Free Trade Agreements Generate $8.3 Billion for Dairy Farmers over 10 Years

A study released by the U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF) shows free trade agreement have generated $8.3 billion in additional dairy farm income between 2004 and 2014.

That equates to 34¢/cwt higher average milk prices over the 10 years, or about $75/cow per cow per year. The average 200-cow herd would therefore see a $15,000 per year benefit.

The $8.3 billion impact “was an estimate of the increased dairy farmer grow income due to the incremental expansion of demand that stemmed from all the free trade agreements,” says Peter Vitaliano, NMPF economist.

“This estimate includes the effects of additional sales from the expanded exports and the higher milk prices that resulted from additional sales,” he says. The higher milk prices, however, dampened demand domestically somewhat, but those effects were accounted for in the analysis.

The amount of U.S. exports have exploded over the past decade and a half, growing form less than $1 billion in value to $7.1 billion in 2014, an increase of 625%. Every dollar of U.S. dairy exports generates $2.76 on economic output.

Global dairy trade is currently in a slump, and might not fully recover until 2017. But the USDEC/NMPF analysis shows Free Trade Agreements  have the power to boost exports, and thus create opportunities for dairy farmers, dairy processors and the U.S. economy.

“Positive return on investment is not the automatic result of every free trade agreement,” says Tom Suber, USDEC president. “But this analysis shows that each individual agreement negotiated over the last 15 years has led to an increase in dairy exports. That’s why we focus so much energy on our trade agreements.”