United States Dairy Products for a Global Marketplace

Abstract

The US dairy industry is indeed in a global marketplace. Whether or not an individual dairy producer is involved in exporting, the markets in which producers participate are global markets. Milk producer and dairy processor prices are now clearly determined by the supply and demand for dairy products worldwide. For instance, in spring 1995, butter prices in the US market rose dramatically, primarily because international demand was exceptionally high the previous fall. In 1995 also, record amounts of nonfat dry milk were exported. Again, this situation buoyed prices in the US marketplace. These two examples are just the prelude to the future. Changing dynamics in the rest of the world have led to growing export opportunities for US milk and dairy products. According to the US Dairy Export Council, there will be a surge in world demand for dairy products over the next decade. The US Dairy Export Council also suggests that potential competitors to the US dairy industry for this extra business— New Zealand, Australia, Poland, and Argentina— cannot be expected to increase milk production enough to fill this growth in demand. Most of the needs will probably be filled by gains in local supply. Large investments are pouring into these emerging markets, especially those in the Far East and South America. However, there will still be a sizeable demand for milk products that could be filled by US suppliers, according to the US Dairy Export Council. Historically, the US has not been a major factor in the international market, but that situation is changing. In 1995, US dairy exports exceeded $1 billion. This paper outlines the changing dynamics occurring in the world market and the US response to that opportunity.