Plan to increase international sales by 5 percent in five years.
By: Krista Kuzma
Source: Dairy Star
MADISON, Wis. – Three dairy industry leaders – Tom Gallagher, Dairy Management Inc. (DMI), CEO; Tom Vilsack, CEO and president of the U.S. Dairy Export Council (USDEC); and Marilyn Hershey, Pennsylvania dairy farmer and DMI board vice chairperson – met Oct. 4 in Madison, Wis., during the week of World Dairy Expo for a press conference to talk about the future of dairy.
“What’s on my mind is improving trust among consumers and the ability of farmers to be able to operate in the next five to 10 years,” Gallagher said.
In order to continue operating, dairy farmers will need a place for their milk, which is becoming a concern with producers as milk is filling processors to near capacity.
“The reality is we do an incredibly good job at producing milk. In fact we do an ever-increasing good job each and every year. It’s projected that will continue. No matter how well we do on the domestic side of consumption, we’re still going to have to have strong exports in order to stabilize markets,” Vilsack said.
Vilsack and Gallagher talked about how their two organizations will work together to use checkoff dollars to increase the U.S. dairy export market.
Right now, exports account for 15 percent of the nation’s dairy sales. Vilsack and Gallagher said they are working on a plan to increase that to 20 percent within three to five years.
“The reality is, we can’t stay at 14-15 percent. We have to expand exports … To do that, Tom Gallagher mentioned the word trust and it’s incredibly important we go out and establish trust not with our own consumers, but with consumers around the world. If they trust us, they will try our products. If they try our products, they will absolutely love them. If they love them, they will continue to consume them,” Vilsack said.
In order to make the 5 percent jump, it will require additional sales of 200,000 metric tons more of cheese and 450,000 metric tons more of dairy ingredients.
Mexico will be a target country. Although U.S. products are already No. 1 in their market, accounting for 75 percent of all their dairy imports, Vilsack said he would like to see that number increase.
“There is still potential …,” Vilsack said. “They drink a lot of soda down there, and they are concerned with obesity of their children. We want to work with Mexican producers and processors cooperatively and collaboratively for Mexican families to consider consuming more dairy.”
Vilsack also said the plan will look to increase imports to Canada if the market opens, and to Japan, where there are fewer than 650 dairy farmers for the 120 million-person population, Vilsack said. Korea, Vietnam, China, the Middle East and Africa are also potential markets where U.S. dairy products could see an increase.
“A person consumes pizza once every 45 days [in China]. Just imagine what that would do for dairy sales if it increased,” Vilsack said.
In Asia, the population will expand, as will the middle class.
“At one point in the next 15 years, the Asian middle class will be 10 times the size of the entire United States. Those folks are going to want to consume dairy products. They will need protein,” Vilsack said.
To carry out this project, USDEC is restructuring its organization in order to reach these markets and have been analyzing how many boots on the ground it will need to accomplish the final goal, Vilsack said. From the regional or state levels, there will be $2.8 million from the checkoff dedicated to this project. Vilsack also said USDEC plans to increase dues for its members.
“We believe if we can get that 5 percent bump it can create another $2 to $2.2 billion of additional sales,” Vilsack said. “That’s the goal, knowing full well if we don’t reach that goal it potentially creates some real challenges in terms of the stability and pricing our farmers will receive because there’s going to be a lot of milk on the market.”
Hershey said she knows this is a time of tight margins for dairy producers across the country.
“The checkoff is not going to be the savior of the farm. It’s a piece of the puzzle,” she said.
During the milk price slump in 2008 and 2009, Hershey and her husband felt the burden of the low price.
“We had to bring in consultation and look at the whole farm as a picture, look at each part of our business where we had to hone down and really get back to grassroots farming. We were able to pull through, but it was a rough time. So I feel the pain [of other dairy farmers]. The margins are small,” Hershey said.
Vilsack wants this plan to help U.S. dairy farmers.
“The goal here is to reduce the volatility in dairy,” Vilsack said.
He is looking forward to the potential in the upcoming year.
“This is a tremendous opportunity to expand exports, a tremendous opportunity of selling the American brand of greatness – our capacity, stability, safety and sustainably produced dairy products,” Vilsack said “We’re excited at USDEC.”