U.S. dairy product export sales have been strong. Exports of dairy cows and heifers have been growing, too, bolstered by a strong U.S. supply of heifers, and demand from oil-rich countries.
By Susan Harlow
World demand for U.S. dairy cows and heifers is strong, say cattle exporters, with much of the strength coming from oil-rich Middle Eastern countries.
“Last year and this year are two of the most active years I can recall,” said Oscar Kennedy of American Marketing Service Inc.-International, a livestock exporting company in Richmond, Va.
In recent years, annual U.S. exports of female dairy cattle have nearly doubled, from 8,385 in 2007, to 15,794 in 2008 and 16,109 last year, according to USDA’s Foreign Agricultural Service (FAS). In the first four months of 2010, the U.S. dairy industry is on a record pace, exporting 11,114 dairy females in the January-April period.
FAS records show exports to Mexico, the largest market for U.S. dairy cattle over most of the past decade, have surged, from about 1,800 in 2007 to more than 12,000 last year. And, for one three-year period, (2006-08) exports to Saudi Arabia actually outpaced those to Mexico, averaging nearly 4,300 head per year during that stretch.
U.S. has numbers, quality
The availability of dairy cattle – especially as sexed semen increases the supply of heifers and lower milk prices hinder domestic replacement demand – are key factors driving U.S. exports.
“Also, despite disease problems around the world, the U.S. continues to be most fortunate in having a good, clean, healthy herd,” Kennedy said. In two or three other major exporting countries, veterinary procedures are not up to U.S. standards, he said.
Oil money is allowing some countries to dig deep to pay for high-quality U.S. cows. “International demand for heifers the last few years has fluctuated with the price of crude oil,” said Brandon Webb, managing director of LI Animal Health, York, Pa. The countries importing the most U.S. cows are also looking to move from net importers of dairy products to producing more of their own. “With oil over $70 per barrel and billions of U.S. dollars in reserves, there is strong incentive for these countries to offer direct and indirect subsidies to domestic dairy producers,” Webb said.
In particular, Turkey and Russia have been pushing to increase dairy product consumption, and have the money to buy cattle. Turkey’s economy also benefits from a strong U.S. military presence in the region, according to Kennedy. “Other countries are trying to increase dairy cattle numbers, like Russia and, to a lesser extent, Egypt. Those are countries that, politically, have decided they want to expand and increase agriculture.”
China, also eager to grow its dairy industry, has been buying cattle from Australia and New Zealand. But that will change, predicted Ken Raney of the Pennsylvania Holstein Association. “They come to us because of our genetics and availability,” he said.
The United States’s dairy industry is a role model for most countries. “Most places are trying to come up to our standards of large dairies dedicated solely to producing milk,” said Gordon Thornhill of TK Exports Inc., Culpeper, Va. “Many (countries) were buying cattle, milking them, eating them and then buying more. Now they have to try to raise cows like the rest of us. But there’s a management factor that has a lot to do with how successful these animals will do.”
Management expertise aside, other countries don’t have the climate, topography or availability of water and feed to support a strong dairy industry. Japan and Korea, for instance, buy much of their alfalfa from the United States, Thornhill said.
He said a big boost to U.S. cattle exports has been an end to live cattle subsidies by the European Union. Middle and Near Eastern countries are now turning to other countries. “The subsidies had a big, big, big influence on the world dairy market,” Thornhill said.
Strict environmental laws and a shrinking agricultural land base are also diminishing Europe’s export potential, according to Luis Rocha of Texas-based American Genetics International Inc.
Besides competing with animals, Australia and New Zealand exports have another impact: Those countries have snagged many of the ships that transport cattle overseas.
“There are tremendous orders for cattle, and we have an awful lot of cattle to sell,” said David Rama of The Cattle Exchange, Delhi, N.Y. “The biggest obstacle is that we have 13 large transport ships for livestock in the world, and we can’t get enough boats. Many are tied up by other countries like Australia and New Zealand. They got the jump on us and are moving tremendous volume,” he said.
Planes are prohibitively expensive, and the specialized transport ships must be scheduled in advance.
“When you put 1,900 head on a boat, you have to be prepared for feeding and caring for them,” Rama said. “This is the biggest dilemma exporters face today.”
Other factors play into transportation. Two of the world’s largest livestock shipping lines tie their ships up for eight months of the year moving sheep from Australia and New Zealand to the Middle East, Rocha said. And, as countries like Egypt, Morocco and Russia – which is pushing to bolster its beef supply before hosting the 2014 Olympics – import more beef animals, the number of livestock transport ships available to move dairy cattle shrinks even more.
Also U.S. ships must be contracted 4-6 months in advance, with a 35% deposit – a large capital outlay for a deal that might fall through.
Stronger market forecast
Exporters see the trend of more U.S. exports continuing– and even strengthening. What could threaten that trend?
“Politics or health issues,” Raney said. A resurgence of bovine spongiform encephalopathy or other contagious disease would shut the doors to exports, much as it did for Canada and the United States a few years ago. After an outbreak of bluetongue in Europe four years ago, several countries closed their borders to E.U. cattle imports.
Will exports be able to shrink large heifer inventories and help contain a growing U.S. milk supply? Not any time soon, said Webb. “I would like to think that some day we will have the infrastructure to export 100,000 head per year and have some small impact on the US. milk supply,” he said. “However, there are a number of barriers that make such a task almost impossible, and our competitors in Australia, New Zealand and Europe are years ahead of us.”
U.S. producers have always had a strong consumer market for dairy products, and haven’t been forced to develop cattle exports, unlike the Australians and New Zealanders.
“Australia and New Zealand must have strong export markets for their live cattle and dairy products and, as such, have developed infrastructure and significant support from the government and private sector,” Webb said.
Exports of commercial-grade dairy cattle aren’t likely to grow quickly, said Ken Matthews, ag economist with USDA’s Economic Research Service. “The U.S. dairy cattle herd has been declining, and I don’t see that changing in the near future,” he said.
For more information on dairy cattle exports, contact:
• Livestock Exporters Association of the USA, e-mail: firstname.lastname@example.org; or
ν The June 2010 issue of HolsteinWorld magazine contains the 2010 International Export Directory. Website: http://holsteinworld.cadmus.com/index.aspx.