We’re in the export business for good

Hoard's Dairyman: 

We’re in the export business for good

Fri, 10/15/2010

Chicago, Atlanta and Miami, or Beijing, Tijuana and Riyadh? One group of cities is the perception of where U.S. dairy products are sold; the other is the fast-growing reality and the future. Forecasters say we should not only expect our role as a major exporter to continue, but emphasize that we are in the best position to fill the new demand they see coming.

A comprehensive analysis of this situation is presented in the recently released Bain Globalization Report, which was commissioned by 32 producer cooperatives, processing companies, and promotion groups. In the next three years it predicts a worldwide gap between milk demand and supply of up to seven billion pounds on a milk equivalent basis, and says the only traditional exporter that will be able to keep up is the U.S.

As demand continues to outstrip supply, global competition for milk will cause new sources of production to emerge within 15 years, most likely Brazil and eastern Europe. Thus, great opportunity exists now for the U.S. to grab market share, build strong relationships, and set a track record as a reliable, safe supplier.

The question the U.S. dairy industry must answer is, are we finally going to commit to exporting products that meet customers’ specifications, or continue saying, “All we’re willing to make are government grade products that guarantee us a buyer of last resort.”

With or without export sales, market volatility will remain a fact of life for the U.S. dairy industry. Ebbs and flows in consumer demand and milk prices will also continue. The question is, do we want to ride the waves when they arrive, or let them crash down upon us?