March 12, 2024 • 18 mins
What trends are we seeing with dairy products developed for exports? Does unique branding and logos for dairy products make a difference in the exports market? Can you tell us more about the new Singapore Dairy Center of Excellence?
These were a few of the questions dairy farmers asked during the 2023 Joint Annual Meeting. On this podcast, William Loux, Vice President, Global Economics Affairs at U.S. Dairy Export Council, and Vikki Nicholson-West, Senior Vice President Global Ingredients Marketing and Executive Director USDEC Singapore Ltd at US Dairy Export Council answered these questions and more.
Tune in to find out!
To learn more about the national dairy checkoff and your local dairy checkoffs, please visit www.usdairy.com.
Host & Guest:
Host: Charles Krause, MN Dairy Farmer – Farmer Relations Chair
Guest: William Loux - Vice President, Global Economics Affairs at U.S. Dairy Export Council
Guest: Vikki Nicholson-West - Senior Vice President Global Ingredients Marketing and Executive Director USDEC Singapore Ltd at US Dairy Export Council
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Charles Krause (00:00):
Under the bonus exports podcast where we answer
(00:02):
farmer questions from the 2023joint annual meeting. I am
Charles Kraus, a dairy farmerfrom Central Minnesota and I'm
the chair of the farmerrelations committee at Dairy
management Incorporated. I havewith me two experts from the US
dairy Export Council. VickiNicholson West is Senior Vice
President global ingredientsmarketing and the executive
(00:23):
director for US debt, Singapore.And William Lout, who is Vice
President of Global EconomicAffairs at US dairy Export
Council. Let's jump into thefarmer questions either one of
you can answer what trends arewe seeing in dairy products
develop here created forexports? Well,
Vikki Nicholson-West (00:41):
I'll kick us off on that one. I think I
might have touched on it alittle briefly earlier. But one
of the key trends we see isaround dairy proteins given you
know, the focus on health andwellness worldwide, I mean, it's
the pandemic really drove folksto think more about their health
(01:02):
and what they can do, andpreventative health and how food
can be medicine, and support ahealthy lifestyle. And dairy is
just such a perfect fit on thatone. And, you know, protein
definitely has risen to the top.And we're really excited about
that. And that's a trend that wesee really driving a lot of
(01:23):
utilization, and incorporationand snacks, and in beverages
going forward. So you know, alsosnacking and grazing is not just
a US thing. It seems likeeveryone started snacking more
around the world. And we'rereally happy about that. So you
know how we can incorporatedairy, whether it's skim milk
powder, or dairy proteins, ormilk proteins and snacks, is
(01:46):
really becoming a goodopportunity for, for the US
industry. And then I think Imanaged to mention some of those
very high value elements, thebio actives is unique elements
that you can find in dairy, thathave some very unique benefits,
like lactoferrin has a lot ofimmunity boosting elements. So,
(02:12):
you know, this is just one ofthose things where as more
research comes online, whetherit's through, you know, the
National Dairy board, or a lotof the partners that we have,
through DMI that do research forus with the universities, this
is just going to help reinforcethe value that dairy brings to a
(02:33):
really healthy lifestyle.
Will Loux (02:35):
Yeah, and I agree completely with everything.
Vicki said I think this is suchan interesting question, because
there's so many differentthreads that you could pull on
this because I think Vicky'spoints on moving up the value
chain on the high value side isabsolutely correct. I think
we're seeing that, especially inthe ingredient space. I mean,
certainly, obviously, a lot ofthe marketing that US DEC has
done on the cheese space as wellto highlight the image of us
(02:58):
cheese through a lot of ourgreat diversity of specialty
cheeses has been fantastic. Butwe also do a lot of product on
the more bulk side, especiallyon the cheese, as well. There's
a lot of great opportunitiesthat we see there, especially
with the new capacity comingonline. And the fact that cheese
demand is growing around theworld. I mean, I think I look
at, you know, the per capitacheese consumption and in most
(03:19):
Asian markets, outside ofperhaps Japan and Korea compared
to the US, it's a fraction ofwhat we consume here. But it's
even in China and in SoutheastAsia. It's a fraction of other
Asian markets. And so I thinkthere's a great opportunity for
the US to continue to expand itsportfolio beyond what we've
done. But it's not just theproducts exactly that we're
trying to find innovation in Ithink it's also the channels and
(03:42):
I think Vicki was alluding toall the different snacking
opportunities, the opportunitiesat retail, the opportunities and
food service, e commerce, Ithink there's a lot of different
ways that I think the US dairyindustry is diversify in terms
of what products is offering,which markets it's targeting and
which channels it's going into.Let alone everything we can talk
about on packaging and all therest. I guess this
Charles Krause (04:03):
is directed to Vicki can Vicki Can you tell us
about our new single floor dairycenter for dairy excellence?
