“The dairy industry is suffering through one of its worst economic periods ever,” said Jim Mulhern, president and chief executive officer of the National Milk Producers Federation (NMPF). “Low milk prices are already creating hardship for farmers, and further supply disruptions would only prolong producer difficulties.”
“Dairy exporters already are suffering from diminished access to export markets due to high tariffs and lack of progress on U.S. trade agreements,” noted Tom Vilsack, president and CEO of the U.S. Dairy Export Council (USDEC). “Closing the U.S. Southern border to Mexico would be a gut punch that could set the industry back by a decade or two.”
Mexico is U.S. dairy’s largest export customer, purchasing $1.4 billion (U.S. dollars) in 2018. Mexico is the largest customer for U.S. milk powder, cheese and butterfat.
“There is not a ready alternative market for the millions of gallons of milk that are converted into the thousands of tons of dairy ingredients and cheese we ship to Mexico,” Vilsack said. “It is very difficult to fathom the impact closing the U.S.-Mexico border would have on U.S. agriculture and both the American and Mexican food industries.”
USDEC has spent more than two decades building the market for U.S. dairy products in Mexico. Mulhern and Vilsack noted that as bad as a Southern border closing would be for the U.S. dairy industry, it will hurt their friends and colleagues in Mexico even worse given the dependence of its consumers on U.S. products. “U.S. dairy products are the lifeblood to the Mexican food industry whose development USDEC and NMPF have helped foster,” Mulhern said.
“We cannot condone limiting access to food as a bargaining chip in solving immigration issues,” Vilsack concluded.
In a letter to members of the House and Senate, Dairy Farmers of America (DFA) President and CEO Rick Smith urged immediate action to ensure the U.S.-Mexico border remains open to U.S. dairy exports. Closing the border could put the future of the U.S.-Mexico-Canada trade agreement in peril and further strain key trading relationships that are already fragile as a result of recently imposed tariffs, he said.
“In the volatile dairy industry, strong dairy export markets are crucial for our farmer-owners, who have suffered years of financial stress on the farm,” Smith said. “Mexico remains a key customer for our dairy farmer-owners, and we are asking Congress to work with the administration to keep our border open and quickly ratify the United States-Mexico-Canada Agreement (USMCA) to ensure our robust trade partnership continues.”
Calendar year 2019 dairy product exports have already gotten off to a slow start, according to a monthly update from USDEC.
• Volume basis: Overall, suppliers shipped 151,851 tons of milk powders, cheese, butterfat, whey products and lactose in January, down 9 percent from January 2018. Volume to China was down 41 percent from a year ago – including a 54 percent drop in whey shipments – while cheese exports to Mexico were off 20 percent. On the positive side, U.S. exports of milk powder to Mexico remained robust, and cheese shipments outside of Mexico were up 15 percent.
• Value basis: Total January 2019 U.S. exports were worth $429.9 million, up 4 percent.
• Total milk solids basis: On a total milk solids basis, U.S. exports were equivalent to 12.5 percent of U.S. milk production in January, the lowest figure in nearly three years.
Dairy heifer exports off to a slow start, too
Dairy replacement heifer exports got off to a slow start in 2019. At 838 head, monthly sales were the lowest since June 2018. The shipments were valued at $1.76 million, also a seven-month low.
Mexico was the leading destination for U.S. dairy replacement heifers in January 2019 at 577 head. Kuwait took 203 head, while sales to Canada slowed to a trickle at just 58 head, the smallest number dating back to 2014.
Hay exports start year lower
U.S. hay exports declined in January, with foreign sales of alfalfa hay turning in a 12-month low. Alfalfa hay shipments totaled 181,442 metric tons (MT), down nearly 38,000 MT from December. The month’s exports were valued at $56.5 million, also the lowest since January 2018.
Among leading markets for alfalfa hay, China’s January total of 25,461 MT was the lowest monthly total in more than six years. Sales to Japan remained steady, but shipments to Saudi Arabia were the lowest since April 2018.
Sales of other hay totaled 114,6455 MT in January, the lowest total since September 2018. Total shipments were valued at $38.3 million, also the lowest since last fall. Among leading markets for other hay, increased sales to Japan were offset by lower sales to South Korea.
January 2019 shipments of dehydrated and sun-dried alfalfa meal and cubes were mixed compared to December 2018, but well below January 2018.
U.S. ag trade surplus low
January 2019’s U.S. agricultural trade surplus turned in a second consecutive month under $600,000, and a 12-month low. Monthly exports were estimated at $11.93 billion, up slightly from December 2018. Imports were valued at $11.36 billion.
- Progressive Dairyman
- Email Dave Natzke