US Dairy Exports Hits All-Time High

US - The export of U.S. dairy products reached an all-time high in 2007, and — for the first time in more than a decade — the United States exported more dairy products than it imported.
calendar icon 21 February 2008
clock icon 3 minute read

John Rutherford, IDFA Assistant Director of Economic Analysis

According to year-end data released this week, U.S. dairy exports set records for both total value and total quantity traded. The value of exports grew to $3.0 billion, which is a 62% increase over 2006. The total quantity of non-fluid products exported increased to 3.0 billion pounds, beating 2006 by 23%. Higher prices for many products in 2007 and the increase in volume drove the upswing in total value.

For the first time since 1993, export value exceeded import value, which was $2.8 billion in 2007. Typically, U.S. dairy exports are highly processed, lower-cost dry products that are profitable only through economies of large-scale production. Last year greater worldwide demand for these products not only buoyed volume, but raised prices.

IDFA's analysis of 2007 dairy exports found a number of factors came together to create these export records. We are seeing market growth influenced by large populations with increasing incomes in south-central and southeastern Asia that are demanding more westernized diets. The drought and reduced milk production in Australia continues, straining already depleted world stocks of dairy products. Add to these factors the declining value of the U.S. dollar — which increases the buying power of our customers — and you have the perfect opportunity for increased trade.

Our analysis also showed that while most of the trade factors were outside the influence of the U.S. dairy industry, production did play something of a role. For example, dairy products have to be available for sale, and with milk production expanding 2.1% over 2006, much more product was available.

A close look at the export data showed that dry whey products made up the lead product category in volume at 938 million pounds, up 27% from 2006. Lactose increased 41% to move into the second spot at 746 million pounds. Nonfat dry milk declined slightly in 2007, to the third position with 568 million pounds. The export of nonfat dry milk was hampered somewhat by a 58% increase in price that discouraged purchases by some smaller volume buyers.

Traditional U.S. trading partners — Mexico, Canada and Japan — were the top buyers of U.S. dairy products, accounting for approximately 40% of the total volume. Mexico, in fact, purchased more nonfat dry milk from the United States than any other country. China was a top market for whey and lactose, while the Philippines rounded out the top five buyers of U.S. dairy products with significant purchases of nonfat dry milk.

The top products by value illustrate the low value (per unit) nature of U.S. dairy exports. The leading and second-place value products were nonfat dry milk ($836 million) and whey ($676 million). Other ($392 million), cheese and curd ($387 million) and lactose ($304 million) round out the top five, respectively. Note that lactose had the second-largest volume traded. These products rank in the same order as in 2006, as shown in the following chart.

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