Guest Columns

Perspective:
Export Expertise

U.S. dairy exports: Lessons from past progress

Tom Suber

Tom Suber is president of the U.S. Dairy Export Council. He contributes this column exclusively for Cheese Market News®.

Twenty-one years ago when Dairy Management Inc. founded the U.S. Dairy Export Council (USDEC), the idea that we could sell the equivalent of 15 percent of the U.S. milk supply overseas, unsubsidized, elicited either skepticism or disbelief.

To many, it was an exotic notion to think that the United States would commercially ship large volumes of cheese to Mexico, skim milk powder to Southeast Asia and whey proteins to China. Many were more certain that trade would only enable low global prices to gut our domestic market, and would never rise to cycle back and forth around U.S. prices.

Having had the honor to lead USDEC as president since its inception, I’ve had a front row seat watching U.S. dairy suppliers work with farmers to allay those fears and blossom into significant global players. As I prepare to step down at year’s end, I am left pleased with the progress but also aware that some skepticism may be returning.

• Bigger ups than downs

Over the past two-plus decades, I’ve witnessed five major global trade events where forward progress stalled.

Yet, each time, U.S. dairy suppliers returned to an ever-higher plane of growth. It’s important to recognize that the initial growth and our ongoing resilience has rested on just a few largely immutable “megatrends,” as powerful 25 years ago as they are today.

First, we have had obvious, predictable population growth rates, i.e., more mouths to feed, with current projections showing 9-9.5 billion people by 2050. Rising per capita income among the higher populations, while not quite as predictable as population gains, has served nonetheless to balloon the size of the middle class in developing nations. With this new disposable income has come every family’s aspirations to foster healthy children, playing directly to dairy’s inherent dense nutrient profile, functional versatility and good taste.

At the same time, travel and the global proliferation of western-style food chains have helped to shift dietary preferences toward dairy-friendly foods. Finally, and the only megatrend currently stumbling a little, is a tendency toward freer trade and more open borders. In 1995, it was the signing of the General Agreement on Tariffs and Trade and the North American Free Trade Agreement that heralded the rise of globalization.

These were all clear trends at the time. Yet, only a few U.S. dairy farmer checkoff leaders saw the need to put up significant funds to partner with U.S. manufacturers, traders and USDA’s Foreign Agricultural Service to accelerate the impact of these trends and expand our global footprint.

USDEC embodied this partnership, and the organization’s array of efforts in trade and regulatory policy, market research, product portfolio expansion, ingredient and dairy food marketing, and creating an overseas office network began to have an impact.

The industry came to a watershed with the landmark Bain Report in 2009 (and refresh in 2011), commissioned by the Innovation Center for U.S. Dairy. The report got at the root of the future, asking the question: Do we want to take the steps necessary to accommodate operating in a globalized dairy market? If so, what do we have to do to get there? And what would it mean to us as an industry, both good and bad?

The industry clearly said we are not going to become Canada and retreat from the volatility that comes with a global market. Neither should we stay at the status quo and let circumstances drive our future. Instead, the Innovation Center, with the participation of multiple industry associations, manufacturers and USDEC, determined to move forward.

USDEC’s role has been to accelerate that move through long-term, pre-competitive initiatives facilitating U.S. participation in global markets. USDEC worked hand-in-hand with the industry to channel investments and collaborative action to maximize the opportunity created by those megatrends.

But it was the industry that really picked up the ball and ran. Without dairy manufacturers and their trading company partners taking action, USDEC’s activities would have been just lip service.

While there are always first movers and those that then follow, the industry largely upped its game, traveling to export markets, talking to customers, refining their product specs and investing in products, plants and personnel to service requirements that often varied from traditional U.S. needs — continuing to plug away even when they met resistance.

• Back to the future

That same dedication will be needed moving forward as we encounter new skepticism about where the global upside is now. Some are concerned that recent evolutionary changes have overwhelmed those megatrends and torpedoed U.S. dairy competitiveness.

We now have a transformed, quota-free Europe. We have a certain muted demand — not zero demand, not zero growth in demand, but muted growth compared to recent expansion. We have a stronger dollar than in recent years — although no stronger than it was when USDEC came onto the scene. And legislatures certainly now have a fear of trade that is impeding efforts necessary to increase our overseas market access and match that of our competitors.

The path — the task — is the same. We have to keep working on the fundamentals: communicating the story of U.S. dairy, developing stronger food safety systems, traceability programs and risk management systems, and innovate across the board in cheese, dry ingredients and fluid products. This all starts with listening to and serving the customer. We need to outdo our competitors who are excelling at meeting their (our) customers’ needs.

Concerning the politics of trade that are holding up the benefits we would see from the Trans-Pacific Partnership, we cannot just sit back and wait for politicians to take action. U.S. suppliers and farmers need to play a role by talking to colleagues, customers and neighbors about the importance of trade for their companies. Facts on what trade means to a company’s community and the jobs it brings are largely lacking in the misinformed commentary we have today.

The megatrends still apply and still foretell of a brighter global dairy future ahead. Come next year, I’ll be watching from the sidelines, but I have little doubt the industry is as up for the challenge today as it was 25 years ago.

CMN

Note: The U.S. Dairy Export Council is primarily supported by Dairy Management Inc. through the producer checkoff that builds on collaborative industry partnerships with processors, trading companies and others to build global demand for U.S. dairy products.

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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