Vikki Nicholson-West (04:09):
Okay, how long do we have?
Charles Krause (04:11):
Keep it under half an hour? All right.
Vikki Nicholson-West (04:14):
Yeah, happy to you know, this is one
of those really key cornerstoneelements. accomplishments that
the US dairy industry has made.Our us center for dairy
excellence opened in 2020Officially, and it's really you
(04:36):
know, an ideation and learninghub. It is a destination. So
it's envisioned as the first ofits kind learning and discovery
destination for all things usdairy. So think of it as that
gateway linking us suppliers andSoutheast Asian customers,
health professionals,influencers and other partners
(04:59):
that we have In Southeast Asia,to collaborate and work, you
know, it's this ideation andinsights hub that's going to
deepen knowledge and create newopportunities for our industry,
and to be more of acollaboration space. And,
really, it's the opportunity tohold programs that create and
(05:22):
set the stage for developwinning food and beverage
products, and menus that meetSoutheast Asian consumer needs,
and their tastes, preferencesand their lifestyles. So this is
what I like to say. And youknow, first and foremost, thank
you, for the dairy farmers forsupporting us to be able to
establish this, because really,this is the house that farmers
(05:43):
built. It really is, we couldn'thave done it without the support
of every dairy farmer within theUS. Because it is your home away
from home is our industry's homeaway from home, to be able to
use as that platform to meetwith their customers. And to
engage. If I go through thestats, just to kind of give you
(06:03):
that part is 5000 square feet ofspace, we have a demonstration
kitchen, which we also have alot of cameras on there, and it
can project throughout thatwhole 5000 Square Space anywhere
within the facility to watchwhat's going on behind within
the kitchen when we have foodtechnologists and chefs they're
(06:25):
demoing. But we can also livestream and record which we've
done a number of things on ofrecording videos that can be
used as like podcasts, to livestreaming webinars and demos to
customers across Southeast Asiawho can't make it Singapore, and
might be in the Philippines orThailand. We have a small
(06:48):
sensory sensory lab there inwhich we support our, our our
members in trying to identifywhat are those taste profiles
and textures that localconsumers are looking for. We
also have a very large seminarroom that can be broken up into
(07:09):
two smaller ones where we hosthands on workshops. So that's
one of our cornerstones, theirevents there is that we will
bring in food formulators andcustomers from around the region
to spend a couple of days withour team, and really learn how
to utilize ingredients orcheeses. And if you think about
(07:31):
it, we could talk to you in aseminar. But sometimes your eyes
glaze over and it doesn't reallykind of set in. But if you think
about like in high school, whenthere was homework or shop and
you had to do it, you rememberedit. And it's a great opportunity
for those customers to not onlygo through a classroom style,
but to get in there and actuallydo it themselves. And this is a
(07:52):
lot of fun, we actually have itlittle put them in teams, and
they do a bit of a competition.And who can come up with some of
those best local friendly,creative ideas using our dairy
products in our dairyingredients. It's also a place
where our members can utilize itfor meeting with their customers
and having meetings and evendoing their own demos. We have
(08:14):
hot desks or spaces where theycan sit, because not every
processor or Co Op has an officeor an office rep sitting in
Singapore, the region. So whenthey come to visit, they've got
some place that they can sit andwork for the day, they don't
have meetings with customers tomake phone calls, get something
done on their laptops, etc. Sowe're really excited, it's going
(08:37):
to evolve over time. We knowwe're we've gotten our feet wet.
