Suber outlined steps to sustain U.S. export growth while moving towards becoming a consistent supplier:
• press ahead on price reforms
• pursue an ambitious trade policy agenda
• continue to develop better risk management tools
• lead the way to assure buyer and consumer confidence – individually and collectively
• “double down” on talking to customers, with an eye toward future innovation
“Export growth will not be a straight line, but our path is the right path,” said Jay Waldvoel, DFA’s senior vice president of strategy and global development.
He said several macro factors – the free flow of information and capital – were helping drive global demand for dairy – especially in China.
“There are more people in more places with more money,” Waldvogel said.
Among the first investments in emerging economies is food, and dairy is seen as a highly nutritious protein source worldwide, as people seek to feed not only their children, but maintain nutrition throughout their lives. In other cases, dairy is seen as an indulgence, and consumers are seeking more options.
Despite a growing appetite for dairy, most major dairy importers will not be able to produce their own milk due to climate, land and water availability. He noted, for example, China has 22% of the world's population, but just 7% of the farmland and 3% of the world's water.
And, despite enormous financial investments in China's dairy sector, 2013-14 milk production totaled 70 billion lbs., down from 2010-12 by 6%-15% due to animal health issues and dairy farmer exodus.
The U.S. is increasingly being seen as a global dairy supplier, Waldvogel. And, compared to other potential suppliers, it may also hold the greatest potential.
New Zealand's dairy production system is changing from low-cost, grass-based operations to freestall barns and milking parlors, he noted. Higher input, labor and land costs will take away some of New Zealand's economic advantage.
Waldvogel said the European Union creates a dichotomy, with some areas thriving when quotas come off, while others will drop out without subsidies. And, while milk quotas may be lifted, "cow quotas” related to environmental and other regulations will prevent growth in some areas.
While strong grain prices are encouraging agricultural investment in Brazil and Argentina, good returns from grain production will slow investment in the dairy sector, with its different production and marketing cycles. And finally, political strive in another area seen as an emerging dairy production center, the Ukraine, will slow growth there.