiatives complemented U.S. suppliers’ own expanding focus on world opportunities and helped drive U.S. dairy export volumes from the equivalent of 4.4 percent of U.S. milk supply in 1995 to 15.3 percent last year.
Long-term outlook remains strong
We have been careful not to sensationalize the outlook and have avoided hyperbole in discussing export opportunities. I could have cited a dozen quotes where we talk about volatility, the need for patience, and the hard work that goes into building export markets. That remains the case. But conditions today notwithstanding, the long-term outlook also remains strong.
As we noted in September 2008 when U.S. exports signaled an imminent dive, there were reasons for optimism: “Global consumers are getting the message on dairy’s health benefits and so are governments. Besides the myriad school milk programs in developing nations, countries like China are officially advising populations to consume more dairy... Many global consumers have become more accustomed to dairy tastes to the point where cheese, milk and other products have become a regular and expected part of mealtime. To many, dairy has become a staple.”
I have every confidence that U.S. dairy exports will be stronger when USDEC’s 25th anniversary hits in 2020. I’m not sure, though, what we’re going to do with the silver.