And we're really, you know,starting to envision even more
what we can do with the spaceand and how we can engage more
with the trade. We've had anumber of different SNR groups
come and visit we've had anumber, State Department of eggs
(08:57):
come and visit. So that's alsoreally great as those different
ad groups also start to come andspend more time in the region.
This allows them also a base tobe able to hold one day or half
day meeting. So really excited.Hope I really wish that every
one of you could come and see itand I hope at least one day that
(09:17):
a number of you can but it isreally a great endeavor. And I
will tell you this one lastpoint. It does reinforce our US
dairy industry's commitment tothe region, having a brick and
mortar footprint in SoutheastAsia speaks volumes to buyers
(09:37):
and end users. That to them isjust a true establishment of how
committed we are of working withthem and wanting to collaborate
and be a committed supplier
Charles Krause (09:48):
and I can having just toured it in June this last
year. I don't know if everyonecan get there. It's only a
little 17 hour plane ride to getthere but I was so impressed and
the thing that is impressed memost was the people that you
have working on your staffthere, and the passion and the
pride, I think they were soexcited to be able to finally
(10:08):
meet some of the US dairyfarmers that they're working
for, and put a face to theproduct and commend you for the
excellent facility you put in,and for how well you manage the
money that we give you to do it.It's not elaborate, but it gets
the job done. And it's a verygood cornerstone in that very
large market that we have. Sothanks, Vicki for that. So the
(10:33):
next question, how can we makethe export story relevant to
other farmers back home, thathave no concept of how this
market impacts their business?
Will Loux (10:43):
Yeah, so I can take this one, because I think this
is one that I really findparticularly important, just as
so I grew up on a corn andsoybean farm back home, and I
see how important thoseinternational markets are to our
farm back in Iowa. But cruciallyfor dairy, I see international
markets as critical to everydairy farmers business, whether
(11:05):
they're producing in thesoutheast, which doesn't export
much at all, or whether they'reproducing in California where
over a third goes to export, youknow, critically, dairy exports
do three major things to eachfarmer's business. So number
one, it's crucial formaintaining market balance. So
Vicki alluded to it earlier thatbasically, you know, one in six
(11:28):
tankers of milk is going toexport every year. And, you
know, frankly, a lot of that ison the protein side of things.
So we're pretty close to beingbalanced and milk fat, so you're
on average butterfat, 95% or so97% stays here in the United
States, but around 20% of theprotein and other skim solids go
(11:49):
overseas. So if we want to bebalanced as a market, we've got
a choice of either one, weexport that protein and other
skim solids, as well as the milkfat, and particularly in cheese
that goes abroad. Or two, we endup actually deciding to cut our
milk production by 20%. And thenimport a heck of a lot of butter
(12:09):
from our friends over inIreland. And I don't know many
dairy farmers that want to dothat. So one, just to keep the
market where it is and keep pacewith domestic demand growth on
the fat side, we got to export.And number two is also dairy
exports are really the enginefor growth. I mean, I think
that's absolutely critical heretoo, is the fact that since
COVID, so since 2020, US exportshave grown more than US domestic
(12:33):
consumption. Now, certainly weconsume a lot more of our milk
here in the US than we do sellabroad, as I was alluding to,
you know, roughly upwards of 80%is consumed here at home. But
even still US exports havereally been the engine of
growth. And even if your farmdoesn't necessarily want to
grow, your neighbors might orfolks around the country do. And
(12:54):
so if we're going to continue togrow as an industry, and really
find demand for a lot of thatnew processing capacity that's
coming online that folks arewanting, we've got to find that
abroad. And I think that's theother critical piece here. And
then finally, you know, day today, what happens abroad matters
to your milk check. I mean, ifyou think about our regulated
pricing system today that it'sprimarily driven, last one to
(13:16):
class for, by what's happeningabroad and in many different
products. It's driven by yourbutter price, your cheese price,
your nonfat dry milk price, andyour dry weight price. And for
nonfat dry milk and dry away,over half of those go abroad and
cheese is increasingly becomingimportant for international
markets. And if there's anythingyou know, Vickie's team can do
(13:37):
to increase the reputation of usdairy products abroad and US
nonfat abroad. If we increaseour reputation, and you know,
we're able to increase our valueof our nonfat dry milk by just
10 cents or so because we'veeither driven demand or we're
getting a premium in themarketplace. And that filters
back to the milk price that'sgoing to add about tenths almost
(14:00):
$1 to your class for price. So Imean, we're talking about one,
we just got to keep exportsgoing to keep the market
balanced, not imported a heck ofa lot of butter from Ireland,
but it's also driving our growthand from a day to day basis. It
matters a lot for what your milkcheck looks like month to month.
