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Global Dairy Landscape Is Shifting; US Is Facing Some Different Challenges: USDEC's Al Levitt

World Market Will Be More Competitive In Future; Cheese Exports Offer Good Opportunity

Egg Harbor, WI—The shifting global dairy landscape will present some different challenges for the US dairy industry, including more competition, in the coming years, according to Al Levitt, vice president, communications and market analysis, US Dairy Export Council (USDEC).

For the US dairy industry, there is a “dramatic contrast” from where we were 20-plus years ago to where we are today, Levitt commented at the Wisconsin Dairy Products Association’s 2016 Dairy Symposium hereTuesday.

Twenty years ago, the US was a domestically focused industry, but step by step, the US has moved into the globalized system.

“This is not necessarily an upbeat presentation,” Levitt said. “The international market is in the tank, it’s been in the tank for about two years, exports are down” and have been down for about two years.

“The landscape has shifted over the last couple years and so it’s going to present some different challenges for us,” Levitt continued.

It’s now a very different world for US dairy exporters than it was during what Levitt called the “boom period” of 2003 through 2014, “when everything went our way. We’re all operating in this very different competitive environment than we were during that boom period.”

A lot of the success for the US during the boom period, and lack of success more recently, has been a product of the competitive environment, Levitt explained. “For 10 years, we were in the right place at the right time,” but now, some of the market’s characteristics “go against us.”

The 2003-14 period was characterized by “global tightness,” Levitt said. There were stretches where global prices were higher than US prices, and it was mostly a seller’s market.

And during that period, US dairy exports increased across almost all product categories, and export volumes tripled.

But a number of fundamental factors have shifted, and “none of them” have shifted in favor of the US, Levitt noted.

Among other things discussed in Levitt address:
n Over the 2003-14 period, the European Union (EU) was still operating under its milk production quota system, but since April of 2015, there have been no EU quotas to constrain supply.
n Returns from the world market were attractive over the 2003-14 period, but are less attractive now.



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