American dairy producers are part of the global marketplace, whether or not they sell a single pound of product overseas. Their industry has yet to make long-term, strategic commitments to exporting products, doing so holds emerging opportunities.
Jay Waldvogel is the senior vice president of strategy and international development for Dairy Farmers of America, Kansas City. From his point of view with the largest milk marketing cooperative in America, he said the U.S. dairy industry needs to reposition itself. He made his comments during the annual business conference of the Professional Dairy Producers of Wisconsin held March 16-17 at the Alliant Energy Center, Madison, Wis.
“Your milk price is directly impacted by what happens out there,” he said, pointing to a world map on the screen.
Waldvogel said that American dairy producers have evolved in their understanding of overseas marketing. They initially relied on American consumers to purchase what was produced. Then the industry began exporting as a way to get rid of excess production onto the world market. As the industry evolved, it started to sell, but again mostly when it had excess product.
“Dairy cases around the world are much more interesting than they are in the U.S.,” he noted. To be part of those cases, U.S. processors need to deliver products and milk components that meet customer specifications. “Our perception of what is best is not what they think is best. What we want isn’t what they ncessarily want,” Waldvogel added.
The U.S. dairy industry has had some success in the export business, selling non-fat dry milk, whey (the nutrients remaining after milk is made into cheese) and some cheeses. However, jumping in and out makes U.S. sellers unreliable sources for many foreign customers, Waldvogel noted.
On the other hand, he said there are global opportunities for the U.S. dairy industry as more people around the world have more money in more places. He pointed directly at China and India as examples of where the U.S. dairy industry could be looking – if it produced the right products.
“When people have more money, they buy more calories, more nutrition,” he noted, adding that he believes foreign consumers are making enough money to afford U.S. dairy products at a price American farmers need.
A look at dairying in other countries doesn’t hold the potential that American producers could capture. Waldvogel noted that countries such as New Zealand, Australia and Europe have some contrains; and Argentina, Brazil and the Ukraine don’t have a dairying tradition or expertise to ratchet up production with short notice. That leaves American dairy farmers and their generations-old message of a wholesome, nutrition, safe product.
“Safety is an issue,” Waldvogel said, pointing to last year’s melamine contamination in Chinese products. “And if you don’t believe that the product you’re producing is the best, most nutritious product out there, then how do you expect consumers to believe it?”
The industry has to move from its previous positions “to be consistent marketers in global markets,” he said.
Repositioning the U.S. won’t be without its challenges, including investments in new processing and products, Waldvogel acknowledged. However, he said the industry has the next several years to make changes happen, if it’s willing to make the long-term commitment.