Will Dairy Exports Make Better Headway in 2024?
Krysta Harden, president and CEO of the U.S. Dairy Export Council (USDEC) graced the stage at the 2024 High Plains Dairy Expo in Amarillo, Texas sharing that she will be excited when exports rise.
“I’ll be excited when we get to 20%,” she says, noting that currently we hover between 17-19%, as U.S. export value finished 2023 at $8.11 billion. That is the second largest value of all time but down 16% from the record year of 2022 as both volume and prices eased.
Tug of War
Harden told the mainly producer-dominated audience at High Plains that today’s tug of war of exports has created a sluggish demand and weakened supply caused by four factors:
· U.S. and global milk production is limited by poor margins.
· Inflation has cooled U.S. demand growth.
· International demand is subdued by China and inflation.
· Global competition has increased, although that may be easing slightly.
USDEC listens to their international customers on what they need and why, and Harden says it takes time to establish relationships and understand how to incorporate dairy ingredients, like cheese, into their diets.
Harden also pointed out that U.S. consumers spend a relatively small percentage of their income on food and that other countries don’t have that luxury. Dan Basse, president of AgResource Company, concurs with Harden sharing that Americans spend 6.9% of their paycheck on food.
“Other countries spend significantly more,” he says. “U.S. food is cheap and abundant.”
Despite contraction in 2022 and stagnation in 2023, China remains the largest dairy importer in the world – a position it is likely to retain for the foreseeable future. However, China’s future growth trajectory remains murky. Although Harden points out that China needs to buy from someone.
“They come down from New Zealand and Australia, and New Zealand and Australia have products that have to compete with us and other markets,” Harden says. “So, people ask, ‘Is China going to come back?’ and I think it is limited for us.”
A Bright Spot for U.S. Dairy
A bright spot this past year for U.S. dairy exports was Mexico. U.S. suppliers shipped a record high 631,511 metric tons (MT) in milk solids equivalents (MSE) to our neighbor to the south, up an astonishing 13.5% compared to the same period in 2022. These strong volumes were critical in compensating for slower exports to other major demand destinations.
Harden points out that 80% of dairy exports are ingredients and those numbers will start to change.
Beyond just China and Mexico, the global economy is going to need to pick up if U.S. dairy exports are going to rebound in 2024.
“As we’ve seen this past year, there is a clear connection between economic well-being and dairy consumption,” she noted.
Regardless of the external factors, the financial well-being of the U.S. dairy farmer will be critical to U.S. export success in 2024. Harden says the U.S. dairy's role in helping feed and nourish the world is something we should take full advantage of.
“The opportunity is ours. The demand is there,” she says, pointing out that U.S. dairy is diverse, highly efficient and sustainable.