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Top Dairy Importers Present Potential Opportunities in 2019

February 4, 2019

Two large dairy-importing markets present promising opportunities for the U.S. dairy industry in 2019. One, Japan, ranks just behind China as a buyer of U.S. dairy. The other, the United Kingdom, is a sizable dairy purchaser that gets a large share of those suppliers from Europe — though that may be changing soon.

NMPF’s goals on Japan include expanding existing market share and becoming a key foreign supplier to fill the country’s growing demand. These goals are particularly urgent this year as Europe, Australia and New Zealand have new trade deals with Japan, making it easier to sell into a market that imported nearly $1.2 billion worth of cheese in 2017 alone.

A study from the U.S. Dairy Export Council released in January projected that new trade agreements between Japan and other countries will put U.S. dairy exports at a competitive disadvantage, making a U.S.-Japan accord an urgent priority for dairy producers this year.

Lost sales in Japan for U.S. dairy exports may total $5.4 billion over 21 years without any action to rectify the current imbalance in trade access, according to the study conducted by Tokyo-based Meros Consulting. In contrast, the United States could roughly double its market share with a level playing field, according to the study, which was conducted by Tokyo-based Meros Consulting.

“These agreements will give our competition a significant economic advantage that will enable them to increase their market share in Japan, costing the U.S. dairy industry billions of dollars in lost sales,” said Tom Vilsack, USDEC president and CEO. “U.S. dairy farmers and processors strongly support the Administration’s launch of trade talks with Japan. We hope this report provides fresh ammunition to our negotiators about why a strong U.S.-Japan agreement is so important for American agriculture.”

U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe announced plans to launch trade talks last September. But progress was delayed by the government shutdown, which slowed U.S. preparation, and by renewed U.S. focus on trade negotiations with China. NMPF is geared up to support the U.S. Trade Representative (USTR) in negotiations by providing input to the Trump Administration on dairy priorities; educating congressional allies on what dairy is looking for; and working with the U.S. food and agriculture community to push for a swift, yet strong, deal with Japan. In doing so, NMPF is fighting to preserve and grow exports.

“U.S. dairy farmers are facing economic hardships, and expanding opportunities overseas is the best way to counter that,” said Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF). “A trade deal with Japan that significantly expands dairy access would make 2019 a brighter year.”

While Japan is the fourth-largest destination for U.S. dairy products, the United States currently sells close to nothing to the United Kingdom. America exported just $7 million worth of dairy products to the island nation in 2017, while importing $76 million during the same period. NMPF believes that Brexit and a U.S.-U.K. free-trade agreement can change that dynamic.

NMPF has told the administration this lopsided trade dynamic is driven by disparities in market access opportunity created by current tariff and nontariff policies – not a lack of interest or availability of product. NMPF has urged the removal of those barriers to level the playing field for U.S. suppliers. In comments filed with the USTR in December, NMPF noted:

“It is our hope that post-Brexit, the UK – traditionally a champion of free trade and of a science-based approach to decision making – can forge its own regulatory environment in a way that is more conducive to fair trade in safe food products than is the current EU regime. If that is the path the UK pursues, we believe that there is strong potential to expand bilateral dairy trade and bring benefits on both sides of the Atlantic.”

NMPF staff drove home this point and detailed how to get there in testimony at a USTR hearing on the U.S.-Japan agreement at the end of the month.

This year presents encouraging opportunities to gain momentum in negotiations with both Japan and the United Kingdom, making an investment in improved trade relations a worthwhile effort.