The U.S. Dairy Exporter Blog: Market Analysis, Research & News

  • Vilsack says COVID-19 will have lingering effect on 2021 global dairy markets

    By Mark O'Keefe October 27, 2020

    The new U.S. Center for Dairy Excellence is one reason to be bullish on exports of U.S. dairy ingredients to Southeast Asia. 

    Dairy Foods magazine asked the top executives of leading dairy associations to discuss the industry’s most significant issues heading into 2021.

    USDEC President and CEO Tom Vilsack participated in the roundtable. Dairy Foods' questions and Secretary Vilsack's answers are below:

    Dairy Foods: 2020 has been quite a year, bringing with it a worldwide pandemic, social unrest and other challenges. Heading into 2021, what are your members most worried about, and why?

    Vilsack: Even if daily life returns to something approaching normal in 2021, COVID-19 will have a lingering impact on the global economy, including dairy markets.

    Mexico, our No. 1 dairy export market, is on our watch list. The country's economy was already precarious before COVID-19 thanks to a deceleration in manufacturing, a reduction in investment and an uncertain policy environment.

    Combine those factors with an oil price collapse, a weakened peso and insufficient government stimulus, and you have the potential of a prolonged recession in a country that purchased more than $1.5 billion in U.S. dairy exports last year.

    To mitigate the risk of being too dependent on a single nation’s economy, many of our members are diversifying to new markets, including the Middle East/North Africa, South America and Southeast Asia.

    That’s a wise strategy. Our exports to Mexico have decreased this year, but we have more than made up for that with booming sales of ingredients to Southeast Asia.

    Dairy Foods: How is your association helping its members better weather these trying times?

    Vilsack: Our staff usually logs tens of thousands of air miles per year to pave the way for our member companies to increase their exports. With the pandemic, we found creative ways to reach the world without leaving our homes.

    To cite one example, less than 48 hours before a Korean Dietetic Association conference, we learned the entire meeting was moving online. We had arranged for an in-person expert to address the protein benefits of dairy to fight sarcopenia, a condition causing muscle loss among an aging Korean population

    Moving quickly, we created a 40-minute video presentation that was seen by hundreds of dietitians and nutritionists. The presentation was amplified through a Korean-language news release that was picked up by nine media outlets, including JoongAng Ilbo, a top-tier newspaper.

    Dairy Foods: Amid all of the turmoil, what are you most excited about, in terms of growth opportunities, for the dairy industry?

    Vilsack: We are bullish about dairy ingredients exported to Southeast Asia. U.S. SMP exports to Southeast Asia grew 72% in the first seven months of 2020 (compared to January-July 2019), and the region is well on its way to displacing Mexico as our No. 1 SMP market this year. WPC and WPI sales to Southeast Asia were up a healthy 38% over the same period.

    Even more exciting for the future, we have positioned our industry to take advantage of opportunities through the new U.S. Center for Dairy Excellence (CDE), which we just opened in Singapore. The CDE was built with state-of-the-art technology to connect our suppliers with Southeast Asian customers. We invite our member companies and others in the U.S. dairy industry to stop by for a visit when air travel returns to a new normal.

    Dairy Foods: Any other comments about the dairy industry and/or the year to come?

    Vilsack: As we look ahead, I think it is appropriate to look back for a moment to reflect on the U.S. Dairy Export Council's inception 25 years ago. Operating under the governance of Dairy Management Inc. and the national dairy checkoff, USDEC clears new paths to untapped markets, cuts through miles of regulatory red tape, markets U.S. exports to the world and fights for fair trade policies.

    Working with our farmer-funders and member companies, much has happened in those 25 years. In 1995, U.S. dairy exports were $982 million. Last year, they reached $6 billion, a 511% increase. Volume is up 552%.

    Today, the milk from one out of seven tankers leaving American farms ends up in dairy products and ingredients sold beyond U.S. borders. In 2021, we see significant opportunities, despite all the challenges, to build on this solid 25-year foundation.

     

    Other CEOs on the panel included Blake Anderson, CEO of the American Dairy Products Institute (ADPI); Michael Dykes, D.V.M., president and CEO of the International Dairy Foods Association (IDFA); Brad Legreid, executive director of the Wisconsin Dairy Products Association (WDPA) and John Umhoefer, executive director of the Wisconsin Cheese Makers Association (WCMA).

    Secretary Vilsack's comments first appeared in the Oct. 23 issue of Dairy Foods magazine. To see the full article, click here

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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.  

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