And so as an industry if youthink about those three things,
I mean, man, we've got to reallydo our due diligence and invest
(14:22):
in what's happening abroad. Andit's not to say domestic sales
aren't important. It's a bothand between domestic and
international today just givenhow interconnected the world is.
And I look to the internationalmarket with particularly
excitement as we go forward inthose next 510 15 years as we
talked about.
Charles Krause (14:39):
So here's another question from the Annual
Meeting does unique branding andlogos for dairy products make a
difference in the export marketsso
Vikki Nicholson-West (14:48):
I'm I'm gonna build on that because of
you know, there's a dovetail towhat William touched on. Where
we do brand and have a seal isin the air If cheese, I will
admit not my area that I lead.But I'm going to speak on behalf
of my counterpart who has done afantastic job when it comes to
(15:11):
specialty cheeses in the retailmarket, where they brand
cheeses, and we have a seal inwhich we brand cheeses from the
US. And it's about raising theawareness, but also raising the
understanding and that brandequity of us dairy. And does
that matter? Yes. Because asconsumers and customers are
(15:35):
willing to pay more, I II moveus up the value chain because we
they see that brand equity, andthey start to associate that
brand awareness of us cheesewith a quality cheese, a high
value cheese, one that they'rewilling to pay more far for,
that has a halo effect acrossall the other dairy products and
(15:57):
dairy ingredients. So we do thatthere. You might ask, Well do we
brand it elsewhere, kinda alittle hard to brand
ingredients, because we're notthe finished product. And you're
not always sure if you're beingused at 10%, or 15%. And that
finished product, or whosefinished product you're going
in, because of the supply chain.But to take advantage of that
(16:20):
halo of consumers learning andunderstanding more and
recognizing, you know, thatbrand equity that comes from the
cheese portfolio really hasvalue when they see products
elsewhere. And it also hasimpact on those buyers and their
perception when they're buyingfor their company. Yeah, and
Will Loux (16:37):
if I can add just even a tangible example of how
us building that brand iscritical in the long run. I like
to look at the Europeans alittle bit here. Because when
Europe sells cheese to theUnited States, where they've
done a very good job of buildingtheir reputation and brand,
they're selling it on average,the export value is about $4.50
(16:57):
a pound to the rest of theworld, it's about $2.50 a pound.
So we're paying just $2 Extrabasically for the name of
Europe. So if there's things wecan do to increase the
reputation of the US abroad,that then can filter back to the
value of us cheese and back tothe value for dairy farm.
