A Globalized Dairy Market The U.S. Dairy Industry: Were All In - - PowerPoint PPT Presentation

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A Globalized Dairy Market The U.S. Dairy Industry: Were All In - - PowerPoint PPT Presentation

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A Globalized Dairy Market The U.S. Dairy Industry: Were All In International Grocers Association Atlanta, GA October 8, 2014 Managed by Dairy Management Inc. Todays Topics About USDEC Growth factors and prospects

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Managed by Dairy Management Inc.™

A Globalized Dairy Market

The U.S. Dairy Industry: We’re “All In”

International Grocers Association Atlanta, GA October 8, 2014

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Today’s Topics

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  • About USDEC
  • Growth factors and prospects

‒ Milk supply assets ‒ Export commitment ‒ Portfolio expansion

  • Final thoughts
  • Q & A
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  • Independent membership organization
  • 119 members

‒U.S. dairy producers ‒Dairy processors and cooperatives ‒Trading companies ‒Allied companies and organizations

  • Created in 1995 by U.S. dairy farmers
  • Headquartered in Arlington, Virginia

U.S. Dairy Export Council (USDEC)

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Representation Around the World

Provide market insights and technical support to local buyers and end-users

  • China
  • European Union*
  • Japan
  • Mexico, including

Central America

  • Middle East &

North Africa

  • South America
  • South Korea
  • Southeast Asia
  • United States
  • Vietnam
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Factors Behind Growth in U.S. Milk Production

  • Higher yields per cow (despite

lower number of cows)

  • Steady growth in dairy farm

efficiency

‒ Lower production costs (reduced investment/overhead per cow) ‒ More financial stability and commitment

  • Year-round production with very

little seasonal variance

‒ Volume ‒ Nutrient composition

  • Production across the USA

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U.S. Leads the World in Milk Volume Growth

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Source: USDEC

EU-28 US NZ Australia Argentina

  • 1,500

1,200 3,900 6,600 9,300 12,000 05 06 07 08 09 10 11 12 13

(000 MT)

Cumulative milk production growth since 2005

EU-28 US NZ Australia Argentina

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Source: USDEC - USDA

Value (millions) % change

  • vs. 2008

Volume (MT) % change

  • vs. 2008

SMP/NDM $2,050 +44% 554,752 +38% Cheese $1,355 +138% 316,556 +141% Whey proteins $1,210 +98% 544,584 +50% Lactose $574 +213% 341,747 +84% Butterfat $354 +30% 91,952 +2% Ice cream $177 +208% 61,089 +141% Fluid milk & cream $36 +84% 86,991 +78% TOTAL $6,831 +78%

What We Export (2013)

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Source: USDEC - USDA

Value (millions) % change

  • vs. 2008

Mexico $1,425 +53% Southeast Asia $1,247 +68% Middle East/North Africa $827 +79% Canada $764 +57% China/Hong Kong $750 +283% Japan $304 +46% Korea $303 +200% Caribbean $193 +18% TOTAL $6,831 +78%

Where We Export (2013)

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Source: USDEC - USDA

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0.0 1.0 2.0 3.0 4.0 5.0 04 05 06 07 08 09 10 11 12 13 Jul-14 (billion lbs., total milk solids)

Incremental growth in U.S. production and exports since 2003

incremental production growth incremental export growth

Increasing Percentage of “New” Milk Produced Since 2003 for Export

Source: USDEC, NMPF

68% to Exports

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Record U.S. Dairy Exports in 2013

10 420 840 1,260 1,680 2,100 $0 $1,500 $3,000 $4,500 $6,000 $7,500 05 06 07 08 09 10 11 12 13

Volume (thousand mt, TSB) Value (millions)

U.S. Exports - value and volume

Value Volume

19 Exports in 2013:

$6.7 billion 1.8 million MT

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Export value + 31% last year + 21% p.a. over 10 years (CAGR) Export volume + 19% last year + 12% p.a. over 10 years (CAGR) Export % of production 15.5% up from 11% in 2008 U.S. global share

[SMP, WMP, cheese, butterfat, whey]

17% up from 11% in 2009

2013 Saw Outstanding Growth

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Most U.S. Products Hitting Higher Export Shares

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Product 2014 (7 mos.) 2013 Avg. ‘04 – ‘08 NDM/SMP 59% 58% 42% Cheese 7.4% 6.3% 1.9% Dry sweet whey 53% 56% 42% Lactose 55% 73% 56% Butterfat 8.6% 10.7% 4.4%

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Diverse, Growing Base of Markets for U.S. Dairy Products

Source: USDEC, USDA

62% to Exports

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U.S. DAIRY EXPORTS, TOP 10 MARKETS (in millions) (JAN.-DEC. 2013 AND % CHANGE VS. PRIOR YEAR) CANADA $569 m, +21% MEXICO $1,429 m, +16% CARIBBEAN $216 m, +1% SOUTH AMERICA $277 m, +9% MIDDLE EAST/

  • NO. AFRICA

$788 m, +83% CHINA $706 m, +70%

  • SO. KOREA

$301 m, +34% JAPAN $304 m, +7% SOUTHEAST ASIA $1,284 m, +39% OCEANIA $258 m, +17%

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14 Source: GTIS, USDEC +7.2 +8.5 +8.5 +7.2

25% 28% 17% 5% 24% 0.00 0.08 0.16 0.24 0.32 0.40 EU-28 NZ US Australia Other

percent

2013 Aggregate Export Volume (share)

SMP, WMP, cheese, butterfat, whey

  • 2. Rising U.S. Presence in Global Dairy Trade
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Most Products Moving Up

Seven Months 2014 vs. Seven Months 2013

  • 10%

0% 10% 20% 30% 40%

Lactose Ice Cream Whey SMP/ NDM Milk & Cream* Butter Cheese All Value

  • 6%

6% 7% 11% 16% 22% 31% 22%

Volume (000 MT) *(mil. liters)

15 198.5 42.5 335.1 353.0 58.6 47.9 231.2 $4,615 mil

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U.S. Exports of Cheese

Eleven Months 2013 vs. Eleven Months 2012

0% 5% 10% 15% 20% 25% 30% 35% 40%

World Mexico Korea Middle East Japan Central America SE Asia China Caribbean

19% 24% 21% 37% 16% 10% 6% 16% 13%

Volume (000 MT)

285.5 72.9 44.7 39.3 28.2 15.4 14.1 12.2 11.8

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Closing

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Questions and Answers?

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Thank you

Vikki Nicholson, Senior Vice President 19 vnicholson@usdec.org