When looking at the big agricultural picture, dairy products have been relatively stable in recent years. Overall, dairy products ranked as the sixth-largest commodity exported, at 4.7% of total agricultural exports and valued $8.2 billion in 2024, according to the USDA-Foreign Agricultural Service (FAS). This makes 2024 the second highest year since 2020. When evaluating the longer trajectory, U.S. dairy product exports experienced a 4.6% compound average annual growth rate (CAGR) since 2015. That ranks as the third-largest CAGR among the top 10 U.S. agriculture export commodities.
For many years, China was America’s No. 1 customer. However, Mexico switched places with China in 2024 and purchased 17.2% of all U.S. agricultural exports. This includes $2.47 billion worth of U.S. dairy products last year.
Ag trade deficit widens
In 2025, the trade deficit for agriculture is forecast to widen from last year’s $38.2 billion to $45.5 billion. The primary sectors contributing to this shortfall are horticultural products and sugar. Horticulture is a broad category that includes fruits, vegetables, spirits, wine, essential oils, tree nuts, and nursey stock. Imports in this area are forecast to grow 4.1%, while U.S exports could inch up 2%. All told, this is a trade imbalance of negative $63.9 billion.
Dairy, on the other hand, is relatively stable. Fiscal year 2025 exports are forecasted to grow by $400 million to $8.4 billion, according to USDA-FAS. Meanwhile, imports could climb $300 million to $5.7 billion. The net value equates to a $2.7 billion positive trade balance. Nonfat dry milk, skim milk powder, cheese, whey, and lactose are the primary dairy products exported to other countries. Butter and cheese remain as the top two dairy products imported into the U.S.
The world of agriculture is always changing
To understand the health and well-being of the agricultural economy one must understand three key factors:
- Agriculture is cyclical. There will always be highs and lows.
- It depends on which sector is discussed.
- It is highly sensitive to change.
Overall, USDA forecasted net farm income at $162.5 billion, after being adjusted for inflation, for 2025. This is a 26% jump — or $33.8 billion more — than in 2024. Much of the adjustment between this year and last year is the $33.1 billion boost in direct government payments to farmers for supplemental and ad hoc disaster assistance.
After grain and oilseed commodity prices fell drastically from their peaks in 2022, the dairy and livestock sectors have benefited from softened feed costs. Both fertilizer and pesticide costs are expected to decline this year, as well. On the flipside, other expenses remain elevated for all production agriculture. This includes labor, animal purchase prices, seed, property taxes, and rent expenditures, which are forecasted to climb.
At the end of the day, both the macro and agricultural economies are driven by consumers and are sensitive to shifts in demand. Dairy is well-positioned in these volatile times with value-added products that include attributes such as nutrient-density, high-protein, affordability, and above all, good taste. Lastly, the $8 billion of investment in dairy processing assets coming online over the next three years is a primary example of the dairy industry being in tune with growth trends to meet consumer demand.
