That was the leading question during the September 14, 2022, Hoard’s Dairyman DairyLivestream. Specifically, dairymen wanted to know how much growing export volume . . . now an estimated 17% of U.S. milk production . . . and export value truly impacts farms’ bottom lines.
“When we're letting markets work, and right now we're competitive, then the question is, ‘What would that mailbox price have been if we didn't have that export outlet?’” posed Cornell University’s Chris Wolf. “Since we are competitively exporting, the counterfactual is that price would have been lower.”
Just how much lower that price would have been is the difficult question.
“That's an excellent question, and also a very tricky one to answer from a macro standpoint, because it's really a very detail-oriented question,” explained United Dairymen of Arizona’s Robert Chesler. “It’s not simply will exports increase or decrease the price on the milk check or in the milk pool depending on where it's coming from; it's a question of what's being exported.”
To that end, several panelists emphasized the importance of continued investment in time and dollars to make products that are of higher value for the export market. Additionally, relationships and strategic partnerships need to continue to be built in these countries. All of these factors are paramount to helping exports help farmers.
“Today, it’s a different playing field,” said DairyAmerica’s Patti Smith. “We are building those relationships, we have built those relationships, and we have strategically taken advantage to where we do have equality or close to equality with other exporters.”
She was quick to point out that those relationships aren’t exclusively in areas where our trading partners are growing, such as Southeast Asia and the Middle East. It also applies to historically strong export partners like Mexico and Latin America.
“Exports should certainly continue to increase and add value to that milk check,” Chesler concluded. “Will it have the same increased value today that it will have in three, five, seven, or 10 years? No, it should consistently expand because we should consistently improve our profitability associated with said inventories as we shift from an inventory sweeping mechanism to a choice mechanism with profitability attached.”
To watch the recording of the September 14 DairyLivestream, go to the link above. The program recording is now also available as an audio-only podcast on Apple Podcasts, Spotify, Google Podcasts, and downloadable from the Hoard’s Dairyman website.
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