Last year, the U.S. dairy industry shipped $6.5 billion worth of dairy products to destinations worldwide, including Chile. U.S. dairy exports to the small South American country have tripled over the last decade, reaching 69.4 million pounds valued at $86.8 million last year, according to USDA’s Global Agricultural Trade System (GATS).
“Chile may not be the first country that comes to mind when people think of rising global dairy demand, but the country has offered a substantial and growing opportunity to U.S. dairy exporters in recent years,” says Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra, a consulting firm in Buenos Aires. “Chileans’ shifting diet, which includes a growing appetite for pizza, has raised demand for imported cheese, particularly mozzarella and cream cheese.”
According to GATS data, expanding cheese demand has driven most of the increase in U.S. dairy exports to Chile, but exports of nonfat dry milk/skim milk powder (NDM/SMP) and whey have also been rising. In 2010, U.S. exporters shipped just 4.4 million pounds of cheese to Chile. By 2020, cheese exports had grown to 24.6 million pounds. Over the same period, NDM/SMP exports to the country rose at an annual rate of 13.7%, while annual whey exports expanded at a rate of 3.5%, respectively.
“Chile is not a particularly populous country—about 19 million people— but its macroeconomic growth has helped support a sustained increase in demand for imported dairy products. Chile’s gross domestic product (GDP) has generally expanded faster than that of Latin America as a whole over the past 10 years, and the country boasts the highest GDP per capita in South America.”
Economic stability, rising incomes, and changing diets in Chile have increasingly attracted U.S. restaurant chains to the country, including Johnny Rockets, Applebees, and the Hard Rock Café. While dairy products have long been used in traditional Chilean cuisine, a growing preference for non-traditional foods has accelerated demand.
“U.S. products have also benefitted from an aspirational halo, as Chileans generally consider them to be of superior quality and highly desirable,” Ganley says. “Chile will likely continue to offer opportunities to U.S. dairy suppliers going forward.”
However, U.S. exporters will continue to face fierce competition from other global suppliers, including New Zealand, Europe, and other countries in South America. “Even as U.S. exports into Chile grew by more than 150% between 2015 and 2020 in absolute terms, the U.S. share of total Chilean dairy imports dropped from 27.1% to 23.3%, offset mostly by increased shipments from the European Union and neighboring Argentina,” Ganley added.
However, as the pandemic subsides, Chile is expected to continue to increase imports of dairy products, and U.S. dairy exporters now have the country squarely in their sights.