The World Needs US Dairy and US Dairy Needs the World.

 By Dr. John Chalstrom, PH.D.

 When Tom Vilsack left the U.S. Dairy Export Council (USDEC) to assume the mantle of Secretary of Agriculture for the Biden Administration, big shoes were to be filled. Rest assured, Vilsack’s replacement, Krysta Harden, is more than capable and is leading USDEC with vigor and enthusiasm.

USDEC’s new leader spoke with poise and confidence in a recent telephone interview as she addressed the future of USDEC and the expansion of US dairy exports, particularly in the Southeast Asian market. Brimming with optimism, this Georgia native discussed the challenges and opportunities facing the dairy industry in a pandemic and post-pandemic world.

How does USDEC work to assist dairy producers and increase their bottom line?
Harden is quick to note that USDEC does not sell products. Its member companies do. USDEC brings together producers, processors and other players across the dairy industry to establish global markets. “We go in early and open doors for those who want to export while working with other governments to educate and sell an image of quality for US dairy products,” stated Harden. Primarily funded by farmers through the dairy checkoff program, USDEC’s mission is to promote dairy exports, enriching the well-being of people, communities and the planet. Headquartered in Arlington, Virginia, just outside Washington, USDEC has extensive expertise in trade policy, market access, regulatory affairs, dairy ingredients and cheese. USDEC works to increase dairy export volume and value, which is essential for dairy producers across the country, regardless of region or size, because exports support all farmers’ milk checks. Empowered by producers, USDEC is enabled to fund expanded reach and bring a broader range of products by using a bigger toolbox to engage with customers and consumers. It is the producer who has allowed USDEC to encourage diversification of the industry’s investments while mitigating risk.

U.S. dairy exports have been very successful in recent years with an all-time high of more than 2 million metric tons exported last year. What factors have contributed to this growth?
When USDEC was formed, the council was created to build markets. Cooperative leaders and producers saw the potential for increasing the market for dairy products. In order to do so, a presence needed to be established outside the US, recognizing that 96% of the world’s population lies outside of its border. And this population is in need of nutritious dairy products. Eight regional USDEC offices have been established worldwide to address this demand. The diversification strategy has been successful, in Southeast Asia and other parts of the world. Last year, the equivalent of 16% of US milk production went into exported products and ingredients. In Southeast Asia alone, one day of US milk production per month heads to the region. Given the regional population of 675 million people, export sales have increased by 36%, a value of $1.3 billion.

And it is not just Southeast Asia where growth has been realized. Cheese exports to Central and South America rose 50% and 18% respectively in June while Caribbean exports rose by 41%. These are places that are not necessarily expected but are indicators that USDEC’s reach is having an impact on opening markets.

How is USDEC working to address challenges in the export market?
Success brings challenges. Harden discussed at length the issues surrounding the success of US dairy exports and the hurdles created. As in most sectors of the export economy, support issues, fulfilling orders, backlogs in trade, labor issues, and general supply chain disruption due to the pandemic have been real issues. Harden emphasizes that the industry needs to be nimble in working with perishable partners in agriculture to take advantage of what is taking place in the sector. Making sure that product can be obtained and shipped in an uneven recovery is, at times, problematic. Furthermore, recognition needs to be made that customers in some export markets are slower to recover from the pandemic than others.
Despite these challenges, US dairy exports are up 13% in both volume and value in the first half of 2021 compared to a record-setting year in 2020, with dairy ingredients leading the way. Higher commodity prices have pushed value up at an even faster pace.

Harden is quick to say that “The world needs US dairy, and US dairy needs the world.” Due to the fact that many countries need more dairy supply and recognizing that the US can provide it, a “win-win” situation is present. In the end, global customers win, member companies win, dairy farmers win, and the US economy wins, especially in rural areas.

What makes the U.S. an ideal supplier for global dairy demands?
With the obstacles facing the global market in a pandemic, it is important to reflect on why the US is the ideal supplier for dairy. The answer lies simply in the efficacy of the US farmer, according to Harden. “Farmers are so good. They create an efficient, high-quality product that is sustainable.” This has resulted in farmers producing more than can be consumed in the United States. “Being able to sustain ourselves and feed other countries nutritious, healthy dairy products is what really motivates me about this position. It’s about taking the things we are doing here and sharing them with the world while helping American dairy farmers,” says Harden.

How have you been proactive in developing new markets like SE Asia?
The Southeast Asia market presents challenges that USDEC is tackling vigorously. Recognizing that other players, namely Europe and New Zealand, have had a longer presence, USDEC has sent the signal that the United States is committed to Southeast Asia for the long haul. Trade shows, working on relationships, making products available, and demonstrating how dairy can be used in a cultural context are all strategies USDEC has employed in securing new markets in Southeast Asia.

Trade battles with China have been problematic with the US Phase I agreement but USDEC works to break down barriers. It is the hope that future policies will be mutually beneficial. However, Harden proves to be an astute observer of a fluid, world stating, “Geopolitical shifts are hard to predict and we must be aware of the impacts that the ever-changing political culture will have on the dairy industry.” Yet China also holds great potential in untapped markets. For instance, milk powder has been a relatively small sector in China, only 6.9%. This creates an opportunity for exponential growth in other products as well.

Along with China, the success of USDEC initiatives has been witnessed in other regions of Southeast Asia. US cheese is now being promoted at Costco in South Korea through newly minted US cheese specialists trained and certified by USDEC. Market staff on the ground have improved working relationships and market growth has resulted in Vietnam, Indonesia, and Thailand, all countries with enormous potential for future expansion.

What is the importance of USDEC membership and partnership with entities like dairy co-ops in global US dairy promotion?
“Strong leaders follow the vision of other great leaders and follow the foundation that has been laid and take it to the next level,” says Harden. “Secretary Vilsack opened a lot of doors with the many great relationships he developed over the years. Ultimately, USCED helps lead the industry through those doors to expand those partnerships and relationships.” Harden firmly believes that farmers, cooperatives, and processors all have respect for each other and the great products created. Working to provide market access and navigate regulations are the central focus of USDEC, which paves the way for producers to deliver.