Cheese Export Growth Crucial to Future U.S. Dairy Prosperity
The U.S. dairy industry has set a goal of growing exports from its current 14% to 15% of current milk production to 20% over the next three to five years.
Achieving that goal represents a sales opportunity of $2 to $2.2 billion, says Tom Vilsack, U.S. Dairy Export Council (USDEC) CEO and the former Secretary of Agriculture under President Obama.
But those gains won’t come automatically, particularly on the cheese side, says Merle McNeil, USDEC director of market research and analysis. “Increasing cheese exports by around 200,000 metric tons over the next five years is a critical component to achieving the that goal,” she says.
USDEC estimates global cheese imports will likely increase more than 500,000 metric tons by 2021. “U.S. suppliers essentially would need to win about 40 percent of that additional volume to get an additional 200,000 metric tons. And therein lies the challenge,” she says.
She believes half of that volume will need to come from North Asia (China, Japan and South Korea) and the Middle East/North Africa (MENA). Both regions are currently dominated by U.S. competitors—the European Union and New Zealand.
To increase market presence in both regions, U.S. suppliers will need to broaden their cheese offerings, tailored to each specific market. While challenging, U.S. suppliers have done this before. U.S. cheese makers sold just 5,000 metric tons to Mexico in 1995, but scaled that up 18-fold by last year. They did it by creating products such as gouda varieties that fit both Mexican taste and applications, says McNeil.
“If U.S. cheesemakers expect to become global players in world cheese markets, they will need to defend and grow share in Mexico by better catering to market needs,” says McNeil. “But even more importantly, they need to branch out and pursue strategies in the higher-volume potential of MENA and North Asia. Read her full blog here.