Increased demand for dairy products around the world, particularly in China, is doing for U.S. farmers what decades of farm policy could not: sell off all the milk their cows can produce at record-high prices.
The good fortune of U.S. dairy farmers is due to exploding demand from an emerging global middle class, but also to misfortunes elsewhere. In China, domestic dairy has been hampered by production problems and lingering distrust among consumers about safety. In New Zealand, the global leader in dairy exports, a 2013 drought reduced the country’s ability to meet foreign customers’ needs. In the first quarter of 2014, the value of U.S. dairy exports grew 39 percent.
“China buying has been through the roof,” says Alan Levitt, spokesman for the U.S. Dairy Export Council. “We shifted from a period of structural oversupply to structural undersupply.” Exports have been rising steadily during the past decade, but they surged in the past year—evidence that the U.S. can be a viable player in the global dairy market.
Source: Businessweek