by Jerry Cessna, Lindsay Kuberka (USDA/FAS), Christopher G. Davis, Roger Hoskin, USDA Economic Research Service
From 2004 to 2014, the value of U.S. dairy product exports more than quadrupled, and the United States became the world’s third-largest dairy product exporter, behind New Zealand and the European Union (EU). This export status was a significant change for an industry previously focused primarily on domestic rather than international demand. Demand for dairy products increased with soaring income growth in developing countries. Moreover, policies of the United States and its trading partners became more market-oriented, allowing trade that responds more to market forces. As the United States became more of a global dairy-market player, the U.S. dairy market faced greater variability in demand and prices. In 2015, as global conditions changed, the value of U.S. dairy exports fell by almost 30 percent. The United States, as both a top producer and exporter, has a pivotal role to play, but will have to compete with other large dairy exporters such as New Zealand, the EU, and Australia to increase export market share in the future.
Despite being one of the top milk-producing countries and home to an extensive milk-processing sector, historically, the United States did not play a major role in international dairy trade. Exports accounted for a minor share of milk use as the U.S. dairy industry focused primarily on domestic rather than international markets. In the early 2000s, the situation began to change, and adjusted for inflation, U.S. dairy product exports grew from just under $1.6 billion in 2004 to almost $6.8 billion in 2014, more than a fourfold increase (values in 2015 dollars). This far exceeds the overall inflation-adjusted growth rate in total U.S. agricultural exports, which rose from $76.7 billion in 2004 to $150.2 billion in 2014, almost a twofold increase (values in 2015 dollars).