Vikki Nicholson-West (17:13):
And if I can build on that some more,
because I just can't let go ofthis. So part of building that
brand equity. Having a US centerfor dairy excellence in
Singapore is an element ofbranding. It's not on the
product, but it's on thebuilding, so to speak. It's on
the floor. So that helps buildthat brand equity and that brand
(17:34):
recognition. And it just helpsto drive the value and that
willingness to pay a little moreeven for
Will Loux (17:42):
Yeah, and that's not just Cheez Its ingredients. It's
everything. It brings that wholehalo of us dairy, I think to
customers around the world. Well
Charles Krause (17:50):
thank you, Vicki and we'll for the conversation
about exports today. I think wecould go on and on but we need
to wrap it up. It's beeninteresting to hear about how
the what the Dairy Checkoff didore exports in 2023 and how we
look forward in the coming yearof 2024. In closing, I just want
to say thank you for joining usand all the farmers listening
(18:11):
today. If you want to hear moreabout various issues affecting
the dairy community, subscribeto this podcast on your favorite
podcast platform, includingStitcher, Spotify and iTunes or
you can check out our websiteDairy Checkoff. podcast.com for
future episodes
Under the bonus exports podcast where we answer
(00:02):
farmer questions from the 2023joint annual meeting. I am
Charles Kraus, a dairy farmerfrom Central Minnesota and I'm
the chair of the farmerrelations committee at Dairy
management Incorporated. I havewith me two experts from the US
dairy Export Council. VickiNicholson West is Senior Vice
President global ingredientsmarketing and the executive
(00:23):
director for US debt, Singapore.And William Lout, who is Vice
President of Global EconomicAffairs at US dairy Export
Council. Let's jump into thefarmer questions either one of
you can answer what trends arewe seeing in dairy products
develop here created forexports? Well,
Vikki Nicholson-West (00:41):
I'll kick us off on that one. I think I
might have touched on it alittle briefly earlier. But one
of the key trends we see isaround dairy proteins given you
know, the focus on health andwellness worldwide, I mean, it's
the pandemic really drove folksto think more about their health
(01:02):
and what they can do, andpreventative health and how food
can be medicine, and support ahealthy lifestyle. And dairy is
just such a perfect fit on thatone. And, you know, protein
definitely has risen to the top.And we're really excited about
that. And that's a trend that wesee really driving a lot of
(01:23):
utilization, and incorporationand snacks, and in beverages
going forward. So you know, alsosnacking and grazing is not just
a US thing. It seems likeeveryone started snacking more
around the world. And we'rereally happy about that. So you
know how we can incorporatedairy, whether it's skim milk
powder, or dairy proteins, ormilk proteins and snacks, is
(01:46):
really becoming a goodopportunity for, for the US
industry. And then I think Imanaged to mention some of those
very high value elements, thebio actives is unique elements
that you can find in dairy, thathave some very unique benefits,
like lactoferrin has a lot ofimmunity boosting elements. So,
(02:12):
you know, this is just one ofthose things where as more
research comes online, whetherit's through, you know, the
National Dairy board, or a lotof the partners that we have,
through DMI that do research forus with the universities, this
is just going to help reinforcethe value that dairy brings to a
(02:33):
really healthy lifestyle.
Will Loux (02:35):
Yeah, and I agree completely with everything.
Vicki said I think this is suchan interesting question, because
there's so many differentthreads that you could pull on
this because I think Vicky'spoints on moving up the value
chain on the high value side isabsolutely correct. I think
we're seeing that, especially inthe ingredient space. I mean,
certainly, obviously, a lot ofthe marketing that US DEC has
done on the cheese space as wellto highlight the image of us
(02:58):
cheese through a lot of ourgreat diversity of specialty
cheeses has been fantastic. Butwe also do a lot of product on
the more bulk side, especiallyon the cheese, as well. There's
a lot of great opportunitiesthat we see there, especially
with the new capacity comingonline. And the fact that cheese
demand is growing around theworld. I mean, I think I look
at, you know, the per capitacheese consumption and in most
(03:19):
Asian markets, outside ofperhaps Japan and Korea compared
to the US, it's a fraction ofwhat we consume here. But it's
even in China and in SoutheastAsia. It's a fraction of other
Asian markets. And so I thinkthere's a great opportunity for
the US to continue to expand itsportfolio beyond what we've
done. But it's not just theproducts exactly that we're
trying to find innovation in Ithink it's also the channels and
(03:42):
I think Vicki was alluding toall the different snacking
opportunities, the opportunitiesat retail, the opportunities and
food service, e commerce, Ithink there's a lot of different
ways that I think the US dairyindustry is diversify in terms
of what products is offering,which markets it's targeting and
which channels it's going into.Let alone everything we can talk
about on packaging and all therest. I guess this
Charles Krause (04:03):
is directed to Vicki can Vicki Can you tell us
about our new single floor dairycenter for dairy excellence?
