Tag: dairy exports
Exports Stoke Dairy Demand as Inflation Bites U.S. Consumption
U.S. Dairy Breaks Exports Record for Third Straight Year
U.S. dairy exports set new records in 2022, helped along by work from NMPF in collaboration with the U.S. Dairy Export Council (USDEC), policymakers and stakeholders who delivered on targeted policy priorities.
More than $9 billion of U.S. dairy products reached international customers in 2022, according to data finalized in February. The volume shipped accounted for 18% of total milk production. This marked the third straight record year for volume and the second for value.
In a year full of challenges, NMPF was proud to work with members and policymakers to find solutions to support dairy exporter, including:
- Successfully pursuing solutions to the supply chain crisis, most notably on the Ocean Shipping Reform Act.
- Defending U.S. dairy’s market access rights against barriers to trade in markets around the world including in Europe, Latin America, Canada, Southeast Asia and the Middle East.
- Strengthening and expanding key partnerships to grow the global dairy industry’s influence with governments and organizations around the world.
Record Exports Show Dairy’s Global Reach; Cheese Demand Rises
Record Exports Drive U.S. Dairy Demand
By William Loux, Vice President, Global Economic Affairs, NMPF and U.S. Dairy Export Council.
U.S. dairy exports excelled again in 2022, with record shipments further cementing its role as the key demand driver for U.S. milk.
For the third consecutive year, the U.S. dairy industry set a record for the volume of dairy products exported on a milk solids equivalent basis, with the current record now surpassing 2.4 million metric tons — the equivalent of over 40 billion pounds of raw milk, or 18% of the U.S. milk supply.
Perhaps even more impressive, for the fifth time in the last six years, U.S. exports grew by more than domestic consumption. Of that six-year window, 2019 was the only time in that span when exports grew by less than domestic sales. That’s the year the U.S. faced prohibitive retaliatory tariffs on dairy products destined for China. In addition, African Swine Fever was cratering China’s demand for whey products. At the same time, U.S. skim milk powder exporters were facing headwinds from EU intervention storage stocks that began hitting the market at below-market prices in 2019. All this noted, with 2019 being a particularly unique exception, the international market has been the driver of U.S. dairy demand growth for the past six years.
Success can’t be taken for granted
European milk production came on strong at the tail end of 2022 as favorable weather and margins boosted output. Conversely, demand within the European Union bloc has reportedly weakened as consumers feel the squeeze on their wallets, which is causing European wholesale prices to dip. With more supply, weaker internal demand, and low prices, we can expect significantly more competition from Europe in the international market than we did in 2022 when their exports dropped 10% during the first 11 months of the year.
Additionally, the international demand picture remains uncertain. Despite the clear success of U.S. dairy, the world’s collective dairy trade actually dropped 4% in 2022 — primarily on account of China. The world’s largest dairy product-importing nation contracted dairy imports by 21% as the country drew down inventories built in 2021, witnessed a surge in domestic milk supplies, and instituted movement restrictions, all of which damaged dairy consumption and imports.
China’s return to the market in 2023 remains uncertain. The lockdowns have been lifted, but milk production in the country is still growing, and inventories of milk powder reportedly remain heavy. Optimistically, consumption in the country will rebound and stockpiles will be reduced, setting the stage for China’s return as a global buyer in the middle part of the year. But until they do, New Zealand, which exported over 40% of its production to China at its peak, will have plenty of products available for customers elsewhere, meaning increased competition with the United States.
Outside of China, the demand picture will likely be mixed depending on local conditions, but broadly, slower economic growth and inflation are expected to challenge lower-income consumers and push buyers to look for bargains.
Overall, I am forecasting international demand in 2023 to return to growth, but not at a spectacular rate, and with more suppliers competing for business.
Given the expected headwinds this year, industry investment in international markets will be critical to success. To set another record in 2023, the U.S. must continue the work being done to build demand for U.S. dairy products overseas and expand market access in key markets, all while maintaining reliability with international customers by being engaged and responsive.
This column originally appeared in Hoard’s Dairyman Intel on Feb. 21, 2023.
NMPF Statement on Record Dairy Exports
From NMPF President and CEO Jim Mulhern:
“For the third consecutive year, U.S. dairy farmers have proven how their dedication to innovation and sustainability leadership increasingly have made them the world’s provider of choice for nutritious dairy products. In both value and in volume, U.S. sales are at all-time highs, and in 2022, a record percentage of U.S. milk production was exported overseas. This happened despite the headwinds our exporters battled last year, which included supply chain challenges, a lack of new trade agreements to establish more level playing fields abroad, and other barriers to trade that threatened to upend progress.
“Let this be a signal to the world: U.S. dairy farmers are, and will be, a growing force for global nutrition, sustainability and health, as shown by the increasing preference of consumers worldwide for the products they create. We’re excited to see today’s year-end export totals reflect a vision we’ve been pursuing for decades, and we look forward to seeing further progress in the years to come.”
