Charts Show Projected Impact of New Japanese Trade Agreements on U.S. Dairy Exports

A new economic impact report released by USDEC forecasts that without a strong U.S.-Japan trade treaty, U.S. dairy exports could lose $1.3 billion in sales over 10 years.

Exports of cheese products like this to Japan could suffer, according to a new report. Image: USDEC

ARLINGTON, VA – A study released Wednesday by the U.S. Dairy Export Council projects that new trade agreements made by Japan will benefit U.S. dairy global competitors while reducing sales of U.S. dairy exports.

Australia and New Zealand have the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in place with Japan. On Friday, a Japan-EU Economic Partnership Agreement (JEEPA) is scheduled to take effect.

Where does that leave U.S. dairy exports to Japan?

The study, conducted by Tokyo-based Meros Consulting, can be downloaded here. It showed that without a strong U.S.-Japan trade treaty, competitors will seize a cumulative $1.3 billion in dairy sales over the next decade. That would climb to $5.4 billion once the agreements are fully implemented over 21 years, the report said.

The Japanese dairy market is valuable to the U.S. dairy industry, importing $291 million from U.S. exporters in 2017, the last year with complete data. Those strong 2017 sales were a 41 percent increase over the previous year.

The total made Japan the fourth largest market for U.S. dairy exports. Dairy demand, especially for cheese, is expected to continue.

Leading U.S. Dairy farmers travel to Japan

Underscoring the importance of the Japanese market, four U.S. dairy farmers traveled to Tokyo as U.S. dairy ambassadors in November. All the farmers serve on the board of Dairy Management Inc., USDEC's parent organization. 

Brad Scott @udderdelite introduces fellow dairy farmers at USDEC reception for Japanese cheese buyers, customers & other members of dairy trade. In his remarks, Brad emphasized U.S. dairy farmers’ dedication to quality and their commitment to the Japanese market. #USdairyExports pic.twitter.com/yNXYSMExec

— U.S. Dairy Exporter (@USDairyExporter) November 6, 2018

The report quantified the same potential the dairy farmers saw in November.

Findings include:

• Japan’s cheese imports are expected to show a 1.6-fold expansion over the next 10 years under CPTPP and JEEPA.
• If the U.S. has the same market access as its competitors, U.S. share could grow from 13 percent in 2017 to 24 percent in 2027, and U.S. cheese export value to Japan could show a 3.3-fold expansion.
• However, if the U.S. remains without a comparable agreement with Japan, the U.S. dairy industry will be at a significant disadvantage against other dairy suppliers and lose market share. 

USDEC and NMPF comments on report

“These agreements will give our competition a significant economic advantage that will enable them to increase their market share in Japan, costing the U.S. dairy industry billions of dollars in lost sales,” said Tom Vilsack, USDEC’s president and CEO, in a news release.

The report outlines the potential for growth in U.S. dairy exports in Japan, all things being equal; while underscoring the large toll that an uneven playing field will take on U.S. dairy exports to Japan, particularly for cheese, whey and lactose.

In 2017, U.S. dairy exports to Japan were valued at $291.2 million, a 41% increase over 2016. Checkoff funding of exports makes a difference! https://t.co/6DjWsu4WNo #USdairyExports pic.twitter.com/meCaTSXjpK

— U.S. Dairy Exporter (@USDairyExporter) November 3, 2018

“U.S. dairy farmers and processors strongly support the Administration’s launch of trade talks with Japan. We hope this report provides fresh ammunition to our negotiators about why a strong U.S.-Japan agreement is so important for American agriculture.”

Charts tell the story

In its 97-report, Meros Consulting analyzed the impact on key U.S. dairy products and ingredients exported to Japan  It created charts showing what would likely happen if the CPTPP and JEEPA moves forward as planned while the U.S. remains without a comparable agreement.

Four of those charts are below. 

U.S. Ripened Natural Cheese Exports

U.S. Fresh Natural Cheese Exports 

 U.S. Whey Protein ExportsU.S. Lactose Exports

 Capitalizing on future growth

"The potential upside for the U.S. dairy industry and U.S. economy underscores the need for the Trump administration and Congress to secure a strong trade treaty with Japan," said Jaime Castañeda, USDEC senior vice president. "These treaties need to significantly expand export opportunities for all our U.S. dairy products."

Mark O'Keefe is vice president of editorial services at the U.S. Dairy Export Council.

Learn more:

• Japan's Milk Problem Has a U.S. Solution
• November 2018 comments by USDEC and NMPF to USTR on dairy’s priorities for U.S.-Japan Trade Negotiations (goes off this site)
• Social Media Roundup of Dairy Farmers' Trip to Asia
• Farmers Take Dairy Checkoff Program's Global Vision to Japan, Hong Kong

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The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.