|
|
|
|
|
|
Churning Up the Export Numbers in 1997
By Arthur Coffing
Is the grass greener on other
sides of the market? In 1997, the U.S. dairy industry put this
hypothesis to the test as U.S. producers, processors and
exporters moved aggressively in the global marketplace. Their
efforts were backed by the world's largest, most modern dairy
industry--one that enjoys many market efficiencies and low
production costs.
Results? Although competition remained stiff, increased promotion and new trade initiatives paid off.
It was a time when the global playing field continued to level out as implementation of the Uruguay Round Agreement continued to reduce the role of subsidies and once-closed markets were opening wide. Many analysts saw new trade opportunities emerging from the rapid economic and changing dietary patterns in Asia.
Industry leaders today continue to work hard to expand foreign sales of both bulk and high-value processed products. If all goes as expected, the United States is poised to play an increasingly important role as a major dairy product exporter.
In 1997, U.S. dairy exports were valued at $905 million, 27 percent above 1996, a year that suffered from market effects of the Mexican economic crisis.
Last year's outcome is viewed favorably, especially in light of earlier problems that dairy exports have faced.
Of these, the greatest impact came from the sharp downturn in the Mexican market following the peso devaluation in December 1994. Imported dairy products simply became too expensive for most Mexican consumers. Other factors affecting export growth included high prices and limited supplies of some products.
Although the overall sales gain in 1997 was strong, there were variations among individual products. Those that did extremely well included whey protein concentrate and lactose, cheese and fresh milk. Trade was also generally up in products heavily dependent on consumer demand in Mexico, as in the case of fluid milk.
The whey/lactose complex was one of the stars among U.S. dairy products in 1997, with exports up 4 percent to a record $178 million. Developing markets in Asia accounted for nearly all the increase.
Much of the credit goes to market development activities, which have introduced foreign food processors to new methods of incorporating whey products into locally produced foods. Whey protein concentrate and lactose shared significantly in the growth. U.S. dried whey shipments to Asia, except for Japan and Taiwan, were also up sharply. However, high prices for dried whey and the financial crisis during the second half of 1997 put a damper on U.S. exports.
U.S. cheese exports in 1997
climbed to $123 million, an 18-percent increase over 1996 and a
new record. Some of the strongest growth was to Asia,
particularly Japan and Korea, and to the European Union (EU) and
Central and South America, regions where market promotion efforts
have played a significant role in building demand for U.S.
cheeses.
Among dairy products where exports largely depend on the DEIP--butter, anhydrous milkfat, nonfat dry milk and whole milk powder--trade was up, as DEIP activity picked up in July 1997. Trade data show 1997 exports of powdered milk at $185 million, substantially above the $54 million activity reported in the previous year.
Where Markets Hold Promise
The top six markets for U.S. dairy products in 1997 were Mexico, Japan, Canada, Taiwan, Hong Kong and the Philippines. Except for Mexico, U.S. exports reached record highs in each of these countries last year.
Mexico is a market that returned to the growth track with vigor in 1997; inputs of U.S. dairy products jumped from $109 to $170 million. Due to its proximity, Mexico is the major market for fresh dairy products such as fluid milk.
In Japan, U.S. dairy product exports have been rising steadily, reaching a record $119 million last year. Sales also set a new high to Canada, a market with an economy and tastes very similar to those in the United States. With a strong increase in DEIP sales, imports by the Philippines were approximately double those of 1996, allowing that country to oust South Korea from sixth place. In contrast to previous years, Russia was mainly a commercial buyer in 1997, but late in the year, strong demand for butter facilitated an increase in DEIP sales. Many of these sales will show up in 1998 export statistics. In the last two or three years, Russia has been a major cheese importer, offering the United States some significant sales opportunities.
For Asian markets as a group, future trade prospects look especially promising, despite current economic problems. Consumers in countries such as Japan, Taiwan, Hong Kong and South Korea are rapidly developing a taste for a variety of dairy products.
With rising foreign demand, the U.S. dairy industry has a new attitude toward exports. Although there will be ups and downs, a sustained, long-term commitment to exports will pay healthy dividends for U.S. dairy producers, processors and exporters in the years ahead.
_______________________________
The author is an agricultural economist with the Foreign
Agricultural Service's
Dairy, Livestock and Poultry Division. Tel.: (202) 720-3761; fax:
(202) 720-0617.
|
|