U.S. Dairy Industry Reaches Global Crossroads, USDA Study Shows
Current dynamics in world dairy markets and the potential for global and domestic trade policy reform are bringing the U.S. dairy sector to a new global crossroads, according to a study published last month by the U.S. Department of Agriculture's (USDA) Economic Research Service. The study, commissioned by USDA to assess the impact of future trade liberalization, found that the U.S. dairy industry is getting in position to compete globally through innovation, expansion and partnerships, not through protective policies or subsidies.
"If the U.S. dairy sector continues to make gains in efficiency as it has in recent years, particularly with an open trading system, U.S. dairy producers and manufacturers could benefit from trade liberalization. Accordingly, U.S. consumers and producers would benefit from greater access to markets and higher international prices accompanying trade liberalization," the study concludes.
According to IDFA Senior Vice President Chip Kunde, "More and more U.S. dairy products are being exported. We are truly in a global marketplace and need to realign our domestic dairy policies to take advantage of market opportunities here in the U.S. and around the world."
The study, titled "U.S. Dairy at a Global Crossroads," identifies several competitive forces in play today: demand for new products in industrialized countries, changes in technology, rapid economic growth in emerging developing countries and the increasing role of multinational firms. These forces, according to USDA, are leading to increased dairy consumption, more opportunities for dairy product trade and more foreign direct investment.
"As global demand for milk and new dairy products expands, the roles of policies that support prices are diminishing, while the roles of flexibility and innovation aimed at improving competitiveness are growing," the study states.
Dairy product launches have more than doubled from 2000 to 2004, compared with the previous five-year period, the study discovered. New markets also have developed for dairy ingredients like milk proteins and lactose, along with new uses for milk-based ingredients, rising demand for additional cheese varieties and increased shelf-life for products.
The study notes that trade barriers still influence the flow of dairy products globally, but few countries that compete successfully in the export market have additional constraining domestic policies.
To read the full report, click here.
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Posted December 4, 2006