Vikki Nicholson-West (04:09):
Okay, how long do we have?
Charles Krause (04:11):
Keep it under half an hour? All right.
Vikki Nicholson-West (04:14):
Yeah, happy to you know, this is one
of those really key cornerstoneelements. accomplishments that
the US dairy industry has made.Our us center for dairy
excellence opened in 2020Officially, and it's really you
(04:36):
know, an ideation and learninghub. It is a destination. So
it's envisioned as the first ofits kind learning and discovery
destination for all things usdairy. So think of it as that
gateway linking us suppliers andSoutheast Asian customers,
health professionals,influencers and other partners
(04:59):
that we have In Southeast Asia,to collaborate and work, you
know, it's this ideation andinsights hub that's going to
deepen knowledge and create newopportunities for our industry,
and to be more of acollaboration space. And,
really, it's the opportunity tohold programs that create and
(05:22):
set the stage for developwinning food and beverage
products, and menus that meetSoutheast Asian consumer needs,
and their tastes, preferencesand their lifestyles. So this is
what I like to say. And youknow, first and foremost, thank
you, for the dairy farmers forsupporting us to be able to
establish this, because really,this is the house that farmers
(05:43):
built. It really is, we couldn'thave done it without the support
of every dairy farmer within theUS. Because it is your home away
from home is our industry's homeaway from home, to be able to
use as that platform to meetwith their customers. And to
engage. If I go through thestats, just to kind of give you
(06:03):
that part is 5000 square feet ofspace, we have a demonstration
kitchen, which we also have alot of cameras on there, and it
can project throughout thatwhole 5000 Square Space anywhere
within the facility to watchwhat's going on behind within
the kitchen when we have foodtechnologists and chefs they're
(06:25):
demoing. But we can also livestream and record which we've
done a number of things on ofrecording videos that can be
used as like podcasts, to livestreaming webinars and demos to
customers across Southeast Asiawho can't make it Singapore, and
might be in the Philippines orThailand. We have a small
(06:48):
sensory sensory lab there inwhich we support our, our our
members in trying to identifywhat are those taste profiles
and textures that localconsumers are looking for. We
also have a very large seminarroom that can be broken up into
(07:09):
two smaller ones where we hosthands on workshops. So that's
one of our cornerstones, theirevents there is that we will
bring in food formulators andcustomers from around the region
to spend a couple of days withour team, and really learn how
to utilize ingredients orcheeses. And if you think about
(07:31):
it, we could talk to you in aseminar. But sometimes your eyes
glaze over and it doesn't reallykind of set in. But if you think
about like in high school, whenthere was homework or shop and
you had to do it, you rememberedit. And it's a great opportunity
for those customers to not onlygo through a classroom style,
but to get in there and actuallydo it themselves. And this is a
(07:52):
lot of fun, we actually have itlittle put them in teams, and
they do a bit of a competition.And who can come up with some of
those best local friendly,creative ideas using our dairy
products in our dairyingredients. It's also a place
where our members can utilize itfor meeting with their customers
and having meetings and evendoing their own demos. We have
(08:14):
hot desks or spaces where theycan sit, because not every
processor or Co Op has an officeor an office rep sitting in
Singapore, the region. So whenthey come to visit, they've got
some place that they can sit andwork for the day, they don't
have meetings with customers tomake phone calls, get something
done on their laptops, etc. Sowe're really excited, it's going
(08:37):
to evolve over time. We knowwe're we've gotten our feet wet.
And we're really, you know,starting to envision even more
what we can do with the spaceand and how we can engage more
with the trade. We've had anumber of different SNR groups
come and visit we've had anumber, State Department of eggs
(08:57):
come and visit. So that's alsoreally great as those different
ad groups also start to come andspend more time in the region.
