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.
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.
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