Dairy Looks to Asian Markets

SCOTTSDALE, Ariz. (DTN) -- The International Dairy Foods Association will encourage the Trump administration to enter into trade agreements with the Southeast Asian countries that are part of the Trans-Pacific Partnership from which President Donald Trump withdrew, IDFA President and CEO Michael Dykes said at the group's annual Dairy Forum.

Dykes said those efforts should begin with Malaysia, Vietnam and Indonesia, all populous Asian countries that are good prospects for dairy imports. All three, plus dairy-exporting countries Australia and New Zealand, are part of the Comprehensive Agreement for Trans-Pacific Partnership that was formed by the 11 countries that were with the United States in the TPP before Trump withdrew from that proposed pact.

"Our competitors are aggressive," Dykes said at the event, which kicked off Monday in Scottsdale.

USDA has projected that U.S. dairy production will grow, and said U.S. dairy producers will need foreign markets to absorb most of that growth, Dykes said.

"We must expand global markets and competition as part of our overall vision for growth," he said. Dykes added, "Two decades ago, U.S. dairy was almost 100% a domestic market. But the past 15 years have been transformational. Over the past 15 years, U.S. dairy exports nearly tripled, and the United States became the world's third-largest dairy product exporter behind New Zealand and the European Union.

"It's no coincidence that, over the past decade, more than two-thirds of U.S. milk production growth went to exports. Today, 85% of our consumers are in the United States and 15% are global."

To serve those markets, Dykes added, "Dairy must evolve from a fluid commodity business chasing declining volumes and serving a handful of staples, to a value-added business meeting the needs of people everywhere. In other words, we need to shift to making what we can sell -- rather than continuing to attempt to sell what we make.

"The emerging story in exports is no longer overall value, but in value-added products growing as a share of the export pool. We still see big markets for powder and whey. But the biggest movers are cheese, lactose, butterfat and food prep blends -- high-value products taking the world by storm. That's why comprehensive trade deals including the 'whole bucket of milk' are so important to our industry."

In a veiled reference to the troubles at the World Trade Organization in Geneva, Dykes added, "But how do we serve those markets? The dairy industry needs a predictable, transparent and rules-based system of international trade that provides certainty and a clear path to growth through comprehensive trade deals. It is essential that we negotiate new trade agreements that expand our market access and provide a level playing field for our members to regain market share from competitors who've benefited from our trade disputes."

"2018 was one of the strongest years on record for U.S. dairy exports, as value hit $5.5 billion. This past year, despite significant challenges including the U.S.-China trade war and retaliatory tariffs with Mexico, U.S. dairy is on track to beat last year's strong returns," Dykes said.

Jerry Hagstrom can be reached at jhagstrom@njdc.com

Follow him on Twitter @hagstromreport

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