The following interview has been adapted from this conversation with Dairy Foods.
The dairy industry has been facing a variety of challenges this year — most notably, the COVID-19 pandemic. Dairy Foods asked the top executives of leading dairy associations to discuss the industry’s more significant issues, as well as its greatest opportunities. Here's what IDFA President and CEO Michael Dykes, D.V.M., had to say.
Dairy Foods: 2020 has been quite a year, bringing with it a worldwide pandemic, social unrest and other challenges. Heading into 2021, what are your members most worried about, and why?
Michael Dykes: The myriad challenges posed to the dairy industry in 2020 has made our industry stronger, nimbler and more attune to risk. Even in a post-COVID world, we’re going to continue to see a lot of volatility, ambiguity and disruption. While this obviously isn’t our goal, it strengthens our industry and presents opportunities in the midst of such uncertainty.
For one, we expect technology to continue to accelerate disruptions to our business. Think about the rapid shift to online retail. Curbside pickup and at-home delivery have grown 12% during the pandemic. Retail giants have introduced checkout-free technology in some of their stores. More processors with a nationwide or global reach have introduced virtual and multimedia product showcases to meet customers where they reside.
We also expect political risk to continue to grow, regardless of the political outcomes of the presidential elections. Politicians are taking more political actions that significantly affect business at all levels of government. This was not new in 2020 and won’t be new in 2021, but it is increasingly challenging for businesses to plan for and mitigate the business risk. Finally, deglobalization is increasing, and that’s a threat to our industry’s growth. The U.S. government’s talk about “decoupling” with the Chinese economy is one example. With the USDA forecasting an additional 15% of milk output from U.S. farms by 2028, we must, as an industry, stay on the offense and ensure we open new markets for dairy across the world.
Dairy Foods: How is your association helping its members better weather these trying times?
Dykes: IDFA leaders from across each of our five Segment Boards — Cheese, Fluid Milk, Ice Cream, Ingredients, and Yogurt and Cultured Products — have been meeting throughout the summer on our Vision for the Future, a plan that positions IDFA to lead on the new, emerging and strategic issues that will drive our industry over the next five to 10 years.
Throughout these conversations, it has become abundantly clear that many forces outside of our traditional realm of influence — issues like public health, consumer preferences and political risks — are now front and center for our industry. At the same time, our focus on global competitiveness, sustainability, innovation and technology, and attracting the workforce of the future have never been more important to the success of the industry.
Today’s dairy business leaders want to continue to lead our evolving industry through these challenges to ensure a prosperous future for dairy. That’s the focus of IDFA right now — to position our industry to evolve, to attract diverse talent, to mitigate the impact of extraneous factors and to continue to deliver the nutritious, wholesome and delicious products that consumers across the world have come to expect from the dairy industry.
Dairy Foods: Amid all of the turmoil, what are you most excited about, in terms of growth opportunities, for the dairy industry?
Dykes: Across both domestic and global markets, dairy is a growth industry. Just last year, American dairy consumption per capita hit another all-time high, with the cheese and butter sectors driving continued growth for our industry. Since USDA began tracking per-capita dairy consumption in the 1970s, the trend has continued upward for five straight decades, increasing 21% since 1975.
While Americans have always turned to dairy products as fresh, nutritious staples in their diets, they also value the versatility of dairy in new, delicious and more convenient options. In the past decade alone, domestic per-capita consumption of cheese is up 19% percent; per-capita butter consumption is up 24%; per-capita yogurt consumption is up 7%.
What we’re most excited for is seizing the opportunities that await in primarily untapped export markets like India and African countries. Demand for nutrient-dense dairy protein from growing economies remains the driver, especially in Asia. The Philippines, Vietnam, Indonesia and Thailand are all contributing to significant and sustained growth month over month, creating the possibility that the Southeast Asia region will post a record-breaking year for U.S. dairy exports, and we think similar opportunities exist in other markets where U.S. presence was negligible only 20 years ago. We believe the innovation of the U.S. dairy industry will lead the way in opening those markets as the success of extended-shelf-life and UHT present tremendous opportunities to reach export markets that were never before assumed possible. And the continued use of filtration technology to increase the protein content and decrease the sugar content of milk enables us to meet the nutritional needs of Americans and consumers around the world. Our industry is poised for continued success abroad so long as deglobalization, trade policies and other political forces do not constrain us.
Dairy Foods: Any other comments about the dairy industry and/or the year to come?
Dykes: One of the biggest challenges confronting the dairy industry is the slow, outdated process for updating federal standards of identity that don’t reflect or accommodate new processing methods and new food ingredients. To be frank — the ability of our industry to remain competitive and financially viable hinges on the speed of regulatory action.
If we look at recent history, it’s not a positive picture. Outdated standards hinder innovation, impede the production of healthier products, fail to align with global standards, and thwart efforts to meet changing consumer preferences. Yet, critical rule changes have languished at regulatory agencies for years without action or urgency.
Dairy has consistently called for updates to the standards to allow new technologies and ingredients and to pave the way for innovative products to meet evolving consumer preferences. Regulatory efficiency and timely decision-making is not just a talking point for our industry — it will influence our future.