Consider the following. World population will grow exponentially. With high economic growth in emerging countries, animal-based diets will increase in importance. As that happens, global dairy demand will grow, setting the stage for the U.S. dairy industry to expand its market considerably.
In 2012, U.S. dairy exports accounted for over 13 percent of all U.S. milk solids – a full day's worth of national milk production every week. Over the last 10 years, over half of the growth in U.S. milk production was exported. Over the last 5 years, over two thirds of new U.S. milk solids production found its home abroad. With USDA predicting U.S. milk production to grow by 30 billion pounds over the next ten years, we need to ask ourselves where the new buyers for that milk will be.
Studies are projecting that growth in domestic per capita consumption of cheese will slow, and fluid milk consumption shows an unrelenting downward trend. In such an environment, we really do need dairy exports to drive our industry forward, more than we ever needed them before.
What role can Minnesota play? Are we preparing for the brave new world where U.S. dairy sector may become a major global dairy player? In order to answer those questions, I reached out to several Minnesota-based dairy companies and asked them two questions, 1) What products are they currently exporting; 2) How important will exports be for their business going forward?
I first connected with Glenn Kaping, Director of Sales, Marketing and Business Development at the First District Association, headquartered in Litchfield, Minnesota: "First District Association (FDA) has been exporting to key accounts in the Japanese market for nearly 30 years. Over those years, our exports have grown geographically to include China, and at various times countries located in S.E. Asia, Central and South America, and the European Union. In addition to geographic expansion, exported volumes have also increased and now represent approximately 35% of our lactose and nearly 30% of our whey-protein-concentrate production. Recently, FDA has experienced an increased interest in the exporting of cheese, a product we have not yet exported, but one that over the next several years may represent a growth opportunity. We plan to keep international business "front of mind" as we consider future capital expenditures and product mix decisions."
FDA is just completing a major investment cycle in their cheese plant in Litchfield that has substantially increased their capacity, but also set the foundation for further growth at the same location in the near future.