How Exports Underpin U.S. Dairy's Success

By Krysta Harden

For the U.S. dairy industry to be successful and continue to support farmers, workers, and consumers, international trade and exports are of utmost importance. Exports underpin U.S. dairy’s success in the present and will support the industry’s growth in the future.

To best understand the impact of exports, it’s important to understand how milk is produced and priced. Milk contains three essential components: milkfat, protein and lactose. The domestic versus international uses of these different components vary. In essence, U.S. cows naturally produce more of these essential dairy components than the United States consumes, making export markets critical to fully and efficiently using all the valuable components in the milk produced by dairy farmers.

Over the past 20 years, satisfying international consumers’ growing demand for dairy, particularly dairy protein, has allowed the industry to grow. Today, exports account for 17% of U.S. milk production. That figure is expected to continue to climb in the years ahead as global dairy demand continues to grow.  

Since 2001 U.S. milk production has increased by 37% while exports have more than quintupled. Impressive as that export growth has been, the value of exports has increased even faster than the volume of exports over that time, jumping by 537%. This highlights the fact that international markets can be a high value proposition for U.S. dairy. And those sales are critical to our customers abroad as well—the U.S. is the third largest exporter in the world. The well-being of the U.S. dairy industry is inextricably tied to international trade and the global dairy demand is strongly reliant on the U.S. remaining a consistent and reliable supplier.

As important as exports are today to America’s dairy industry, they’re essential to our future. International dairy trade is growing faster than the U.S. domestic market. As shown in the chart below, since 2010, the amount of dairy traded internationally has grown by more than twice the rate (+4% per year on average) of U.S. domestic dairy consumption (+1.5%). 

The U.S. dairy industry’s strongest future growth opportunities will come from international trade with 96% of the world’s population living outside of the United States and rising populations and incomes in dairy importing markets.

In some ways that future is already here. Perhaps the most telling statistic of all is that U.S. dairy exports have grown by more than domestic sales in four out of the past five years, including 2021, which set records for volume, value and percent of production exported. And this is despite what U.S. exporters face in key markets with recent export supply chain headwinds and competitive disadvantages. 

Ultimately, if the United States wants to continue to help fulfill the growing demand for high-quality nutrition around the world—and reap the benefits that those sales create for U.S. dairy farmers and workers through the production of Made-in-America products, we will need to continue to expand export sales.