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Perspective:
Industry Issues

2020 banner year for dairy exports; industry must build on momentum

Michael Dykes

Michael Dykes, president and CEO of the International Dairy Foods Association, contributes this column bimonthly for Cheese Market News®.

Exports are a genuinely “good news” story for the U.S. dairy industry. In extraordinary, challenging conditions, 2020 was one of the best years yet. Last year, the U.S. exported a record 2.4 million metric tons of dairy goods, and we nearly topped the annual record for exports by value as well. It’s a positive trend, and it is important that we continue to build upon the momentum to ensure that our U.S. dairy industry has access to new markets.

USDA projects milk production will reach 227 billion pounds in 2021 and rise to 248 billion pounds by 2030.

Those 21 billion additional pounds of milk will provide nutritious and innovative products demanded by a growing global population. But to fully capitalize on the opportunity, the American dairy industry must undertake a comprehensive review of reactive and proactive factors with potential to bolster our globally competitive position.

First, over the short term, we need to seek resolution to pressing issues like port congestion, container shortages and unfair practices by some of our trading partners that created significant delays and canceled export orders over the past year. These issues persist, and IDFA is actively elevating the issue among government agencies.

But we must also work on the longer-term issues our industry faces. For example, we need to increase the number of preferential access trade agreements we have in place and ensure existing agreements are enforced. Last year, we enjoyed skyrocketing exports to Asia, with volume up by 40 or 50% into some markets — China, Philippines, Indonesia and Malaysia. That’s great, but the U.S. is inherently at a disadvantage to some of our largest competitors in this region because the Trans-Pacific Partnership continues to lower tariffs for countries party to the agreement — an agreement the United States pulled away from in 2017.

This is where we’ll be looking to engage with the new administration, encouraging a collaborative approach to liberalize markets, provide preferential access and produce stable, rules-based trading for U.S. dairy exporters. We’ll also work with our elected officials to encourage protection of U.S. dairy jobs by renewing Trade Promotion Authority, which is set to expire June 30, 2021. Without a renewal, U.S. negotiators have no authority to pursue additional tariff reductions, and U.S. dairy will struggle to compete globally and be positioned for success.

In today’s global markets, however, it’s not enough to just react to external circumstances. If we want to grow our status as a major dairy exporter, we must also act proactively on areas we know need updating to align with the future of trade. We’ve made great strides and enjoyed success of late because of advancements in product health, taste and convenience, but are our innovative products competitive abroad? Are we doing enough? Are we operating in a framework that encourages additional innovation? I believe we need to examine our pricing system to see if it hurts our efforts to take the next steps. Think of it this way: U.S. exports make up a bigger and bigger share of production. Exports are closing in on fluid milk as a percentage of the overall pie. We need to take that into account as we contemplate new pricing systems and structures. We need a system that levels the playing field for production of the innovative products that are going to be a boon for the industry in both domestic and foreign markets.

The U.S. has exceptional, ambitious producers, processors and marketers. Pursuing opportunities related to trade needs to be a top objective for our industry and our government in 2021. With more than 95% of potential customers living outside the U.S., our future depends on it.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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