This allows them also a base tobe able to hold one day or half
day meeting. So really excited.Hope I really wish that every
one of you could come and see itand I hope at least one day that
(09:17):
a number of you can but it isreally a great endeavor. And I
will tell you this one lastpoint. It does reinforce our US
dairy industry's commitment tothe region, having a brick and
mortar footprint in SoutheastAsia speaks volumes to buyers
(09:37):
and end users. That to them isjust a true establishment of how
committed we are of working withthem and wanting to collaborate
and be a committed supplier
Charles Krause (09:48):
and I can having just toured it in June this last
year. I don't know if everyonecan get there. It's only a
little 17 hour plane ride to getthere but I was so impressed and
the thing that is impressed memost was the people that you
have working on your staffthere, and the passion and the
pride, I think they were soexcited to be able to finally
(10:08):
meet some of the US dairyfarmers that they're working
for, and put a face to theproduct and commend you for the
excellent facility you put in,and for how well you manage the
money that we give you to do it.It's not elaborate, but it gets
the job done. And it's a verygood cornerstone in that very
large market that we have. Sothanks, Vicki for that. So the
(10:33):
next question, how can we makethe export story relevant to
other farmers back home, thathave no concept of how this
market impacts their business?
Will Loux (10:43):
Yeah, so I can take this one, because I think this
is one that I really findparticularly important, just as
so I grew up on a corn andsoybean farm back home, and I
see how important thoseinternational markets are to our
farm back in Iowa. But cruciallyfor dairy, I see international
markets as critical to everydairy farmers business, whether
(11:05):
they're producing in thesoutheast, which doesn't export
much at all, or whether they'reproducing in California where
over a third goes to export, youknow, critically, dairy exports
do three major things to eachfarmer's business. So number
one, it's crucial formaintaining market balance. So
Vicki alluded to it earlier thatbasically, you know, one in six
(11:28):
tankers of milk is going toexport every year. And, you
know, frankly, a lot of that ison the protein side of things.
So we're pretty close to beingbalanced and milk fat, so you're
on average butterfat, 95% or so97% stays here in the United
States, but around 20% of theprotein and other skim solids go
(11:49):
overseas. So if we want to bebalanced as a market, we've got
a choice of either one, weexport that protein and other
skim solids, as well as the milkfat, and particularly in cheese
that goes abroad. Or two, we endup actually deciding to cut our
milk production by 20%. And thenimport a heck of a lot of butter
(12:09):
from our friends over inIreland. And I don't know many
dairy farmers that want to dothat. So one, just to keep the
market where it is and keep pacewith domestic demand growth on
the fat side, we got to export.And number two is also dairy
exports are really the enginefor growth. I mean, I think
that's absolutely critical heretoo, is the fact that since
COVID, so since 2020, US exportshave grown more than US domestic
(12:33):
consumption. Now, certainly weconsume a lot more of our milk
here in the US than we do sellabroad, as I was alluding to,
you know, roughly upwards of 80%is consumed here at home. But
even still US exports havereally been the engine of
growth. And even if your farmdoesn't necessarily want to
grow, your neighbors might orfolks around the country do. And
(12:54):
so if we're going to continue togrow as an industry, and really
find demand for a lot of thatnew processing capacity that's
coming online that folks arewanting, we've got to find that
abroad. And I think that's theother critical piece here. And
then finally, you know, day today, what happens abroad matters
to your milk check. I mean, ifyou think about our regulated
pricing system today that it'sprimarily driven, last one to
(13:16):
class for, by what's happeningabroad and in many different
products. It's driven by yourbutter price, your cheese price,
your nonfat dry milk price, andyour dry weight price. And for
nonfat dry milk and dry away,over half of those go abroad and
cheese is increasingly becomingimportant for international
markets. And if there's anythingyou know, Vickie's team can do
(13:37):
to increase the reputation of usdairy products abroad and US
nonfat abroad. If we increaseour reputation, and you know,
we're able to increase our valueof our nonfat dry milk by just
10 cents or so because we'veeither driven demand or we're
getting a premium in themarketplace. And that filters
back to the milk price that'sgoing to add about tenths almost
(14:00):
$1 to your class for price. So Imean, we're talking about one,
we just got to keep exportsgoing to keep the market
balanced, not imported a heck ofa lot of butter from Ireland,
but it's also driving our growthand from a day to day basis. It
matters a lot for what your milkcheck looks like month to month.
