Archive for dairy trade

Understanding the Drop in Southeast Asia’s Dairy Imports from the U.S.

Learn why Southeast Asia is buying less dairy from the U.S. despite economic growth. Is it due to a stronger dollar and no trade deals? Find out more.

Despite robust economic development, U.S. dairy exports to Southeast Asia have unexpectedly decreased. In the first five months of 2024, exports to the Philippines, Indonesia, Vietnam, Malaysia, Thailand, and Singapore declined 5%, reaching 440.7 million pounds, compared to the same time in 2023. This is the lowest export volume to the area since 2019, with significant reductions in nonfat dry milk and lactose exports. This decrease is surprising considering the region’s outstanding economic development, such as Vietnam’s 6.4% GDP spike in the first half of 2024 and the Philippines’ 5.7% GDP gain in Q1. Thailand, Malaysia, Indonesia, and Singapore all saw substantial increases.

CountryNDM Exports (2023) in poundsNDM Exports (2024) in poundsLactose Exports (2023) in poundsLactose Exports (2024) in pounds
Philippines50,000,00046,000,00016,000,00013,500,000
Indonesia40,000,00037,000,00018,000,00015,200,000
Vietnam30,000,00027,500,00014,000,00011,500,000
Malaysia25,000,00023,000,00012,000,00010,000,000
Thailand20,000,00018,000,00010,800,0009,000,000
Singapore10,000,0009,700,0009,500,0008,600,000

The Staggering Decline of U.S. Nonfat Dry Milk Exports to Southeast Asia 

The decrease in nonfat dry milk (NDM) and skim milk powder shipments to Southeast Asia is notable. USDA figures reveal an 8% decrease to 211.2 million pounds in the first five months of 2024 compared to the same time in 2023. This drop is part of a long-term pattern, with US NDM exports being flat since 2020. According to Betty Berning, an analyst with the Daily Dairy Report, the fall is partly due to losing market share. “New Zealand has ramped up its annual shipments to Southeast Asia in 2022 and 2023,” Berning says. Despite heightened competition, overall sales from the top 15 worldwide exporters have dropped since 2020, indicating more significant market issues for U.S. exporters.

Concurrently, U.S. Lactose Exports to Southeast Asia Face a Significant Downturn 

Concurrently, U.S. lactose shipments to Southeast Asia have dropped significantly. From January to May 2024, shipments plummeted by more than 16%, reaching barely 72.8 million pounds. This reduction compares sharply with the same time in 2023, illustrating more significant issues in the United States dairy export markets. Year-over-year sales figures for 2023 reflect a similar pattern, highlighting the persistent challenges for American lactose exporters in these expanding regions.

The Economic Boom Amidst Dwindling Dairy Imports: A Southeast Asian Paradox

The surprising drop in U.S. dairy exports contrasts strongly with Southeast Asia’s economic development. Vietnam’s GDP increased by 6.4% in the first half of 2024, Thailand’s by 1.5% in the first quarter, and the Philippines’ by 5.7% over the same period. Despite this growth, the demand for dairy has yet to follow up. A greater GDP indicates more consumer spending, which frequently boosts milk imports. However, this has not occurred in Southeast Asia, providing a challenge for U.S. exporters looking to restore market dominance.

The Currency Conundrum: How a Stronger U.S. Dollar Impacts Dairy Trade with Southeast Asia

A rising U.S. dollar influences global commerce by affecting importing countries’ buying power. When the dollar rises, products priced in dollars become more costly for customers with weaker currencies. This dynamic is essential for the dairy industry. A rising dollar diminishes buying power in expanding Southeast Asian countries, raising the cost of U.S. dairy goods. Importers must pay more local currency for the same items, making U.S. dairy exports such as nonfat dry milk and lactose less desirable than cheaper alternatives.

New Zealand, a significant player in the global dairy industry, benefits from free-trade agreements with numerous Southeast Asian nations, which reduce tariffs and prices. In contrast, the United States needs such accords, leaving its goods at a price disadvantage compounded by the strong currency. This competitive advantage makes New Zealand dairy products more enticing to budget-conscious importers. Unless U.S. exporters can provide cheaper pricing or achieve new trade agreements, recovering market share in Southeast Asia would be tough.

A Price Too High: How U.S. Dairy’s Premium Costs Are Hindering Exports to Southeast Asia

Pricing strategy is another significant barrier to U.S. dairy exports to Southeast Asia. Since January 2023, U.S. dairy goods have often been priced more than overseas rivals. This pricing disparity has hindered Southeast Asian importers, who value cost-effectiveness, from purchasing American items. Even when U.S. prices were reduced, the reductions were insufficient to change purchase patterns. The absence of convincing pricing benefits makes it difficult for U.S. exporters to regain market dominance.

The Bottom Line

The decline in U.S. dairy exports to Southeast Asia is undoubtedly due to several interrelated reasons. The most urgent are:

  • The loss of market share to New Zealand
  • The negative impact of a higher U.S. currency on buying power
  • The uncompetitive pricing of U.S. dairy goods

Despite substantial economic expansion in Southeast Asia, these factors have significantly dropped demand for American dairy exports. The lack of free-trade agreements exacerbates the problem, making U.S. goods less appealing than those from rivals like New Zealand. As a result, unless the United States can change its pricing approach to provide much reduced prices, the route to regaining its prior export quantities remains difficult.

