Frequently Asked Questions

Q: How can we compete overseas when world prices are low?

A: For value-added products - like certain cheeses, whey, lactose and ice cream - the United States is already competitive. USDEC directs most of its market-development programming at these products.

For commodities, the world price often remains below our domestic price in many categories. However, convergence between world and U.S. prices are occuring with greater frequency and for sustained periods. In 2004, world prices have been brought in line with U.S. prices in part due to  tight global supply and strong demand. As a result, U.S. suppliers have made significant unsubsidized sales of skim milk powder this year.

Further, low world prices for commodities are the result of export subsidies used by our competitors. Under the GATT agreement those subsidies were phased down and one of USDEC's top trade policy goals is to fully eliminate trade-distorting export subsidies in upcoming WTO negotiations. When this happens, world prices are expected to rise further toward U.S. levels. For more information, visit the USDEC trade policy section.

Q: How does the U.S. Dairy Export Council (USDEC) market U.S. dairy products?

A: Each market is approached differently, depending on local dietary patterns, demand for dairy products, level of international and local competition, consumers' purchasing power, degree of market access and myriad other factors. USDEC thoroughly researches all these factors in each market to determine the proper entry or expansion strategy. USDEC members from the processing, co-op and trading communities apply a valuable "reality-check" to these plans, to ensure that they will indeed increase U.S. dairy exports.

USDEC usually enters a market by working with importers and distributors to familiarize them with the features and benefits of U.S. dairy products. This may include trade visits, missions and applications seminars. Later, when sufficient distribution is attained, USDEC's marketing efforts will shift closer to the consumer, with sampling, promotions and advertising.

In developed markets like Japan and Mexico, USDEC runs regular consumer promotions to stimulate demand for U.S. dairy products. However, in other markets, USDEC's marketing efforts primarily are directed at trade servicing activities. Building demand for dairy components through industrial and foodservice importers and distributors gives the U.S. dairy industry the most "bang for its buck."

Part of USDEC's marketing challenge is that the United States is relatively new to the international scene compared with its competitors from Europe and Oceania. USDEC's efforts help persuade distributors to carry U.S. products and help U.S. suppliers meet export requirements for formulation, packaging, labeling, distribution and financing.

Q: How much does the dairy export program cost?

A: USDEC's 2004 budget is $13.4 million. Of this, $7.5 million comes from dairy farmers (through DMI). These funds are leveraged with $4.8 million from USDA's Foreign Agricultural Service and $800,000 from membership dues and other revenue.

Q: If the United States is importing dairy products, why should we develop export markets?

A: In 2003, dairy product imports outweighed exports in value, $2.1 billion to $1.1 billion, but exports exceeded imports by 342 million pounds on a total milk solids basis. However, imports and exports are not opposite sides of the same coin. We export the products for which there is a market overseas - where and at a price at which it makes sense to do so. We import the products that we don't make domestically. Casein, milk protein concentrates and European-style cheeses made up almost 65% of the volume and value of 2003 imports.

There is no limit to the amount of casein and milk protein concentrate that can be imported into the United States. Limits were placed on other imported products in the Uruguay Round of the GATT. In the current round of the World Trade Organization talks, many elements of the dairy industry are pressing U.S. negotiators not to give up any additional access to our markets unless dramatic new access is granted by other trading nations, particularly Europe, Canada and Japan.

In light of long-established trade patterns, the United States is and will remain an attractive market for suppliers around the world. Therefore, regardless of imports, USDEC's industry-wide effort to develop export markets has brought a successful counterweight to imported dairy products. Without the access to additional markets overseas, the U.S. dairy farmers' growth potential is severely limited, and the industry may in fact begin to stagnate.

Q: What products are exported?

A: The U.S. dairy industry exports some quantity of virtually every product it makes. Today, the most viable exportable products are cheese, whey, lactose, ice cream, infant formula, fluid milk and cream, and milk powders.

Q: What's the payback to dairy farmers for this investment?

A: According to the National Milk Producers Federation, from 1996-2003 the check-off investment in unsubsidized exports, leveraged with other contributions from dairy processors and USDA, has improved on-farm milk prices by an average of 13¢ per cwt., and increased dairy producer income by an average of $260 million per year. In comparison, producers contribute less .5¢ per cwt. to USDEC via the check-off program.

Q: Where are U.S. dairy products sold?

A: Our primary markets are China, Japan, Mexico, SE Asia and Canada. Secondary markets include  Korea, the Middle East, the Caribbean and South America.

Q: Why does Dairy Management Inc. (DMI) promote exports?

A: DMI's mission to increase demand for U.S. milk products is not limited to a focus on U.S. consumers. As populations grow and spending power rises in developing countries, demand for dairy products increases. Most developing countries are dairy deficient, lacking the infrastructure to produce high-value dairy products to meet growing demand. The United States dairy industry is well-structured to meet this need, but market development efforts are needed to win sales from well-entrenched competitors now and in the future.

For more information about U.S. dairy exports, please contact the U.S. Dairy Export Council, 2101 Wilson Blvd., Suite 400, Arlington, VA 22201 Phone: 703-528-3049 - Fax: 703-528-3705 - E-mail: info@usdec.org