And so as an industry if youthink about those three things,
I mean, man, we've got to reallydo our due diligence and invest
(14:22):
in what's happening abroad. Andit's not to say domestic sales
aren't important. It's a bothand between domestic and
international today just givenhow interconnected the world is.
And I look to the internationalmarket with particularly
excitement as we go forward inthose next 510 15 years as we
talked about.
Charles Krause (14:39):
So here's another question from the Annual
Meeting does unique branding andlogos for dairy products make a
difference in the export marketsso
Vikki Nicholson-West (14:48):
I'm I'm gonna build on that because of
you know, there's a dovetail towhat William touched on. Where
we do brand and have a seal isin the air If cheese, I will
admit not my area that I lead.But I'm going to speak on behalf
of my counterpart who has done afantastic job when it comes to
(15:11):
specialty cheeses in the retailmarket, where they brand
cheeses, and we have a seal inwhich we brand cheeses from the
US. And it's about raising theawareness, but also raising the
understanding and that brandequity of us dairy. And does
that matter? Yes. Because asconsumers and customers are
(15:35):
willing to pay more, I II moveus up the value chain because we
they see that brand equity, andthey start to associate that
brand awareness of us cheesewith a quality cheese, a high
value cheese, one that they'rewilling to pay more far for,
that has a halo effect acrossall the other dairy products and
(15:57):
dairy ingredients. So we do thatthere. You might ask, Well do we
brand it elsewhere, kinda alittle hard to brand
ingredients, because we're notthe finished product. And you're
not always sure if you're beingused at 10%, or 15%. And that
finished product, or whosefinished product you're going
in, because of the supply chain.But to take advantage of that
(16:20):
halo of consumers learning andunderstanding more and
recognizing, you know, thatbrand equity that comes from the
cheese portfolio really hasvalue when they see products
elsewhere. And it also hasimpact on those buyers and their
perception when they're buyingfor their company. Yeah, and
Will Loux (16:37):
if I can add just even a tangible example of how
us building that brand iscritical in the long run. I like
to look at the Europeans alittle bit here. Because when
Europe sells cheese to theUnited States, where they've
done a very good job of buildingtheir reputation and brand,
they're selling it on average,the export value is about $4.50
(16:57):
a pound to the rest of theworld, it's about $2.50 a pound.
So we're paying just $2 Extrabasically for the name of
Europe. So if there's things wecan do to increase the
reputation of the US abroad,that then can filter back to the
value of us cheese and back tothe value for dairy farm.
Vikki Nicholson-West (17:13):
And if I can build on that some more,
because I just can't let go ofthis. So part of building that
brand equity. Having a US centerfor dairy excellence in
Singapore is an element ofbranding. It's not on the
product, but it's on thebuilding, so to speak. It's on
the floor. So that helps buildthat brand equity and that brand
(17:34):
recognition. And it just helpsto drive the value and that
willingness to pay a little moreeven for
Will Loux (17:42):
Yeah, and that's not just Cheez Its ingredients. It's
everything. It brings that wholehalo of us dairy, I think to
customers around the world. Well
Charles Krause (17:50):
thank you, Vicki and we'll for the conversation
about exports today. I think wecould go on and on but we need
to wrap it up. It's beeninteresting to hear about how
the what the Dairy Checkoff didore exports in 2023 and how we
look forward in the coming yearof 2024. In closing, I just want
to say thank you for joining usand all the farmers listening
(18:11):
today. If you want to hear moreabout various issues affecting
the dairy community, subscribeto this podcast on your favorite
podcast platform, includingStitcher, Spotify and iTunes or
you can check out our websiteDairy Checkoff. podcast.com for
future episodes
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