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Serving: United States
Tom Vilsack, CEO of the Dairy Export Council, speaks at World Dairy Expo Chris Torres
BULLISH ON EXPORTS: It’s no surprise that Tom Vilsack, CEO of the Dairy Export Council, is bullish on dairy exports. But he also sees opportunities for dairy sales in some unconventional places.

10 places U.S. dairy exports could flourish

Tom Vilsack, CEO of the Dairy Export Council, said U.S. cheese is in high demand in certain countries.

With the average dairy cow producing 23,000 pounds of milk — in 1950, the average cow produced 5,500 pounds of milk — there is plenty of milk to go around, but it also risks flooding the market with too much product.

That leads, in part, to the wild price cycles dairy farmers must deal with every few years.

Only recently has U.S. dairy consumption started to exceed production, according to Tom Vilsack, CEO of the Dairy Export Council, who spoke at the recent World Dairy Expo. This makes dairy exports even more important.

“The reality is the U.S. represents 5% of the consuming public globally, which means 95% is outside of the U.S.,” he said, adding that the U.S. share will drop to just 3% in the next few years. “It just makes business sense that we would be interested in approaching those 97% of consumer and asking them to consider purchasing and using U.S. dairy.”

Even with the challenges of trade talks with China and the U.S. pulling out of the Trans-Pacific Partnership, Vilsack said the industry has increased dairy exports over the past three years.

In 2017, dairy exports increased by 133,000 metric tons over 2016. An additional 317,000 metric tons of product were exported in 2018, a value of $992 million over 2017, and through July, exports have already exceeded last year’s number by 92,000 metric tons.

With that, Vilsack listed 10 markets where dairy producers can be optimistic about exports:

1. Japan. The “mini” trade deal that was recently signed with Japan is something President Donald Trump calls a “game-changer” for agriculture. Indeed, according to Forbes magazine, the deal slashes tariffs on $7 billion worth of U.S. ag products and allows U.S. farmers the same access to the Japanese market as New Zealand, Australia and other countries.

But butter and evaporated milk were left out of the deal, according to Forbes.

Still, Vilsack said cheese consumption in Japan is expected to rise by 4% each year over the next 10 years.

“There is a lot of consumption and opportunity here, and there are terrific opportunities to increase dairy in the No. 4 or 5 market,” he said.

The council is also promoting specialty cheeses in high-end grocery stores and promoting additional sales of whey protein in Curves Japan fitness centers.

2. China. Even though the trade situation is unresolved, Vilsack said dairy has a unique chance to help the country’s battered swine industry where 50% of hogs have been destroyed as a result of African swine fever.

Vilsack said the Chinese have reduced tariffs of whey protein in return for more exports of permeate whey, which has been shown to help accelerate the development of piglets. He said permeate whey could help rebuild the hog population at a faster rate.

Whey permeate is made by the removal of protein and other solids from whey.

3. Korea. Vilsack said that a large-scale Korean grocery store has agreed to more in-store sales of U.S. cheeses.

4. North Africa. Pop-up cheese shops could soon be appearing in shopping malls across North Africa and the Middle East.

While this may seem like an unusual place to try to drive cheese sales, Vilsack said some countries, most notably the United Arab Emirates, have large populations of foreigners who will buy cheese and yogurt.

5. Chile. Vilsack said the council is expanding staff in Chile based in part on a recent study that showed the country in the top five of new market opportunities for global cheese sales.

6. Indonesia. The connection here is palm oil.

According to Vilsack, the European Union, which was a key exporter of dairy goods to Indonesia, is upset with the country’s production of palm oil and its effects on the environment.  

Officials in the country, he said, have directed importers to stop buying from the EU and start buying, instead, from the U.S.

“So, this is a tremendous marketing opportunity,” he said.

7. Alliances with South America. Vilsack said new alliances with South American countries will help combat the EU’s influence on Codex Alimentarius, the World Health Organization’s technical body on food production regulations.  

Vilsack said the new alliance will prevent EU countries from injecting culture and societal issues into food production regulations, preserving science-based rules and playing to the strengths of the U.S. ag industry.

8. Mexico. An expansion of a current Costco dairy promotion and the expected passing of the U.S.-Mexico-Canada trade agreement will open additional markets for dairy sales, he said.

“I believe firmly that Congress will indeed pass this by the end of the year. Why do I believe it? Because I believe the Mexican government is making a concerted effort to convince members of the House that, indeed, provisions in the agreement are enforceable and they are a budgeting resources to make sure that agreement is enforceable," he said.

Vilsack added that restrictions on cheese names will also be lifted. This previously gave EU countries an advantage because it restricted U.S. companies from using names like Asiago or parmesan in Mexican stores.

“That's essentially an incredible compliment to the U.S. dairy industry and cheese industry. Why? Because it’s a recognition on the part of the EU that they can't beat you, they can't beat you in a head-to-head competition, they only can beat you if only they are on the [playing] field," he said.

9. Canada. The United States-Mexico-Canada Agreement reduces and eliminates Class 7 ultra-filtered milk, a high-protein product used in making cheese and yogurt.

U.S. dairy companies have complained that Canada, with its surplus of ultra-filtered milk, has flooded the market with powder, preventing U.S. companies from competing on a level playing field.

Vilsack said that once the agreement is finalized, it is estimated that it will generate an additional $300 million in dairy sales in Canada.

10. Singapore. Vilsack said the council is establishing a Center for Dairy Excellence in Singapore to promote U.S. dairy products in this important economic hub of Southeast Asia.

Singapore, he said, is the food innovation center of Southeast Asia with very few restrictions on exporting materials.

TAGS: Trade
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