With a focus on the U.S. dairy market and exports today, in the coming year and in the long-term, Tim Hunt, Global Dairy Strategist with Rabobank, shared his insights on what the industry can expect. In future blogs, we will touch upon these topics, but two questions asked at the conclusion of his presentation highlight the potential for U.S. dairy in the export market if we position ourselves to be a bigger player. During his presentation, Hunt briefly touched on what may happen when the European Union lifts production quotas in 2015 and was questioned further on this at the end of the talk.
"When quotas are removed, there will likely be production growth in northern Europe. This, in turn, will displace milk production in the higher cost regions of southern Europe. There will be some export growth, but it won't flood the market; opportunities will remain for the U.S.
"Irish producers are best prepared to take advantage of this with potential production gains of 40 percent by 2020. Many of these producers are running half dairy, half beef herds, since they cannot gain enough quota to become a full-fledged dairy operation.
"With their existing facilities, Irish producers are preparing to focus solely on dairy as quota is removed. They are prepared to expand their existing sites, but it is cost prohibitive, for most, to consider purchasing neighboring dairy and land. This will limit their growth potential in the future," noted Hunt.
He also commented that the Netherlands, too, have limited growth potential. "With expansion and additional cattle there is more manure. The country is close to or pushing the limit for the amount of manure it can produce on its land base.
"China isn't the only story," noted Hunt when asked if we can afford to place our export stakes on a sole country.
"Brazil, Russia, Mexico, Southeast Asia and other countries are beginning to import more dairy as well. These importers are expanding their demand; we don't have to rely on China.
"New Zealand relies on China as the base of its export market. As they have risen to meet China's growing dairy demand, they have pulled back from other countries and markets. This shift has left a demand gap for the U.S. to fill in countries that are closer to our boarders, such as Mexico and those in Latin America," he continued.
"The U.S. will always sell most of its product internally though," concluded Hunt.
The author, Amanda Smith, was an associate editor and is an animal science graduate of Cornell University. Smith covers feeding, milk quality and heads up the World Dairy Expo Supplement. She grew up on a Medina, N.Y., dairy, and interned at a 1,700-cow western New York dairy, a large New York calf and heifer farm, and studied in New Zealand for one semester.
