A Look at U.S Dairy Exports
In 2020, the U.S dairy industry exported more than $6.5 billion of dairy products despite the Covid-19 pandemic. With economies across the globe starting to rebound, producers are curious as to what dairy exports are predicted to look like in 2021. Krysta Harden, president and CEO of the U.S. Dairy Export Council (USDEC), sat down with AgriTalk Host Chip Flory to discuss what lies ahead for dairy product exports this year.
“I want to make sure that we are creating a situation where farmers can make money and run their businesses in a way that is profitable while doing it in a [sustainable] way,” Harden says. “In the export world, that’s the future. Our farmers are efficient, effective, and impactful and we produce more than we’re going to consume in the U.S. Our population is more stable than other populations around the world and we can help feed them, and that’s where exports come into play.”
According to Harden, one of every six tankers of milk is exported to other countries. If that one tanker of milk stayed in the U.S., it would cause a significant negative impact to the milk checks producers receive.
“The point is that we are consuming [more dairy] and we are growing consumption here in the U.S., and there’s a real interest in making sure that each household has dairy and dairy products in it. But we still produce more than we consume. So even if you don’t see exports affecting you directly, collectively as an industry exports are giving a home to great products that we’re not consuming in the U.S.”
Canada and Mexico
One factor affecting how much the U.S. is exporting is trade policy. According to Harden, the United States Mexico-Canada Agreement (USMCA) has had significant influence on the number of dairy products exported. However, trade issues with Canada and Mexico continue to linger. U.S. Trade Representative Katherine Tai along with the USDEC is working to resolve some of those issues.
“Tai is well aware of our interest with Canada,” Harden says. “She did inherit some of these issues and we’re going to make sure that she doesn’t forget [about the USMCA].”
Currently, Trade Rate Quotas (TRQs) are one of the main concerns impacting exports.
"Canada needs to stop manipulating its dairy TRQs; its actions have not only negatively impacted U.S. dairy farmers and manufacturers, but also constrained many Canadian companies from being able to make use of these new TRQs to expand their supply options,” Harden says. “USMCA lays out clear requirements on TRQ procedures, and we urge the U.S. government to ensure full compliance by Canada with those commitments.
“This is not our first round with the Canadians on these types of issues,” she adds. “It’s just a lingering, pestering problem that we’ve had a hard time getting to. We need to hold them accountable. So, it does impact our markets, not as drastically as some of the other issues, but it does not open up things like we had anticipated and that we had planned on because they have not met those commitments.”
What about Mexico?
“Mexico is our No. 1 market and a lot of our products go there, but we really are having some concerns in Mexico as well,” Harden says. “[Mexico] has been advancing new compliance processes meeting cheese standards. If those go forward it would be extremely burdensome, so ‘troubling’ is a word that comes to mind when I think about what might be ahead with Mexico.”
To add to the concern, Mexico’s economy has been hit extremely hard by the Covid-19 pandemic. Because of this, consumers in Mexico could cut down on their dairy product purchases. This, along with USMCA trade concerns, is causing the U.S. Dairy Exports Council to double down their focus on exports sent south of the border. However, Harden believes there is still great opportunity in Mexico.
Central America
As global economies start to rebound, there’s talk Central America could become a larger importer of U.S. dairy products.
“Secretary Vilsack laid a lot of groundwork in Central America, and we have made great strides there,” Harden says. “It has really good potential there, and we believe it really does have opportunity for dairy in the future. I’m excited about what’s going to be possible in several of these countries.”
China
“Right now, China is our largest single country market and it really plays a big job [for dairy exports],” Harden says. “Whey and lactose are two products that we really do have good growing potential as they rebuild their hog herds after African Swine Fever. But there are also untapped opportunities there that we’re really focusing on like skim milk powder and cheese.”
According to Harden, skim milk powder only holds 5.5% market share in China and 6.3% for cheese. This means there is large potential for export growth in these categories.
“We are in great dialogue with the Chinese about these products and we are trying to make sure that we get these dairy products to them,” Harden adds.
But what’s causing all the attention to dairy products in Asian countries?
“The industry met a real commitment by putting an office in Singapore,” Harden says. “This sent a signal that said, ‘We’re here for the long-haul. We’re serious about our partnership.’ I think that sent a positive signal to Southeast Asia that U.S. dairy is serious about exports.”
Sustainability
Not only is sustainability a hot topic here in the U.S., but in other countries as well. Harden wants to make sure trading partners know just how sustainable dairy products are.
“If we’re going to be the product of choice, we have to be very honest and accountable on these issues,” Harden notes. “We’re not letting others define U.S. dairy, we’re doing it. I’m very pleased and proud of the industry’s proactive approach and I’m excited to go to our trading partners and say, ‘Have you looked at U.S. dairy’s commitment to sustainability?’ I’m excited to be that spokesperson for these products.”
