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Global Trade Affects Everything in the World of Dairy
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MADISON, WIS. – There's no doubt about the fact that global trade is essential when it comes to the profitability of the U.S. dairy industry. Jay Waldvogel, senior vice president of strategy and global development with Dairy Farmers of America, told attendees of the Business Conference of the Professional Dairy Producers in March that American dairy farmers can be competitive in the world market, despite slower growth here at home.
“I would say that the opportunity to grow our customer base here in the United States is not as great as the opportunity we have overseas,” Waldvogel said. “Even though there are a lot of other countries producing milk and other dairy products, the demand for good quality products continues to grow around the world.”
Citing U.S. Department of Agriculture (USDA) statistics, Waldvogel says domestic production of milk in this country has outpaced demand, making the importance of the export market more prevalent.
One of the main reasons for the uptick in global demand is the growing economic status of the people in China and other Asian countries. Waldvogel points out that as per capita income for the average family goes up, so does their desire for more nutritious food in their daily diets.
Dr. Mark Stephenson, the director of dairy policy analysis at the University of Wisconsin-Madison, adds that American dairy producers may also be better able to sustain the cyclical downturns often seen in the dairy markets.
“Farmers in this country have had to deal with the volatile swings in milk prices for years, where our counterparts in Europe have not, for example,” Dr. Stephenson said. “That's the case in New Zealand as well where many of their lenders allow the farmers to borrow more money against their assets, leaving little margin should they face financial hardship.”
The two dairy experts say it is unknown how the United States’ withdrawal from the proposed Trans-Pacific Trade Agreement and renegotiation of the North American Free Trade Agreement will impact the nation's dairy industry. But they urge producers to stay engaged with their legislators as trade talks continue throughout the year.
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Professional Dairy Producers (PDPW) is the nation’s largest dairy producer-led, grassroots organization of its kind, focusing on education, networking and professional development to shares ideas, solutions, resources and experiences that help dairy producers succeed.