NMPF’s Morris Talks Trade, Canada on Podcast
NMPF and USDEC Senior Vice President for Trade Shawna Morris discusses the need to hold accountable for its trade commitments on the Agriculture of America podcast. Canada’s improper allocations under its Tariff-Rate Quota system is impeding the market access promised U.S. dairy farmers under the USMCA trade agreement, making a legal remedy necessary. The U.S. needs to strongly defend its farmers, Morris said; while farmers are hoping for a fair solution with Canadian compliance, retaliatory tariffs against Canadian products may be necessary, she said.
NMPF’s Morris on Holding Canada Accountable
NMPF and USDEC Senior Vice President for Trade Shawna Morris discusses the latest round of conflict between the United States and Canada over over U.S. dairy access to that market. Morris praised the U.S. government’s willingness to take on Canada again after already winning on dispute before a USMCA dispute resolution panel. Morris speaks in an interview on RFD-TV.
Trade Policy Victories for U.S. Dairy
By Shawna Morris, Senior Vice President for Trade, NMPF and U.S. Dairy Export Council.
The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) are proud to be the voice of defending the American dairy industry and promoting dairy exports in Washington D.C. and around the world. Looking back at this past year of trade policy, American dairy producers and the entire industry have much to be proud of.
U.S. dairy exports are on track for another record year in both value and volume — despite a lack of new market access, protectionist actions in key markets, and ongoing supply chain challenges.
Working with the government to help U.S. dairy thrive
The record export numbers are happening despite high costs and unreliable shipping networks that are still causing headaches for the industry more than two years after the global COVID-19 outbreak first snarled supply chains.
NMPF and USDEC have led the way in working with the U.S. government to address the concerns. In June, President Biden signed the Ocean Shipping Reform Act into law. Championed by NMPF and USDEC, the legislation limits ocean carriers’ ability to deny exports and charge unreasonable fees, clearing a significant hurdle for dairy exporters.
Elsewhere, the EU’s abuse of geographical indication rules continues to threaten U.S. producers’ access to foreign markets for common-name cheeses like “Parmesan” and “Feta.” In collaboration with the Consortium for Common Food Names (CCFN), NMPF and USDEC have pushed the U.S. government to proactively defend the rights of U.S. cheesemakers and fought the court battles necessary to advance this effort.
That work resulted in a key win last January, when a U.S. District Court ruled in our favor that “Gruyere” cheese can be produced anywhere – not just in France or Switzerland. This landmark victory again proved that common names are widely understood to refer to types of food, regardless of where they are produced.
Holding Canada responsible
The U.S.-Mexico-Canada Agreement (USMCA) provided a much-needed update to trade rules. NMPF and USDEC supported it as a deal that would increase exports and boost farm gate milk prices.
Unfortunately, Canada hasn’t held up its end of the bargain. By reserving most of its dairy tariff rate quotas (TRQs) for Canadian processors and directly impairing American exporters’ ability to access the Canadian market, it’s clearly a break of the USMCA’s TRQ provisions that allow market access.
NMPF and USDEC successfully advocated for last year’s initiation of the first-ever USMCA dispute settlement process. The United States won the initial case in January, but upon Canadian refusal to comply with the ruling, NMPF and USDEC prompted the U.S. government to pursue a second dispute panel, resulting in the U.S. seeking formal consultations with Canada in May. The organizations have urged a strong response on behalf of wronged U.S. dairy industry members to ensure that America’s dairy sector receives the full export benefits promised under the agreement.
Strengthening relationships in Latin America
NMPF and USDEC finalized partnerships with the Chilean National Federation of Producers (Fedeleche) and Rural Society of Argentina this year that will advance shared policy priorities internationally. Far more than just agreements on paper, these relationships set a foundation to confront emerging threats, both in key export markets and in international standard-setting bodies to ward off anti-trade and anti-dairy policies.
These examples are just a slice of the trade policy issues that touched the U.S. dairy industry in 2022, but each highlights the great potential of the American dairy industry to grow worldwide and shows the need for the U.S. government to work with us to get there. Looking to 2023 and beyond, NMPF and USDEC are looking forward to ensuring that exports keep growing in volume and in value, supporting the bottom line of dairy farmers, manufacturers, and workers throughout the country.
This column originally appeared in Hoard’s Dairyman Intel on Dec. 26, 2022.
NMPF’s Bjerga on Dairy’s Recent Policy Wins
As the year comes to a close, the National Milk Producers Federation is applauding two recent measures that support the dairy industry. NMPF Senior Vice President of Communications Alan Bjerga spoke with RFD-TV’s own Janet Adkison about how the Growing Climate Solutions Act and Sustains Act benefit dairy farmers, and what USTR’s announcement of a new request for dispute settlement consultations with Canada means for U.S. dairy.
https://www.rfdtv.com/two-recent-measures-from-congress-and-ustr-are-giving-a-boost-to-dairy-farmers
China’s Dairy Demand May Be Sluggish in ’23
By Stephen Cain, Director of Research and Economic Analysis, NMPF.
