Dairy Trade Is One Positive Aspect Of The Dairy Economy

Dairy trade is one of the positive aspects of the dairy economy, according to Dairy Profit Weekly editor Dave Natzke. Reporting in Friday’s broadcast, Natzke said February estimates released this week shows the value of dairy exports has now exceeded imports in six of the past seven months.

February exports were valued at $225 million, unchanged from January, but $65 million more than a year ago, according to Natzke. February imports were up slightly, to $198 million, but that’s $61 million less than February 2009.

Through the first five months of the fiscal year, exports are up 9 percent from the same period last year, while imports are down 22 percent. The fiscal year dairy trade surplus stands at about $54 million.

On a volume basis, February exports of milk powder, whey, cheese, butterfat and lactose all posted gains compared with year-ago levels, Natzke said. The important trade balance measure for dairy farmers is that exports were equivalent to 9.8 percent of U.S. milk solids production for the month, up from 8.7 percent in January. Meanwhile, February imports equaled 2.9 percent of total milk solids production, down from 3.1percent in January.

And, on another trade note; U.S. has averted a trade dispute that could have had a negative impact on dairy exports. The U.S. and Brazil have agreed to negotiate an end to a long-running dispute over U.S. cotton subsidies and export credits, Natzke reported, and that’s good news for dairy farmers.

In 2009, a World Trade Organization (WTO) dispute panel ruled the U.S. cotton subsidies violated WTO rules, and allowed Brazil to establish retaliatory measures, including tariffs on skim milk powder and whey products imported from the U.S. That would have effectively priced the U.S. out of the Brazilian market, Natzke said. The U.S. exported about 11,000 metric tons of skim milk powder and dry whey to Brazil in 2008-09.