guest editorial/opinion
Perspective: Export Expertise

Tom Suber is president of the U.S. Dairy Export Council. He contributes this column exclusively for Cheese Market News®.

A decade of Export Tool Kits

Back in the fall of 1996, Cheese Market News Editor Kate Sander asked me if the U.S. Dairy Export Council (USDEC) would like to contribute a monthly column for the paper. Recognizing that the U.S. dairy industry was entering a new era in which international trade would play a greater role, Kate sought to give CMN readers practical information on how U.S. companies could capitalize.

Thus, in January 1997, “Export Tool Kit” was born. During the last 10 years, through 120 columns, we’ve covered a vast range of topics, from logistics to paperwork, from standards to labeling, from marketing to trade talks, from opportunities to competitive threats.

It’s gratifying to see that many of CMN’s readers have put our columns into action. Early movers, working off USDEC information and assistance, have established themselves as world-class exporters during the last decade. They’ve taken advantage of opportunities in the market, and, in many cases, created the opportunities as well.

So we begin 2007 with robust global demand, tight supply, all-time-high world commodity prices and poised for a fourth straight year of record U.S. dairy exports. If you were prescient enough to keep a binder of all 120 “Export Tool Kit” columns, you could see that the current position the U.S. industry finds itself in is not really a happy fluke at all, but a development that USDEC members drove the staff to anticipate and plan for, and to play a role in leveraging.

For instance, flip back to September 2000, when we told the industry, “It’s not easy to think about developing a commercial export program for powder when the U.S. government has for years been willing to buy excess product at a price higher than the world market. But by all accounts, this situation is likely to change in the years ahead. ... Manufacturers have to gear their thinking for the needs of international buyers, rather than the needs of the Commodity Credit Corp.”

Such a statement surely seemed outlandish at the time, but still, USDEC began helping U.S. companies understand why they needed to standardize their protein to make skim milk powder (SMP) for the export market, and showed them (through Cal Poly) how to do it. In the last two years, the United States has exported nearly 600,000 tons of SMP, and not a single bag was sent with a Dairy Export Incentive Program (DEIP) subsidy.

Or turn to October 2000, when we hailed the opportunity to boost cheese sales to Mexico: “U.S. cheese exports to Mexico are hotter than a Ricky Martin concert ticket. ... Specific programs are getting U.S. cheese in the hands of Mexican consumers at the retail level and livening up menus in the away-from-home sector. ... That has U.S. exporters encouraged about the prospects for the long-term growth of south-of-the-border cheese sales.”

Thanks to aggressive and creative promotions at retail and foodservice channels, U.S. cheese sales to Mexico have increased from 832 tons per month when that column was written to almost 2,000 tons per month today. We’ve shown that once we get our products in the market, Mexican consumers will buy them.

In November 1999, after China completed its WTO-accession agreement, we said, “These lower tariffs should help U.S. dairy exporters increase shipments ... to this large and growing market. Increased consumer spending means heightened demand for processed foods and fast food, including meat and dairy products. ... China is a relatively untapped market for U.S. dairy products, so USDEC and U.S. dairy suppliers must lay the groundwork now.”

Lay the groundwork we did. In the intervening seven years, USDEC conducted dozens of applications seminars in the market to help food and feed formulators understand the capabilities of U.S. suppliers, drive demand and bring buyers and sellers together. U.S. dairy exports to China have increased six-fold since 1999, and it now represents our third-largest market, trailing only Mexico and Canada.

Meanwhile, in May 2002, we noted that the growth in the sports nutrition market would drive global protein demand: “Since 1999, food and beverage analysts say growth in the sports nutrition sector has accelerated, driven not by athletes but by everyday consumers seeking general wellness. ... To convince potential users that whey is a quality ingredient that meets their applications best, USDEC is working to raise the profile and reputation of whey through its overseas marketing programs.”

We’ve known from the start that much of the United States’ competitive advantage lay in whey proteins. In fact, our very first “Export Tool Kit” column was about navigating the process of selling whey to Japan. But even though the United States has become the world’s largest whey exporter, we’ve continued to tout the opportunities for higher-value whey fractions.

In the last five years, U.S. exports of whey protein concentrate (WPC) and whey protein isolate (WPI) have increased four-fold, and now represent a $175-million a year business. In fact, in 2006, export value of WPC/WPI topped the export value of dry whey for the first time.

To choose one more example, consider our introspective October 1999 column. “The United States aspires to be a significant player in the international dairy market. Are we there yet?” we asked. “Recent events confirm that we’re steering in the right direction. ... Demand is climbing, particularly as economies in Asia and Latin America recover from economic crises. Our industry is showing greater levels of commitment. Competitors’ export subsidies are on the decline. Market access is improving.”

This paragraph is as accurate and concise today as it was in the fall of 1999. Even then, we understood that the confluence of stronger global demand and more liberalized dairy trade would strain the supply capacity of the traditional exporters from Europe and Oceania, putting U.S. suppliers in position to take a bigger slice of a growing pie.

Export success is no longer in the realm of future “opportunities” that will come to us only if certain market conditions turn our way. In many ways, we have arrived.

And in many other ways, we still have more work to do — our destination still looms on the horizon. Much more is possible.

Where will we be in another 10 years? Keep reading CMN’s “Export Tool Kit” to find out. The prospects and challenges we talk about today may very well foreshadow the dynamics of the coming decade.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.