Vilsack lists reasons for U.S. dairy farmers to smile about the future of exports

At World Dairy Expo, the USDEC president and CEO cites new developments and marketing strategies to increase exports to our North American neighbors as well as overseas markets.

Despite a lingering trade war with China, U.S. Dairy Export Council President and CEO Tom Vilsack says U.S. dairy farmers have many reasons to be optimistic about the long-term growth of U.S. dairy exports -- especially in high-demand markets such as the Middle East, Asia and Mexico.

"This will require patience. We have to play the strategic long game. But I am convinced now more than ever that we are competing to win, not just for today's dairy farmers, but for the next generation," Vilsack said in prepared comments for a Friday address at World Dairy Expo.

Held in Madison, Wisconsin, World Dairy Expo is the largest dairy-focused trade show in the world. 

Exponential increase in exports

Since USDEC was founded and funded by its parent organization, Dairy Management Inc., U.S. dairy exports have increased seven-fold to more than $5.4 billion annually. Last year, the U.S. dairy industry exported the equivalent of nearly 16% of U.S. milk solids produced in this country.

That 2018 volume percentage set an all-time U.S. dairy export record—despite the drag of retaliatory tariffs in the largest U.S. export market, Mexico, and in the world’s biggest country, China.

For several years, export volume had plateaued around 15% of total U.S. milk solid production. Vilsack began an industry-wide initiative in 2017 called “The Next 5%.” It aims to increase export volume five percentage points, to 20% of production.

Value is also up. Through the first six months of 2019, U.S. suppliers exported about $800 million more in dairy products and ingredients compared to the same period in 2016. That’s a value increase of more than 30%.

Trade challenges in Mexico, China

The 2018 retaliatory tariffs have been lifted in Mexico and Vilsack said if Congress passes the United States-Mexico-Canada Agreement (USMCA) to replace the North American Free Trade Agreement, it will bring more stability.

Another positive development: an interim agreement announced last week with Japan, the world’s largest importer of cheese, that will deliver improvements in market access for U.S. Dairy.

But there is no denying that China's retaliatory tariffs combined with an outbreak of African swine fever have taken a heavy toll.

From July 2018 to June 2019, U.S. dairy solids exported to China dropped by 43 percent overall – the equivalent of 1.9 percent of total U.S. milk production. Or to put it another way, roughly 3.7 billion pounds of farmer milk needed to find other markets even though China continued to increase their overall buying as shown below.

Vilsack met Aug. 30 in Beijing with officials from China’s Ministry of Finance and Commerce to stress that the United States has the dairy ingredients, scientific research and know-how to help rebuild China's pig herd decimated by African swine fever. Eleven days later, China announced it was waiving its retaliatory tariff on U.S. permeate for feed.

USDEC is playing a role accelerating the uptake of permeate to rebuild China’s swine population with two full-day seminars Oct. 29 in Beijing and Oct. 31 in Nanchang.

Investment in Southeast Asia

Vilsack said one of the most promising markets is Southeast Asia, where U.S. dairy exports increased 12% last year and USDEC is making a new investment to develop the U.S. Center for Dairy Excellence in Singapore.

“The vision,” said Vilsack, “is to create an educational center within the hub of Southeast Asian food innovation.”

Other USDEC strategies and initiatives

Customers lucky enough to get into the Costco grand opening in Shanghai saw cheeses made in the U.S. from Belgioioso, Sartori, Tillamook, Pacific Cheese, Saputo, Schuman Inc. and Lactalis -- thanks in part to a new partnership facilitated by USDEC. #USDairyChina #UndeniablyDairy pic.twitter.com/ZjyxMXMzdh

— U.S. Dairy Exporter (@USDairyExporter) September 3, 2019

Curves President Maki Sakamoto shakes hands on a growing partnership with USDEC's Tom Vilsack that distributes U.S. whey protein through the largest fitness club in Japan, with 2,000+ outlets. USAdairyJapan pic.twitter.com/I2hm1wJLNH

— U.S. Dairy Exporter (@USDairyExporter) September 3, 2019

Vilsack highlighted other USDEC long-term investments in fast-growing markets where he said there are “outsized” opportunities for growth as reasons for optimism, including:

• Broadening partnerships within Mexico to further build demand for U.S. Dairy to capitalize on USMCA, once ratified.
• Launches of U.S. cheese in Mexico and China through Costco retail partnerships, as well as in Chile through focused retail engagement.
• The launch of the USA Cheese Guild™ an internationally branded effort to facilitate education about and preference for U.S. cheeses within culinary, foodservice, communications and retail channels.
• Halal food training for dairy exporters exploring growth in Islamic nations, such as Indonesia – a top 10 global dairy importer.
• USDEC is in Indonesia on a trade mission this week with the Foreign Agricultural Service of the U.S. Department of Agriculture and a dozen U.S. dairy ingredient exporters. Indonesia is working to expand its dairy supply chain amid trade difficulties with the EU.
• A pop-up U.S. Dairy display to increase visibility and induce product trial across regions.
• Partnerships with fitness centers and cheese marketers in Japan. USDEC has a partnership with fitness chain Curves, which sells concentrated whey protein from the United States to customers at its 2,000 locations.
• USDEC Japanese cheese marketing partner Chesco is introducing high-end U.S. cheeses in its own stores, as well as other Japanese grocery and department stores.

“At USDEC, we’re about planting the seeds of new ideas and approaches to grow export markets for a brighter future for the U.S. dairy industry, “ Vilsack concluded. “We are poised to compete to win and get to The Next 5%.”

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

Learn more:

• Vilsack cites reasons for long-range optimism about exports
• Vilsack optimistic about exports after China, Japan trips
• Travelogue: Vilsack takes U.S. Dairy message to China, Japan
• Vilsack in China: U.S. dairy industry building relationships for ‘long haul’
• Q&A: Dairy Farmers Ask Questions About Exports
• U.S.-China Dairy Partnership Launched to Meet Future Demand for Nutritious Products (VIDEO)
  
  

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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.