Today, more than 15 percent of domestic milk production on a milk solids basis is being exported, and that proportion only looks to go up. The OECD-FAO 2013-2022 Agricultural Outlook report anticipates a 2 percent growth in dairy demand per year in developing countries in addition to positive growth in developed nations through 2022.
The U.S. has already benefited from growing global demand and will continue to do so. USDA projections suggest the value of U.S. exports will climb to $8.5 billion in 2022, up from $5.2 billion in 2012.
To meet global demands, shifts will take place within the domestic dairy marketplace to serve the international market. A study conducted by Blimling and Associates, Inc., and carried out under the direction of the Midwest Dairy Foods Research Center's Dairy Economic Advisory Council, took a look at the Midwest's future role in the changing dairy industry. In this study, the Midwest included Iowa, Minnesota, Nebraska, North Dakota and South Dakota.
In their report titled, "A Path Forward," they explained that these shifts will be largely centered around the coasts. This is not to say that the Midwest does not or will not participate in export markets; however, factors such as added freight costs and higher prices paid for milk make exporting more of a challenge.
The Southwest and Pacific Northwest are leading the way in dairy exports. Fifty-three percent of exported cheese, 89 percent of skimmed milk powder and 69 percent of exported butter come from these two regions. In contrast, the Midwest contributed less than 3 percent of the nation's exports in each of those categories.
However, as more product from coastal states heads overseas, someone will need to fill growing domestic demand. The U.S. is expected to add 20 million people by 2020. Based on current consumption trends, that means 1.1 billion more pounds of cheese will be needed domestically, an 11 percent increase over 2012 production.
The Midwestern states may be just the answer to filling this void. Midwest Dairy and other stakeholders will determine how to apply the study's recommendations to help the dairy industry in the Midwest fit into the changing dairy marketplace.
