Exports were the focus when Secretary Tom Vilsack, President and CEO of the U.S. Dairy Export Council (USDEC), was invited to speak at MMPA’s recent Leader’s Conference held in East Lansing, Michigan.
“I should start by saying ‘thank-you’ to all of you for the investments that you’ve made with USDEC because you have been an integral part of what we refer to as our next five percent plan,” Vilsack said, sharing about dairy exports and their impact on dairy producers.
MMPA together with other cooperatives and institutions raised $4 million for USDEC that was used in three basic areas: hiring more people, forming more partnerships and doing more promotions around the world.
“The Next 5% has really three basic goals: We want to increase the volume of sales outside the U.S., we want to increase the value of those sales and we want to increase the percentage of milk solids produced in this country that’s going into the export market,” he said.
Vilsack said U.S. dairy producers are good at what they do, and as they continue to increase milk production, U.S. Dairy must find more markets for milk, cheese, ingredients and other dairy products. “With 95 percent of the world’s population living outside the United States, that’s where a significant part of our future business lies, so, this became an opportunity for us that we wanted to explore deeper,” said Vilsack.
Thanks to funds from state and regional checkoff organizations, including the United Dairy Industry of Michigan, USDEC hired more business development professionals in critical export growth regions to assist U.S. exporters to increase their international sales. “We went into markets like the Middle East/North Africa, Southeast Asia, Japan and Korea, and hired people with intimate knowledge of the retail and the food manufacturing sectors in an effort to better understand individual markets so we can sell more U.S. ingredients and more cheese,” said Vilsack.
USDEC also hired an application specialist in the important market of Southeast Asia, who is trained in new product development, which will open up business opportunities. Regulatory affairs was another hiring focus, with USDEC bringing on a specialist in Singapore to provide even greater technical assistance and guidance on import requirements and regulations in Southeast Asia.
Also, thanks to state and regional checkoff organizations, more funding has been provided to establish global partnerships in export markets with key academic and culinary institutions such as the Food Innovation and Resource Centre of Singapore Polytechnic and China’s Jiangnan University. Food technologists at these universities have been working with U.S. dairy suppliers to develop innovative product concepts suited to specific tastes of consumers in Southeast Asia and China to create business opportunities for U.S. Dairy. he said.
USDEC also established partnerships with culinary influencers, who have extensive ties with retail and foodservice in the Middle East, Southeast Asia, Japan, South Korea and Taiwan. Culinary partnerships help amplify U.S. Dairy’s presence in these markets and raise the visibility of U.S. Dairy with aspiring and established chefs.
“We also have doubled down on our promotions,” Vilsack stated, including significant marketing and promotions as a result of important partnerships, including Costco North Asia. This particular effort has extensively showcased U.S. cheese in China, Japan, South Korea and Taiwan, as well as Mexico. In addition to Costco promotions, a high-end food retailer in Japan has been promoting U.S. cheeses, which Vilsack pointed out recently received a huge promotional boost when a U.S. cheese for the first time ever won “Best in the World” and the U.S. won the most medals ever at the World Cheese Awards competition last October in France.
“We walked away with 131 medals and we also walked away with the determination that the Rogue Creamery in Oregon had the best cheese in the world, much to the chagrin of our French friends,” Vilsack said, adding the award provides an opportunity for the U.S. to further market award-winning cheeses overseas.
USA Cheese Guild/USA Cheese Specialist™ Certification Program
Vilsack said USDEC has a long-term strategy to promote and market U.S. cheese to food leaders in key export markets. Called the USA Cheese Guild, “We are basically training and educating chefs and food industry professionals with a deeper knowledge of U.S. cheese.”
In 2019, three partners rolled out the USA Cheese Specialist curriculum for culinary students: Daelim University College in South Korea, Hattori Nutrition College in Japan and National Kaohsiung University of Hospitality and Tourism in Taiwan. They joined the USA Cheese Specialist partner from 2018: the International Centre for Culinary Arts in Dubai.
Branding is another ongoing emphasis. Our competitors such as New Zealand, Australia and European companies are very good at branding their products, but products from the United States have not been branded as well. “While a greater focus will be placed on cheese, we want a stronger branding of U.S. ingredients in the health and wellness area as well,” Vilsack added.
“Sustainability is a story that the U.S. can tell better than anyone in the world,” Vilsack said.
According to Vilsack, much of the population in Asia is concerned about climate change and when hearing about U.S. Dairy r efforts to decrease emissions, capture and convert methane gas and renewable farming practices, customer interest is piqued. He believes that U.S. Dairy’s sustainability record could be positioned as a unique selling point among customers.
“There are no producers—no producers—in the world that have the kind of message that you have,” Vilsack said. “You are the only producers using an international certified animal welfare system, the F.A.R.M program. Trust me when I say, this is something people are paying attention to, for sure, in the markets that we are interested in.”
USMCA and China
According to Vilsack, the bottom line on the passage of the United States-Mexico-Canada Agreement (USMCA) is that the administration needs it, the House Democrats need it and the country needs it. As of early January, the U.S. House of Representatives approved the free trade agreement in late December and the FTA now awaits action in the Senate.
“I think there is a real bipartisan motivation on both sides to get this done.” Vilsack continued, “I think it will get done and when it does, obviously we will get the benefits of Canada’s Class 7 pricing system going away with a new pricing system in Canada that will provide greater access to U.S. dairy products. The trade deal also strengthens our relationship with Mexico and establishes new protections for common cheese names from the EU’s attempts to confiscate use of generic cheese terms such as parmesan and feta, said Vilsack.
Vilsack commented on China’s retaliatory tariffs saying that had the United States approached and addressed objections about China’s unfair trade practices with coalition of other countries, the U.S. government could have achieved more success and the retaliatory tariffs imposed by China could have been less damaging.
Results and Reasons for Optimism
In the first few years, USDEC’s goals were more volume, more value and a greater percentage of production to the export market.
“All three of those goals were met,” Vilsack said. “On the volume side, anywhere from 150,000-300,000 metric tons more product has been sold.”
He also said the value has increased every year. “The first year it was roughly $600 million more in product and the second year it was roughly $750 million more and for the first nine months of 2019 we are up $970 million in U.S. exports.”
Despite the recent unanticipated market situations in retaliatory tariffs, increased competition from the EU and the Canadians establishing a Class 7 market, “We were still able to increase volume, increase value and increase percentage,” Vilsack said.
He also said there is a big reason for optimism in 2020: That being the opening of USDEC’s first-of-its kind U.S. Center for Dairy Excellence (CDE) in Singapore. Phase two of the five percent plan will be implemented next with the same goals of more volume, value and percentage going into the export market, but with a different approach.
The United States already owns about a 22% market share of Southeast Asia’s sizeable dairy import sector. We believe that by upgrading our capabilities in Southeast Asia, we can expand our market share to as much as one-third—worth about $100 million of additional business activity annually.
Vilsack said the CDE will serve as a venue and center that U.S. Dairy will utilize to engage and network with partners, promote collaboration with customers and serve as a resource for members active in Southeast Asia and Singapore, which Vilsack says is a research and development hub for beverage and food manufacturers in the region.
“This will allow us to display the versatility and incredible functionality of the products we produce for export,” he said.
This article was originally published in the January/February issue of the Milk Messenger. Subscribe »