Posted by: NCRC | October 12, 2010

EB-5 Investors Take Note: Global Demand Surges for U.S. Dairy Products

Global demand for dairy products is booming. There is a tremendous amount of demand for dairy products globally, and U.S. export markets have been experiencing large amounts of growth overseas. Dairy is a traditional project for the EB-5 program, and continues to be a great investment for EB-5 investors noting that U.S. dairies create many direct and indirect jobs, and produces product for a rapidly growing global marketplace.

Like many other industries throughout the United States, the U.S. dairy industry got caught in the downturn at the end of 2008 and early 2009 as global trade slowed down due to the financial crisis that brought global trade to a screeching halt. The financial crisis did impact the dairy industry significantly early on in 2009, but it recovered far more vigorously than many other industries throughout the U.S. The second half of 2009 seen a dramatic rebound in both dairy exports and domestic demand. 2010 is proving that there is a rapidly growing demand globally for dairy products.

According to the United States Dairy Export Counsel (USDEC), dairy exports of dry ingredients (milk powders, whey proteins, and lactose) cheese, and butter were up 35% in volume from a year ago, and up 66% in volume the first 6 months of 2010 to just over $2 billion. Tom Suber, president of the U.S. Dairy Export Council noted that “All products have experienced robust trade. Cheese, in particular, has come back strongly.” According to USDEC, cheese exports were up 66% driven by strong demand in Japan, South Korea, and Mexico. For the full report from USDEC click here.

Even more impressive than the size of export growth is the magnitude of U.S. gains in relation to other major dairy exporters and the total change in each product category. For example, total global cheese exports were up 14 percent in the first half of 2010; New Zealand was down 7 percent, but the U.S. was up 61 percent. Total global butterfat exports were down 10 percent; New Zealand and Australia were down 15 percent and 38 percent, respectively, but the U.S. was up 150 percent.

Continuing decline in the value of the U.S. dollar, which increases buying power for foreign customers, is just one reason for the increases. USDEC leaders point out that strong customer relationships, consistently high product quality, and reliable delivery make the U.S. an increasingly preferred supplier for many buyers. Click here for another article on a report from the International Dairy Foods Association

Milk is one of nature’s most nutritious food products, composed of protein, vitamins, calcium, and many more beneficial nutrients. In the world today, consumers are demanding quality food products specifically milk and other dairy products. Emerging markets are rapidly growing and expanding, demanding the nutrition that dairy products can provide.

The United States is one of the most efficient dairy producers of quality dairy products in the world, and is quickly becoming a leading exporter to nations around the world. California particularly has been the key U.S. state leading exports primarily due to its location on the Pacific Ocean. California has been a leader in the United States for dairy with the highest milk production than any other state, and has some of the most efficient dairy operations in the world. The California dairy industry is proud for the opportunity to be on the forefront to essentially helping to feed the world.

The global population is rapidly growing, and markets are emerging consequently giving rise to wealthier individuals who can afford to spend more on quality food products. One of the first food products wealthier people are demanding are dairy products. China in particular has a great hunger for dairy products due to the high quality nutrition dairy can provide.

With over 1.5 billion people to feed, China will need to source food products from all over the world in order to feed their populace. In the dairy industry, the Chinese have been one of the largest driving forces of global demand for dairy products. Rabobank, a large international agriculture bank, has recently cited milk demand growth to quickly outpace supply over the next decade leaving tremendous opportunity for the dairy industry in the United States to help China quench its thirst for dairy products.

And with the worldwide economic crisis, food related health scares, food contamination issues, terrorist attacks, and disease epidemics regularly headlining the world news, consumers are beginning to become more aware of the foods they consume, and are demanding consistent, high-quality food products. A report put out by Tetra Pak called “Tetra Pak Dairy Index” in June 2009 cites that 59% of consumers in developing countries, such as China and India, say they are worried about the safety of the food they buy, compared to 49% of consumers in developed countries. The great news is that U.S. dairy has some of the best technology in the world to produce safe, wholesome products along with intricate quality control systems to ensure product quality. The global market is beginning to notice that the U.S. is a leader in product quality, and is one of the reasons why demand for U.S. dairy is exploding.

The dairy industry really does have a tremendous amount of potential due to expanding global dairy demand, and EB-5 investors should take note of these facts. Global demand for dairy has not soured, but the future is really looking quite bright.


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