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The Stunning Turnaround In The US Dairy Trade Balance
For many, many years, the US was a dairy-deficit nation; that is, US dairy imports exceeded US dairy exports, and the difference wasn’t even all that close.
That makes what’s happened to the US dairy trade balance over the last decade or so a truly remarkable, even stunning, turnaround.
Statistics released recently by USDA’s Economic Research Service (and reported on our front page last week) illustrate just how dramatic this shift in the US dairy trade balance has been. The ERS figures look at commercial disappearance on both a milk-equivalent milkfat basis and a milk-equivalent skim-solids basis.
A good starting point to look at how much things have changed is the turn of the century, but an even better starting point is to go back another five years, to 1995. That was when implementation of the Uruguay Round Agreement on Agriculture began.
And so the ERS figures show that, on a milk-equivalent, milkfat basis, US dairy imports increased from about 2.3 billion pounds in 1995 to 4.5 billion pounds in 2000, then continued to increase to a peak of 7.5 billion pounds in 2006.
Then US dairy imports (again on a milk-equivalent, milkfat basis) began to drop, to 5.3 billion pounds by 2008, 4.1 billion pounds in 2012 and 3.7 billion pounds last year. Last year’s total was just the second time since 1997 that US dairy imports on a milk-equivalent milkfat basis fell below 4.0 billion pounds (the other time was in 2011).
Meanwhile, commercial dairy exports (defined by ERS as equalling total exports minus Dairy Export Incentive Program exports minus government donations to foreign countries) on a milkfat basis actually declined from 3.1 billion pounds back in 1995 to a recent low of 1.5 billion pounds in 1999.
Then these exports started to increase, to 3.1 billion pounds in 2004, and then 8.8 billion pounds in 2008, before dropping precipitously in 2009 and then rebounding to over 8 billion pounds in each of the next three years.
Last year, commercial US dairy exports on a milk-equivalent milkfat basis reached 12.4 billion pounds, more than double their level in 2007 (5.4 billion pounds), and more than six times their level in 2000 (1.9 billion pounds).
So since the turn of the century, on a milk-equivalent milkfat basis, the US has gone from running a dairy trade deficit of 2.6 billion pounds to a dairy trade surplus of 8.7 billion pounds.
Some additional ERS statistics shed more light on this shift. Back in 2000, the US imported 48.2 million pounds of American-type cheese and exported 18.1 million pounds of those cheeses, for a deficit of 30.1 million pounds. Last year, the US exported 200.5 million pounds of American-type cheese and imported 16 million pounds, for an American-type cheese trade surplus of 184.5 million pounds.
Also back in 2000, the US imported 296 million pounds of other-than-American cheese, and exported 76.1 million pounds of those cheeses, for a trade deficit of about 220 million pounds. Last year, the US imported 233.1 million pounds of these cheeses and exported 497.4 million pounds, for a trade surplus of 264.3 million pounds.
Finally, the US butter trade balance has gone from a deficit of 14.6 million pounds in 2000 to a surplus of 167.3 million pounds in 2013.
On a milk-equivalent skim-solids basis, US dairy imports increased from 3.5 billion pounds in 1995 to 6.4 billion pounds in 2000, then reached 7.1 billion pounds in 2005 before declining to 5.3 billion pounds last year. US dairy imports on a skim-solids basis have now been under 6 billion pounds for five straight years, after being above that level for seven straight years (2002 through 2008) and for eight out of nine years (2000 through 2008, except for 2001).
Meanwhile, US dairy exports on a milk-equivalent skim-solids basis have increased steadily if not spectacularly for almost two decades now. They totaled 5.2 billion pounds in 1995, reached 8.6 billion pounds in 2000, hit 22.4 billion pounds in 2006 and totaled 38.6 billion pounds last year.
On a milk-equivalent skim-solids basis, the US has run a dairy trade surplus every year since 1995. However, that dairy trade surplus has grown significantly over the years, from 636 million pounds in 1999 to over 33 billion pounds last year.
So from a statistical perspective, the US dairy trade balance has clearly shifted, and shifted very significantly, over the last decade or so. Most attention is paid to the export side of the trade equation, and rightfully so, given that commercial exports on a milkfat basis have risen from 2.1 billion pounds in 2003 to 12.4 billion pounds last year, and exports on a skim-solids basis have risen from 9.1 billion pounds in 2003 to 38.6 billion pounds last year.
But the import side of the trade equation has also been changing in recent years, in the opposite direction. Most significantly, imports on a milk-equivalent milkfat basis last year were less than half what they were as recently as 2006 (3.7 billion pounds last year, 7.5 billion pounds in 2006), while imports on a skim-solids basis are also down from their peak years.
And all of this adds up to a stunning turnaround in the US dairy trade balance over the last decade or so.
The US now exports far more cheese than it imports, exports far more butter than it imports, and produces some products now that it didn’t produce, and only imported, a decade or so ago (milk protein concentrate is one example).
From a trade perspective, the US dairy industry of today is far different from the one that existed even 10 years ago.
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