January 17, 2013

 

US 2012 dairy exports hit record high

 

 

US dairy exporters continue to hit record sales in 2012 despite tough market conditions, defending their hard-won global market share.

 

US dairy exports were on track to crack the US$5 billion mark for the first time, according to the US Dairy Export Council. And for the second consecutive year, US export volume represented more than 13% of the US milk supply.

 

Dairy exports show continued progress and growth, with a trend line that keeps heading up, said Alan Levitt, USDEC vice president of communications.

 

Exports have been increasing for the last eight years, doubling in the last three. Exports in 2005 were US$1.7 billion and reached US$2 billion until 2007. Now they are on track to hit US$5 billion in 2012.

 

The significance is they continue to grow every year, as US suppliers get better at what they do and the US continues to be a bigger supplier to the international market, he said.

 

The US$5 billion in exports in 2012 is significant, but for USDEC, it's more about the mentality of US suppliers, he said.

 

Despite unfavourable pricing for much of the year, historic global milk production gains from January-June, still strong New Zealand output since, and the US drought, US exporters maintained a 19% share of total export volume from the five major suppliers.

 

"US export performance into such headwinds highlights just how far the US industry has come in being a consistent global dairy supplier ... clearly a sign of maturation of the industry as a world player," the USDEC's report said.

 

Not only did US suppliers defend market share, they also invested in future growth. They earmarked considerable dollars specifically to produce products demanded by global buyers, adapted their business structures, invested in overseas offices and dedicated export personnel, USDEC said.

 

Companies are doing such things as making varieties of cheese that are not popular in US but are in other parts of the world. They are also changing production lines and meeting buyers' specifications for powders to go into infant formula and shelf stable milk in countries with limited refrigeration, he said.

 

Another example is Dairy Farmers of America's new whole milk powder plant in Fallon, Nev., the first in the US dedicated entirely to the international market, he said.

 

USDEC is not expecting a lot of growth in US dairy exports in 2013, due to the pricing competitiveness of other exporting countries, flat milk production in the US, and no extra supply of dairy products. But it is hoping the US will maintain its export levels, he said.

 

Nonetheless, the US is positioned to become an even larger global player. Economic and population growth in emerging markets will drive dairy consumption, and neither domestic industries in those markets nor traditional exporters from Europe and Oceania will be able to keep pace, which will leave the door open to the US and others, the report said.

 

New Zealand already exports about 95% of its milk production and is about capped out on its ability to increase production. Australia and Argentina are also limited due to environmental pressures and chronic drought in Australia and political economic issues in Argentina. The EU has historically limited production with quotas but could increase production if it saw opportunity when the quotas come off in 2015, he said.