Key Takeaways:

  • For the first five months of 2024, U.S. dairy exports to Southeast Asia decreased by 5%, marking the lowest level since 2019.
  • U.S. nonfat dry milk (NDM) and skim milk powder exports fell 8% compared to the first five months of 2023.
  • U.S. lactose exports to Southeast Asia dropped by over 16% in the January to May period of 2024.
  • Economic growth in the region has not resulted in increased U.S. dairy imports, contradicting typical market expectations.
  • The stronger U.S. dollar has eroded purchasing power in Southeast Asian countries, making U.S. dairy products less competitive.
  • The lack of free-trade agreements and high U.S. dairy prices relative to global competitors have also contributed to the decline in exports.

Summary:

U.S. dairy exports to Southeast Asia have fallen significantly in the first five months of 2024, reaching 440.7 million pounds, the lowest volume since 2019. This decline is despite the region’s economic growth, such as Vietnam’s 6.4% GDP spike and the Philippines’ 5.7% GDP gain in Q1. The decline in nonfat dry milk (NDM) and skim milk powder shipments is notable, with USDA figures showing an 8% decrease to 211.2 million pounds in the first five months of 2024 compared to 2023. The fall is partly due to losing market share, as New Zealand has increased its annual shipments to Southeast Asia in 2022 and 2023. A stronger U.S. dollar impacts dairy trade with Southeast Asia by affecting importing countries’ buying power and raising the cost of U.S. dairy goods.

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North American Dairy Trade: US-Mexico Relations Strengthen Amid Canada’s Growing Trade Tensions

Explore the evolving North American dairy trade: How are US-Mexico relations strengthening amid Canada’s growing tensions with global trade partners? Discover more.

The current state of dairy trade in North America reveals contrasting dynamics. The US and Mexico maintain a cooperative relationship, regularly meeting to foster mutually beneficial dairy policies. In contrast, Canada’s protective trade measures have strained relations with the US, New Zealand, and the UK, leading to multiple disputes. 

“The coming US election and possible upcoming changes in Canadian federal government leadership, trade dynamics, and policy uncertainty will continue to be the biggest factors affecting Canada’s dairy industry.” — Al Mussell, Canadian Agri-Food Policy Institute 

  • The US and Mexico have regularly met since 2016 to strengthen their dairy trade relationship.
  • Canada’s protective stance has led to significant disputes over market access and dairy trade quotas.
  • Recent developments indicate ongoing challenges with potential impacts on future trade negotiations.

As North America’s dairy trade landscape shifts, stakeholders from all nations play a crucial role in closely monitoring for signs of stability and resolution. Their involvement is key to understanding the current state of affairs and shaping the future of the industry.

US-Mexico Dairy Summit: Strengthening Cross-Border Alliances in Dairy Trade 

The recent meeting in Chihuahua, Mexico, was not just pivotal, but a beacon of hope for renewing commitments between US and Mexican dairy industry leaders. The event underscored the robust and ongoing partnership and the shared focus on mutually beneficial dairy policies, instilling optimism for future cooperation. 

The US delegation, led by the National Milk Producers Federation and US Dairy Export Council, included representatives from over 14 major companies. Their Mexican counterparts, the Mexican Association of Milk Producers and the National Chamber of Milk Industries, are essential in advancing dairy trade relations, ensuring both nations benefit from strategic policy alignment.

Navigating Uncertain Waters

Al Mussell, a prominent figure in the Canadian Agri-Food Policy Institute, recently delivered a keynote address at the Progressive Dairy Operators Symposium. His insights on the upcoming US presidential election and potential changes in Canadian federal leadership were particularly enlightening. 

Mussell described American trade policy as increasingly protectionist, stressing the need for Canada’s dairy sector to stay alert and adaptable. Understanding this stance is crucial to safeguarding the Canadian dairy market and its regulatory framework. New US trade policies could introduce challenges, requiring strategic responses from Canadian stakeholders. 

Mussell’s insights are particularly relevant amid international tensions, as countries like the US, New Zealand, and the UK criticize Canada’s protectionist trade practices. His analysis underscores the importance of understanding these global dynamics and reinforcing Canada’s dairy industry against external pressures.

Protectionist American Polocies: A Significant Challenge for Canada’s Dairy Sector 

Al Mussell’s view on American trade policy being protectionist highlights a pivotal issue for Canada’s dairy sector. He stresses the importance of Canadian policymakers and industry leaders grasping this stance to fortify the sector in a competitive global market. Mussell’s insights call for sharp trade negotiations and policies to shield Canada’s dairy industry from adverse external influences. 

Canada’s protectionist measures in its dairy market face mounting international criticism. The US argues that Canada’s dairy trade quotas don’t match USMCA commitments, reflecting considerable frustration. New Zealand shares this sentiment, with Trade Minister Todd McClay criticizing Canada’s partial compliance with a CPTPP ruling on dairy market access. McClay insists on complete adherence to trade agreements and is ready to take further legal steps if necessary. 