Outside of cheese, China is the number one importer of essentially every major dairy product. Globally, the world’s most populated country purchases 27% of all traded dairy products on a milk solids basis. China accounts for roughly 20% of all U.S. dairy exports and nearly half of all U.S. dry whey exports.
All of this makes China an unquestionably important market; yet, over the last year, Chinese demand has been down significantly. Chinese milk solids imports over the last 12 months are down 16%, and they’re heavily down in skim milk powder (-20%), dry whey (-17%), and whole milk powder (-24%). Two key pieces that have led to the pullback are high stockpiles and COVID-19 lockdowns.
Following the onset of the pandemic and wanting to ensure adequate supplies on hand, China built up some impressive stocks, especially in skim milk power and dry whey. From mid-2020 through mid-2021, Chinese milk solids imports climbed 32% over the preceding 12 months. For the same time period, skim milk powder and dry whey imports rose 32% and 50%, respectively.
This high purchase volume outpaced demand and led to stock build up. These high stocks, coupled with then-high global prices, led China to pull back from the global market and instead work down its stockpiles. That largely kept Chinese purchasing depressed over the past year. Encouragingly, stocks are now approaching more normal levels, which supports China returning to the market, especially for skim milk powder and dry whey.
More COVID-19 lockdowns throughout China are also plaguing demand. While the rest of the world moves on from the pandemic and reverts to pre-COVID-19 life, China seems to be charging in the opposite direction. The zero-COVID policy in China has led to extreme measures in the country, with huge swaths of the population being locked down as the country continues its losing battle against the disease.
Earlier this year, Shanghai, the largest city in China with roughly 25 million residents, was put in lockdown for two consecutive months. Since then, lockdowns have only increased in number and severity, with some estimates as of late October stating there were more than 200 million people affected by lockdowns nationwide.
While many agree China relaxing its zero-COVID approach would be beneficial, rising cases in the country suggest that’s unlikely to occur. The country is facing the highest rate of new cases since the start of the pandemic, which means lockdowns and tough restrictions are only going to become more commonplace. That’s hitting dairy demand. Restaurants and the food service sector are hugely important to dairy consumption in China, but that consumption avenue is being restricted as consumers are increasingly unable to leave their homes. Until lockdowns and restrictions ease, Chinese dairy demand will continue to be challenged.
Source: USDEC, Our World in Data
Dairy is only one part of a Chinese economy that’s facing headwinds. A limited gross domestic product (GDP) growth outlook, a teetering real estate sector, and depressed, COVID-19-driven demand from lockdowns are creating a challenged economic outlook. The 2022 GDP forecast is estimated at 3.2%, which would make for one of the worst performances in nearly half a century; 2023 looks only slightly better, with forecast growth of around 4.4%.
Similarly, Chinese dairy demand in 2023 is likely to see similar sluggish growth. Despite the melancholy economic outlook and lockdown projections, Chinese imports in 2023 will likely be up, but not at substantial volumes, and certainly not same at the growth rate we saw in 2021. As stocks are depleted and domestically produced products (which are largely more expensive than imports) fail to meet demand, China will have to return to the global market. The biggest swing factor, though, remains COVID-19 lockdowns. If China doubles down on lockdowns, demand will likely continue to be depressed and imports will be challenged. Should they ease, China will certainly need product, and greater imports will follow — and that would be good news for U.S. exporters.
This column originally appeared in Hoard’s Dairyman Intel on Nov. 28, 2022.
October CWT-Assisted Dairy Export Sales Totaled 5.1 Million Pounds
CWT member cooperatives secured 39 contracts in October, adding five million pounds of American-type cheeses and 77,000 pounds of cream cheese to CWT-assisted sales in 2022. In milk equivalent, this is equal to 47 million pounds of milk on a milkfat basis. These products will go to customers in Asia, Central America, Europe and Middle East-North Africa, and will be shipped from October through April 2022.
CWT-assisted 2022 dairy product sales contracts year-to-date total 86.1 million pounds of American-type cheese, 657,000 pounds of butter, 7.6 million pounds of cream cheese and 30.3 million pounds of whole milk powder. This brings the total milk equivalent for the year to 1.090 billion pounds on a milkfat basis.
Exporting dairy products is critical to the viability of dairy farmers and their cooperatives across the country. Whether or not a cooperative is actively engaged in exporting cheese, butter, anhydrous milkfat, cream cheese, or whole milk powder, moving products into world markets is essential. CWT provides a means to move domestic dairy products to overseas markets by helping to overcome U.S. dairy’s trade disadvantages.
The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT will pay export assistance to the bidders only when export and delivery of the product is verified by the submission of the required documentation.
