Frankenmuth, MI--“I’m looking forward to 2019 being a better year than 2018 and 2017,” stated Tom Vilsack, CEO and President of U.S. Dairy Export Council (USDEC) as he prepared to speak to the dairy producers who recently gathered at the Great Lakes Regional Dairy Conference in Frankenmuth, Michigan.

But why come to Michigan? “There is a lot of stress up here in Michigan, and I think it’s important for those of us in the dairy industry, that believe there is a better day coming, that we convey that message And just as importantly, the Michigan dairy producers have been supportive of the checkoff program which is allowing us to do more work in these export markets.” Vilsack added, “This is a way of saying ‘thank you’ and that their support is paying off. We need to stick with it because we are seeing the right trajectory for exports.”

Vilsack offered several reasons for why he thought the dairy industry would turn the corner in 2019, “We continue to have strong exports. Our exports in 2018 are likely to be at record levels and imports of dairy products from other countries are down a bit, so that’s a positive sign.” He continued, “Part of the challenge of being in an industry where prices are globally set is that things that occur in other parts of the world can impact and affect what happens here.”

Vilsack went on to give an example, “Europe, for many years, has had a surplus of powder. That surplus has been sold down, so that will take some of the pressure off powder prices and that should reflect ultimately in the later part of this year in better prices for our dairy producers.”

The passing of the Farm Bill was also a positive for dairy producers because of the improved Margin Protection Program and Vilsack added, “I’m excited about the opportunities we are now going to have with the export assistance program that the department of agriculture announced. The dairy industry was successful in securing about $5.2 million in additional help and that will allow us to do some things in foreign markets that we haven’t been able to do because of limited available resources.”

Vilsack went on to mention the positive opportunity to continue to deepen the U.S. presence in the export markets, “One of the reasons we have seen increased exports is because we have more people, more partnerships and more promotions in some of these key areas.” He added that they were looking forward to the ratification of the USMCA trade agreement in Congress, “I would expect that the retaliatory tariffs that have been a bit of a drag on our Mexican business opportunities, will be lifted and hopefully we will reach some consensus with China before the March 1 deadline that allows us to avoid a ratcheting up of that dispute, and potentially a resolution to that negotiation.”

While there has been a lot of interest in exports all over the world, lately southeast Asia is sparking some attention. According to the USDEC, Japan's growing love for cheese will continue, presenting an opportunity for U.S. dairy exports to more than triple the sales over ten years, if a new U.S.-Japan trade agreement is negotiated.

Conversely, there is a chance that U.S. annual cheese exports to Japan could fall by 80 percent in ten years if there is no trade deal between the two countries.  That would solidify the New Zealand, Australia and the European Union trade agreements resulting in a tilted playing field.

The USDEC study revealed that Japan is the second largest net importer of cheese in the world after the UK. Since Japan’s two largest dairy suppliers, Australia and New Zealand, have limited capacity to increase their supply, this would give a foothold to the U.S. And while the Japanese population is shrinking, their consumption per capita is increasing, resulting in a strong opportunity for exporting countries.

Adding income to the U.S. dairy producers bottom line is the ultimate goal and Vilsack pointed to the goal of USDEC to rise from 14-15 percent of production being exported, to 20 percent of production being exported, “And that will add a couple billion dollars to the bottom line and will stabilize farm prices.”

Vilsack concluded, “Our ability to sell dairy products in these markets isn’t just a function of saying we have ample supply, we have a safe supply and we have a nutritious product. That has been the pitch that we’ve used forever. We have to add additional elements to it.” He added, “The dairy industry has a remarkable story to tell, most of the milk produced in this state is in under the F.A.R.M. program and we are the only dairy industry in the world that has internationally certified animal welfare standards. That is a marketing tool that we need to use to its fullest advantage.”