Britain also voiced dissatisfaction, halting trade talks with Canada, particularly impacting the dairy sector. This international pressure highlights the tension around Canada’s protectionist policies, urging Canada to reassess its stance to reduce disputes and uphold solid trade relations.

New Zealand Stands Firm on CPTPP Compliance, Criticizes Canada’s “Cynical” Maneuvers

In a heated dispute under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), New Zealand Trade Minister Todd McClay slammed Canada for not fully complying with a trade ruling. McClay called Canada’s actions “cynical” and stated firmly that New Zealand will not back down. He’s seeking urgent legal advice on the next steps, emphasizing that Canada still has a chance to meet its CPTPP obligations. This follows four market access claims by New Zealand against Canada last year. New Zealand’s approach remains undisclosed but signals a vigorous pursuit of justice in trade.

Canada’s Dairy Quotas: A Point of Contention in USMCA Trade Dynamics

US dairy organizations and officials are frustrated with Canada’s dairy trade quotas, claiming they’re inconsistent with the USMCA. They argue that Canada’s quota system unfairly limits American dairy products’ access to the Canadian market. Despite the USMCA’s goal of freer trade, Canada’s approach is seen as protectionist, disadvantaging US dairy exporters. This issue highlights the ongoing trade tensions and challenges in international agreements.

Stalled Negotiations: UK-Canada Dairy Trade Talks Face Persistent Deadlock

The halted trade negotiations between the UK and Canada over dairy and other goods highlight a significant impasse, which has lasted over two years. This deadlock reflects deeper trade tensions and conflicting policies that have blocked progress. Despite initial enthusiasm, critical gaps still need to be solved, making the future of bilateral trade relations uncertain.

Bill C-282: A Legislative Bombshell Shaking Canada’s Dairy Trade Policy

Bill C-282 is set to significantly reshape Canada’s dairy trade policy. This proposed law aims to limit trade negotiators from granting further market access for dairy, poultry, and eggs in future trade deals, reinforcing the protectionist stance that has drawn criticism from the US, New Zealand, and the UK. This legislation could heighten existing tensions and hinder future trade talks if passed. 

The ramifications of Bill C-282 are substantial. Canada risks alienating itself in the global market by legally restricting negotiators and facing broader agricultural trade consequences. Supporters argue it will protect Canadian agriculture, but critics warn of potential retaliatory measures and reduced global influence. 

Bill C-282, having successfully passed its second Senate reading, is now on the verge of becoming law. Its adoption would mark a significant shift in Canada’s trade policy, potentially drawing attention from both domestic and international stakeholders.

The Bottom Line

North America’s dairy trade landscape is indeed complex and ever-changing. The strong ties between the US and Mexico contrast sharply with the ongoing tensions with Canada. While US and Mexican industries unite over collaborative policies, Canada faces accusations of protectionism from the US, New Zealand, and the UK. However, the Canadian dairy sector, with its robust supply management systems, stands strong in the face of these challenges. Understanding these tensions’ geopolitical and economic implications is crucial for stakeholders navigating this evolving market, but they can do so with confidence in the sector’s resilience.

Key Takeaways:

  • The US and Mexico reaffirmed their cooperative dairy trade relationship at a summit in Chihuahua, Mexico.
  • More than 14 US dairy companies, alongside prominent Mexican dairy organizations, participated in the summit.
  • Al Mussell of the Canadian Agri-Food Policy Institute highlighted the impact of potential changes in US and Canadian political leadership on dairy trade dynamics.
  • American trade policy is perceived as protectionist, posing challenges for the Canadian dairy sector.
  • New Zealand criticizes Canada’s non-compliance with CPTPP dairy trade rulings, threatening further legal action.
  • The US and Canadian dairy trade tensions persist due to disagreements over USMCA dairy quota implementations.
  • The UK-Canada dairy trade talks remain stalled, with no progress over the past two years.
  • Bill C-282 is advancing in the Canadian Senate, potentially tightening future dairy market access concessions in trade negotiations.


Summary: The dairy trade in North America is complex and evolving, with the US and Mexico maintaining cooperative relationships. Canada’s protective trade measures have strained relations with the US, New Zealand, and the UK, leading to multiple disputes. The upcoming US election and potential changes in Canadian federal government leadership, trade dynamics, and policy uncertainty will continue to affect Canada’s dairy industry. The US-Mexico Dairy Summit in Mexico reinforced commitments between US and Mexican dairy industry leaders. Al Mussell, a prominent figure in the Canadian Agri-Food Policy Institute, has described American trade policy as increasingly protectionist, stressing the need for Canada’s dairy sector to stay alert and adaptable. Canada’s protectionist measures face international criticism, with the US arguing that Canada’s dairy trade quotas don’t match USMCA commitments. New Zealand and Britain have also voiced dissatisfaction, halting trade talks with Canada, particularly impacting the dairy sector. Bill C-282, aiming to significantly reshape Canada’s dairy trade policy, is on the verge of becoming law.

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