USDEC’s Vilsack Remains Optimistic About Long-Term Dairy Export Growth

Despite the ongoing US trade war with China, USDEC President and CEO Tom Vilsack today listed reasons to be optimistic about the long-term growth of US dairy exports, especially in high-demand markets in the Middle East, Asia and Mexico.

“This will require patience. We have to play the strategic long game. But I am convinced now more than ever that we are competing to win, not just for today’s dairy farmers, but for the next generation,” Vilsack said in an address at World Dairy Expo.

Last year, the US dairy industry exported the equivalent of almost 16 percent of US milk solids. That 2018 volume percentage set a new US dairy export record, despite the drag of retaliatory tariffs in the largest US dairy export market, Mexico, and in China, the number three market.

For several years, export volume plateaued around 15 percent of total US milk solids production. Vilsack began an industry-wide initiative in 2017 called “The Next 5%.” It aims to increase export volume five percentage points to 20 percent of production.

The retaliatory tariffs imposed last year have been lifted in Mexico and Vilsack said if Congress passes the United States-Mexico-Canada Agreement (USMCA) to replace the NAFTA, it will bring more stability.

Another positive development: an interim agreement announced last month with Japan, the world’s largest importer of cheese, that will deliver improvements in market access for US cheese and whey exports. US dairy exports to Japan last year were valued at $270.3 million, and in value terms, Japan was the fifth most important US dairy export market in 2018, trailing Mexico, Canada, China and South Korea. US cheese exports to Japan last year totaled 123.6 million pounds, making Japan the third-largest US cheese export market, trailing only Mexico and South Korea.

In China, US dairy exports are roughly half of what they were before the tariffs. Nonetheless, the industry must maintain a strong presence there, Vilsack said, establishing and cementing relationships to increase demand for US dairy products.

Vilsack met in late August in Beijing with officials from China’s Ministry of Finance and Commerce to stress that the US has the dairy ingredients, scientific research and know-how to help rebuild China’s pig herd decimated by African swine fever. Shortly thereafter, China announced it was waiving its retaliatory tariff on US permeate for feed.

USDEC is playing a role accelerating the uptake of permeate to rebuild China’s swine population with seminars Oct. 29 in Beijing and Oct. 31 in Nanchang.

One of the most promising markets for US dairy exports is Southeast Asia, where US dairy exports increased 12 percent last year and USDEC is making a new investment to develop the US Center for Dairy Excellence in Singapore.

“The vision,” Vilsack said, “is to create an educational center within the hub of Southeast Asian food innovation.”

Vilsack highlighted other USDEC long-term investments in fast-growing markets where he said there are “outsized” opportunities for growth as reasons for optimism, including:
• Broadening partnerships within Mexico to further build demand for US Dairy to capitalize on USMCA, once ratified.
• Launches of US cheese in Mexico and China through Costco retail partnerships, as well as in Chile through focused retail engagement.
• The launch of the USA Cheese Guild™, an internationally branded effort to facilitate education about and preference for US cheeses within culinary, foodservice, communications and retail channels.
• Halal food training for dairy exporters exploring growth in Islamic nations, such as Indonesia – a top 10 global dairy importer. Vilsack noted that USDEC is in Indonesia on a trade mission this week with USDA’s Foreign Agricultural Service and a dozen US dairy ingredient exporters. Indonesia is working to expand its dairy supply chain.
• A pop-up US Dairy display to increase visibility and induce product trial across regions.
• Partnerships with fitness centers and cheese marketers in Japan. USDEC has a partnership with fitness chain Curves, which sells concentrated whey protein from the US to customers at its 2,000 locations.

In addition, USDEC Japanese cheese marketing partner Chesco is introducing high-end US cheeses in its own stores, as well as other Japanese grocery and department stores
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