Processors and traders moved 3.24 billion pounds of total milk solids into export channels last year, 7 percent more than 2010 and 49 percent more than 2009. Overseas shipments were valued at $4.82 billion, up 30 percent from the year before, according to government trade data released a few weeks ago.
With these gains, a growing and significant proportion of the U.S. milk supply is now sold overseas, notes the U.S. Dairy Export Council (USDEC).
Exports were equivalent to 13.3 percent of U.S. milk solids production, up from 12.8 percent in 2010 and 9.3 percent in 2009. The ratio of milk powder, whey proteins, lactose and cheese sold offshore was the highest ever, a sign of how important exports have become to the U.S. dairy industry.
“The most important benefit of our ongoing export expansion is that it enables U.S. dairy farmers to grow,” says Les Hardesty, a dairy producer from Greeley, Colo., chairman of USDEC and a board member of Dairy Management Inc., which is USDEC’s primary funder. “Since 2003, U.S. milk production has increased 15 percent and more than half (60 percent) of the incremental milk volume has been sold overseas. USDEC’s long-term engagement with U.S. suppliers in overseas markets has helped make that possible.”
Export volumes also were remarkably consistent throughout the year, helping to forestall boom-and-bust cycling on the domestic market. The U.S. dairy industry has exported between 12 and 15 percent of its production for 21 straight months. Nonfat dry milk/skim milk powder (NDM/SMP) exports have been between 33,000 tons and 40,000 tons (74 million lbs. and 87 million lbs.) for 14 consecutive months.
But markets conditions in early 2012 are more challenging for U.S. suppliers.
Prices have eased about 10-20 percent from the spring 2011 peak. Sellers’ offering prices are more aggressive. Buyers are comfortable with current holdings and in no rush to buy ahead. And global economic issues remain a demand concern, particularly in Europe.
“The resolve of U.S. suppliers will be tested in 2012. But the importance of the export market to the health of the U.S. dairy industry is undeniable,” says Hardesty. “More than one of every eight tankers of milk that rolls out of producers’ driveways is turned into a dairy product that’s consumed overseas.”