In August 2011, shortly after Standard & Poor’s downgraded the U.S. credit rating and debt troubles resurfaced in Europe, the U.S. dollar soared against the New Zealand and Australian dollars, rising about 8.5 percent in a little over a week—a considerable jump in so short a period. People immediately began fearing the worst for U.S. dairy exports.

You should be familiar by now with the findings of the Innovation Center for U.S. Dairy’s 2009 “Globalization Report.” The comprehensive strategic analysis of the global dairy landscape meticulously outlined world supply-demand trends and how they were affecting the U.S. dairy industry.

If you think the emphasis placed on diet’s role in maintaining a healthy and active lifestyle is significant now, just wait a few years.

Can you imagine anyone in the New Zealand or Australia dairy sector debating the merits of pursuing exports? Do industry participants in the Netherlands or Denmark ever ponder whether globalization is here to stay? Do they distinguish their customer base between domestic and overseas?

You’ve read before in this column and likely in other ag and food business publications about rising global dairy demand, rising dairy appetites in emerging markets and rising export opportunities for U.S. suppliers. This time, let’s get specific and delve more deeply into just what “globalization” looks like for cheese.

Rabobank Dairy Analyst Tim Hunt made an incisive observation during his presentation at USDEC’s April Board of Directors and Membership Meeting: The United States is more “exposed” to the level of dairy exports than it has been in the past, and specifically more exposed than the “boom” of 2007-2008. It is now imperative to protect volume and market share gains.

Like Halley’s Comet, milk pricing “paradigm shifts” come along every so often and make us sit up and take notice. The last sighting was in the 1970s: over the course of the decade, the farmgate milk price doubled and never looked back, the effect of a new, higher baseline in the cost of production.

December 2010 U.S. dairy export data is released today, after this edition of Cheese Market News goes to press. So I can’t give you the exact year-end numbers on U.S. cheese exports. But whether U.S. cheese exports topped 165,000 metric tons or 168,000 metric tons (365 million lbs. or 370 million lbs.) is somewhat beside the point. The bigger takeaway from 2010 is just how far we’ve come as a cheese supplier to the world—and how far we can and must go.

Global demographics are shifting, and central to that shift is the expansion of the world’s middle class.

The global economic recovery is solidly under way in developing countries. Economic fortunes are “reflected in dairy demand [with] strong buying from developing Asia, the Middle East and North Africa,” notes Rabobank. With the developing world getting back on the dairy consumption growth track, U.S. cheese makers have an opportunity to energize sales in a number of regions where they currently sit on the low end of the market-share scale.

Signs of global economic recovery have been slowly, but steadily emerging for the past six months. Certainly no one would say we are safely out of the woods—the recent Greek financial crisis being the latest threat to stability. But on a world scale, news reports of GDP growth are encouraging.

On paper, based on published cheese, butter and powder prices, U.S. dairy suppliers currently have a huge edge over European Union (EU) and Oceania exporters. The casual observer may wonder why then U.S. overseas sales aren’t quickly ramping back up. In reality, the apparent pricing advantage isn’t always quite what it seems.

China is in the midst of an extensive food regulatory overhaul prompted by its 2008 melamine scandal. The sweeping government program enhances supervision, toughens safety standards, creates a product recall system, cracks down on food additives, severely punishes offenders and establishes China’s first national food safety commission.

The past three years have been a ferocious rollercoaster ride for dairy prices, and that has raised a critical question about the U.S. industry’s future health: “How do you handle dairy’s inherent volatility to ensure success?”