By Tom Vilsack
In the last 20 years, U.S. dairy exports have grown from less than $1 billion a year to nearly $5 billion. That growth has benefitted everyone in the U.S. dairy industry.
But our dairy export volume has plateaued in recent years at about 15 percent of the U.S. milk supply. We believe we can grow that number to 20 percent by 2021.
We're calling this ambitious plan “The Next 5%.”
Reaching the goal together
As the CEO and president of the U.S. Dairy Export Council, I am a big believer in transparency. That's why I'm going public with our broad objective. There is no turning back.
On Thursday we held a webinar with USDEC member companies to discuss a business plan that describes in some detail how we will get there.
With this plan, we are going to put even more "feet on the ground" in key markets where we have international offices. USDEC’s mission has always been to enhance demand for U.S. dairy products.
We don't sell any products. U.S. dairy exporters do. To state the obvious, U.S. farmers provide the milk. We all work together.
Looking ahead, we need even more coordination between USDEC and our members (co-ops/processors and traders). If we are going to achieve this BHAG -- Big, Harry, Audacious Goal -- it's going to be together, for the benefit of everyone in our industry.
The big question: "Why?"
Why? In a way, the answer is simple. Stagnation is not an option.
Since 2003, nearly half of “new” milk produced in this country has gone to markets beyond our borders. Dairy exports annually contribute about $15 billion to the U.S. economy, supporting 42,000 U.S. dairy farmers, 100,000 good-paying jobs and countless businesses that provide inputs all along the dairy supply chain. To sustain the benefits that exports bring to this nation, they need to grow.
What do I mean when I say grow?
USDEC staff analyzed U.S. dairy capabilities, global demand expectations and the capacity of competitors to meet the expanding and evolving needs of overseas buyers. Over the last four years, U.S. dairy export volume has averaged the equivalent of about 15 percent of the U.S. milk supply. We believe we can grow that number to 20 percent—or as we say at USDEC, “The Next 5%.”
Demand will be there, in Asia and around the world
Population gains and middle-class expansion will continue to drive global dairy consumption in emerging markets at a faster pace than domestic dairy industries can match.
Over the next 15 years, Asia’s middle class alone will grow by 2.7 billion people, from about 525 million today to 3.2 billion, which is about 10 times the total current population of the United States.
There is incredible opportunity for U.S. dairy with those middle-class consumers.
USDEC estimates rising consumer demand will increase globally-traded milk powder and dry whey volumes by more than 1 million tons by 2021. Demand for other dairy ingredients—milk protein concentrate, lactose and specialized products like lactoferrin and alpha-lactalbumin—will rise by more than 100,000 tons.
The world is saying cheese
On the cheese side, demand for natural cheese at foodservice and retail (as well as pizza and other cheese types) will raise global cheese trade by more than 500,000 tons by 2021.
An ample, rising milk supply and a competitive, evolving product portfolio put the U.S. dairy industry in position to capture significant shares of those additional ingredient and cheese volumes.
Backed by rigorous quality and safety standards, U.S. suppliers have made investments in products, people and plants and strengthened customer-centric relationships aiming to cultivate long-term global supply and innovation partnerships.
Three areas of focus
For USDEC’s part, we plan to focus on three areas to help deliver The Next 5%: facilitating sales, increasing demand and securing market access. There are many facets to each strategy, but briefly:
- Increasing demand includes supporting research into dairy nutrition and communicating positive health links to consumers, governments and aid organizations to buttress consumption. The more we can facilitate the understanding of milk’s benefits and the enjoyment of dairy products here and abroad, the more consumers will gravitate toward dairy. It is particularly important to address younger people to improve the chances that they will continue to utilize milk and dairy products as they age.
- Facilitating sales focuses on making it easier for U.S. suppliers to access overseas markets by collecting and disseminating the technical requirements of exporting—from labeling to testing to certification. But it goes beyond the technical minutiae to understanding the subtleties of markets, so U.S. processors can innovate to meet demand and bolster U.S. competitiveness.
- Ensuring market access covers everything from working to remove non-tariff trade barriers to making sure U.S. dairy concerns are heard during trade negotiations. We continue to fight European Union efforts to restrict the use of common cheese names and Canada’s actions to block U.S. dairy exports, and to preserve the trade framework with Mexico that has delivered tremendous U.S. dairy export growth.
We need our industry's help
It is important for U.S. suppliers to have a greater physical presence in high-growth-potential regions to gain a better understanding and appreciation for tailoring products to local tastes. That physical presence and responsiveness simultaneously helps solidify partnerships, making clear that you want to be a consistent supplier.
We also need your help to educate the American public about the importance of dairy exports to their lives, to the U.S. economy and to the nearly 100,000 jobs created by dairy exports.
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