By Madeline Schultz, content specialist, AgMRC, Iowa State University, schultz@iastate.edu.

Profile revised June 2011 by Malinda Geisler, AgMRC, Iowa State University.
 

Overview
International dairy trade is primarily in butter, cheese and dry milk powders, with some trade in fluid milk products, ice cream, yogurt and dry whey products (ERS).

The United States produced 87,450 metric tons (MT), of milk in 2010, more than any other individual country. Other major producers of milk in 2010 included the 27 countries of the European Union (EU), which produced 134,200 MT; India, which produced 50,300 MT; Russia, which produced 31,740 MT; Brazil, which produced 29,948 MT; and China, which produced 29,100 MT. 

The United States was a net exporter of dairy products in 2010. U.S. exports of dairy products were valued at $3.7 billion in 2010, the second highest on record. Export volume totaled 1.6 million MT. The United Stated imported 594,687 MT of dairy products in 2010. The products were valued at $2.17 billion, leaving a trade surplus of more than $1.5 billion.

Demand
Countries with developing economies offer growth prospects for U.S. dairy products. As incomes increase, consumption improves of value-added food such as dairy products.

Demand for value-added dairy products at the international level is influenced by factors related to growth in household incomes and economic conditions. These factors include:

1. Increased urbanization and income growth in developing countries.
2. Growing power of supermarkets.
3. Concentration in the processing sector.
4. Different levels of adding value.
5. Increasing segmentation of consumption.
6. Changes in eating habits.
7. Falling value of the U.S. dollar.
8. Continued drought and reduced milk production in Australia.

One example of expanding international markets is the U.S. Dairy Export Council's Halal certification program, which was implemented in 2005. Products are certified in compliance with the religion's food preparation guidelines. This program allows U.S. dairy suppliers the opportunity to market to the 1.3 billion Muslims worldwide.

Exports
According to the Babcock Institute, the United States exported dairy products to 163 countries in 2010. As a result of higher world dairy prices, the nation exported $3.7 billion worth of dairy products during 2010. Mexico, Canada, and China were the top three export markets for U.S. dairy products in 2010, accounting for 40 percent of total export value. Several East and Southeast Asian countries, Egypt and Russia were also large U.S. dairy buyers.

The United States faces international competition for dairy export sales. About two-thirds of world dairy exports originate from the EU, New Zealand and Australia. Other notable dairy exporters include Argentina, Canada, Poland, Switzerland and Uruguay.

Butter
U.S. butter production in 2010 totaled 1.56 billion pounds, a 0.5 percent decrease from the previous year. U.S. dairy spreads were 56,849 MT in 2010. The major markets for the butter were (in order): Russia, Japan and Morocco.

Cheese
As an individual country, the United States is the largest cheese producer in the world, making 10.4 billion pounds and exporting a record 173,531 MT in 2010, a 60 percent increase from the previous year. (In terms of affiliated countries, the EU is the largest cheese producer.) The value of U.S. cheese exports reached $694 million (USDEC). Mexico is the largest market for U.S. cheese. 

Ice Cream
The volume of U.S. ice cream exports totaled more than 32,000 MT and were valued at $75.6 million. Mexico and Canada remained the leading markets for U.S. ice cream.

Milk Powders
Since milk can be difficult to transport, store or formulate while in its liquid form, milk processors create milk powder by removing most of the water. According to the U.S. Dairy Export Council (USDEC), the most common forms of milk powder are nonfat, skim, whole and buttermilk.

The United States is the largest individual producer of nonfat dry milk powder, exceeded only by the EU-27. Over 1.56 billion pounds of nonfat dry milk powder was produced in the United States in 2010. Exports accounted for 384,104 MT in 2010. The largest market for U.S. nonfat dry milk powder is Mexico. The other two leading markets for U.S. nonfat dry milk powder were the Philippines and Indonesia.

Whey and Lactose
The United States is one of the largest producers of whey protein in the world. In 2010, 1.0 billion pounds of whey were produced, up 1.2 percent from the previous year. U.S. exports of whey totaled 481,492 MT. Major whey markets are Southeast Asia and China.

The United States also produces and exports lactose. Lactose is used in baked goods, dairy products, infant formula, confectionery, pharmaceuticals and animal feed. Lactose production was 907 million pounds, an increase of more than 25 percent from the previous year. In terms of exports, 274,525 MT of lactose were exported in 2010. Southeast Asia, China and Japan are the leading markets for U.S. lactose.

Imports
The United States imported $2.17 billion worth of dairy products during 2010. Almost 80 percent of the import value was in cheese and dry milk proteins (casein, caseinates and milk protein concentrates). About half of all U.S. cheese imports originated from Italy, France and Switzerland. U.S. imports of dairy products other than cheese came primarily from Oceania, Europe, Canada and Mexico. 

Country-Of-Origin Labeling (COOL)
Mandatory COOL took effect in September 2008. The labeling program was included in the Farm Security and Rural Investment Act of 2002 (2002 Farm Bill). The Agricultural Marketing Service is responsible for enforcing and regulating COOL. 

Sources
Dairy, Economic Research Service (ERS), USDA.

Dairy: World Markets and Trade, Foreign Agricultural Service (FAS), USDA.

Dairy Products Annual Summary, National Agricultural Statistics Service (NASS), USDA.

Global Ag Trade System, FASonline, USDA.

International Dairy Foods Association

Livestock, Dairy & Poultry Outlook, ERS, USDA.

Milk Production, Disposition, and Income Annual Summary, NASS, USDA.

National Milk Producers Federation

U.S. Dairy Export Council

U.S. Dairy Trade: Situation and Outlook, 2011, Babcock Institute, University of Wisconsin-Madison.

Profile created February 2003 and revised June 2011.