U.S. Dairy Market Holds Great Potential For U.S.
Dairy Profit Weekly’s Dave Natzke reported on his recent U.S. Dairy Export Council (USDEC) information mission in Friday’s broadcast. The group was made up of USDEC members, USDA staff, Pennsylvania dairy farmer Paula Meabon, Arizona dairyman Paul Rovey, and North Dakota dairy farmer Kenton Holle, and traveled to Dubai, in the United Arab Emirates.
A centerpiece of the trip was to attend Gulfood, the largest Middle East food trade show which brought food suppliers and buyers from all over the world. They also spent five days meeting with dairy product and ingredient buyers from throughout the Mideast.
“What I found” Natzke said, “Was a region hungry for a consistent supply of U.S. dairy products and ingredients.” The United States lags well behind the European Union, New Zealand and Australia as a supplier of dairy to this emerging market, according to Natzke, and while logistics and prices put many U.S. companies at an economic disadvantage, members of the mission were told that population growth and cultural changes in the Mideast “make the market potential too great to overlook.”
Meeting that market demand will likely mean changes in how U.S. companies address competitive issues, Natzke said, as to what products we produce, and how we conduct business. For example, many U.S. cooperatives produce a lot of nonfat dry milk powder and salted butter, because if there’s a surplus, they have a guaranteed buyer in the U.S. government. In contrast, Middle East buyers prefer whole milk powder, he said, unsalted butter, and anhydrous milk fat as ingredients for other foods.
The region is a large buyer of whey protein concentrates to use as in ingredient in other foods, according to Natzke. However, because the U.S. produces a lot of yellow Cheddar cheese, the whey concentrates discolor foods manufactured in the Middle East compared to the whey concentrates derived from the white Cheddar in other parts of the world.
In addition, because the export market is largely seen as a market of last resort for U.S. surplus, U.S. companies often overlook the customer service and personal business relationships necessary to serve this market, he concluded.
The Agriculture Department issued its final decision as to what constitutes a “producer-handler.” National Milk’s Chris Galen reported in Thursday’s broadcast that “It’s the end of a long sought effort to put a lid on the exemption that the largest producer-handlers have enjoyed.”