Who Are The Big Players?
Over the past two decades as dairy exports from the U.S. have grown, we’ve become more aware of the impact of exports on farm profitability in this country. Our exports compete with dairy products from other countries and regions as shown in the table below. The primary products exported from the U.S. are SMP (skim milk powder), whey protein and lactose products (not shown in table). We export significantly more milk solids (protein and lactose) than we do milk fat. In 2017, we exported 44 billion lbs. of skim milk solids and 9 billion lbs. of milk fat solids, on a whole milk equivalent basis.
Over the past decade, U.S. dairy exports have varied between 7% and 15% of total U.S. production. In contrast, New Zealand exports 97% of their dairy production, largely in the form of whole milk powder (WMP) and butter. New Zealand and Australia have lower costs of production than the U.S., making them more competitive on the global market as evidenced by their milk prices vs. the world average (see table). The European Union (EU 28) is the largest dairy producing region in the world, with a majority of the production coming from the Netherlands, Germany, France, Italy and Ireland. Production per cow and cost per pound are nearly equivalent between these EU countries and the U.S., although subsidy programs on both sides can skew this comparison.
The price of milk is determined by supply and demand. Each year, the U.S. domestic supply has been steadily increasing with the increasing genetic potential of the cows and with improvements in nutrition, management, and facilities. Domestic dairy consumption has also increased with increases in the U.S. population and per capita consumption. However, the increase in domestic consumption does not fully offset the increased supply, resulting in a surplus. If this surplus is not exported, it depresses milk prices. Milk prices have reflected the export volumes; when exports are high, milk prices have been high and vice versa.
Trade policies, government regulations on agricultural production, and weather events can all affect the balance of trade in dairy global products. Who will be the largest dairy exporter in the next decade? The U.S. has more potential for expansion in dairy production than New Zealand, Australia, and the EU countries. Whether we can continue to expand and remain profitable will depend on balancing the increased supply with domestic demand and competitive exports.
Global Dairy By The Numbers:
44 Billion pounds of skim milk solids exported from the U.S. in 2017.
9 Billion pounds of milkfat solids exported from the U.S. in 2017.
Mexico is the single largest importer of U.S. dairy products.
Practice Cold Temperature Caution!
Farming doesn’t stop in the winter: animals still need to be fed, chores completed, equipment repaired. A day on your farm during a massive snowstorm or period of freezing rain will still include being outside to feed calves in hutches, remove plastic from silage piles, start tractors or skid steers in cold weather, or thaw frozen pipes and equipment. During this time of year there are safety concerns in cold temperatures that everyone is aware of, but that sometimes get pushed to the side in order to “get the job done”. Keep yourself safe.
First, remember to always dress in layers as weather is liable to change during the duration of your time outside. OSHA recommends wearing at least three layers of clothing to ward off the chill. Next, drink plenty of water. Especially when working outside in the winter dehydration is a common problem. This is because of the combination of heavy winter clothing, high-intensity work, and not always feeling as thirsty in cold weather as in the heat. Finally, tell someone where you will be working and when you expect to be done. In case of an accident or unexpected weather event someone will know where you are. Also, be aware of the symptoms of major issues associated with cold stress such as hypothermia, frostbite, and trench foot so that you can heed the warning signs if they do arise.
Keeping these tips at the forefront of your mind as you head out into the cold each day will help keep you safe this winter season.
Change In Billing Terms:
To support our customers during the current economic conditions, we have delayed our discount due date by 10 days to the 20th of each month. Please contact us with any questions.
Helpful Article References:
Wisconsin DATCP Export Statistics
US Census Foreign Trade: Exports from Wisconsin
*Parts of this post were contributed by Dr. Joanne Knapp, Provimi.