June 24, 2008
Audio: Rabobank Analyst Explores the U.S. Dairy Market in New Podcast
NEW YORK, June 23 /PRNewswire/ -- Since 1937 June has been Dairy Month: an annual tradition to celebrate the dairy industry. A new Rabobank podcast examines some causes for this celebration, such as growth in specialty products and an increase in dairy exports.
To view the Multimedia News Release, go to: http://www.prnewswire.com/mnr/rabobank/33766/
In the podcast, Rabobank Dairy Analyst and Food & Agribusiness Research and Advisory Managing Director Debbie Perkins, explores the current U.S. dairy market, the growth of specialty products and export opportunities. (The full podcast is available online at http://www.rabobankamerica.com/Rabocast.)
Perkins said interest in the dairy market is at an all-time high because, "we saw record prices in the international market at the end of 2007 as well as high prices in the U.S. domestic market." (This information begins at 1:06 in the podcast.)
However, this may not equate to continued expansion in the market as feed prices, labor costs and energy costs continue to rise. In fact, industry growth in has slipped from an average of 3 percent in the second half of 2007 to 2 percent during the January to April 2008 time frame.
"There has been a lot of concern in the sector as to whether the over production that could occur as a result of farmers expanding would mean the prices could come down," said Perkins. Instead, the increased costs are likely to lead some farmers to reduce their herds, and it means "we will see a significant reduction in milk production growth for the second half of 2008." (This information begins at 2:40 in the podcast.)
On the demand side there are areas of the dairy sector that are growing. "We're seeing the strongest growth in some of the newest categories to the dairy sector such as yogurt and specialty cheeses," said Perkins. (This information begins at 6:56 in the podcast.) In terms of cheeses, U.S. consumers are beginning to demand a higher quality and larger variety of cheese, and, for yogurt, growth is coming from new product development -- such as drinkable yogurts.
Another area where the U.S. dairy sector is experiencing growth is in its exports. "The U.S. share of production that is being exported has increased from about 5 percent in 2002 up to 10 percent in 2007," said Perkins. (This information begins at 9:15 in the podcast.) One reason for the growth is the increased production. While some of that goes to the domestic market, there is additional supply available for export.
Additionally, there has been strong demand on the international market -- especially in developing countries with increased populations. However, "key exporters such as the European Union, Australia and New Zealand have not been able to increase their production to meet the increased demand," said Perkins. (This information begins at 9:44 in the podcast.)
While international success for U.S. dairy producers is influenced by what happens in other key regions, in the long-term, there is a "great opportunity for the United States, but, if they are to succeed, they really have to make it a focus," said Perkins. (This information begins at 10:17 in the podcast.) To do that, companies would have to make changes. For example, they would need to alter their packaging to metric measurements to match buyer expectations.
"The U.S. can't afford to see the international market as somewhere to dump their extra supply. They need to make it a focus. And, if they do that, they have a good opportunity to be successful in the longer term," said Perkins. (This information begins at 11:38 in the podcast.)
The premier bank to the global food and agriculture industry, Rabobank is a global financial services leader providing institutional and retail banking and agricultural finance solutions in key markets around the world. From its century-old roots in the Netherlands, Rabobank has grown into one of the 25 largest banks worldwide, with over $800 billion in total assets and operations in over 35 countries. Rabobank is the only private bank in the world with a triple A credit rating from both Standard & Poor's and Moody's, and is ranked among the world's safest banks. In the Americas, Rabobank (http://www.rabobankamerica.com/) is a leading financial partner to the entire American food and agribusiness industry and is a specialist in sophisticated, customer-driven solutions in the Global Financial Markets and Corporate Finance arenas. Rabobank also provides retail and commercial banking services in California; leasing; and real estate lending, operating loans, input financing and crop insurance to American agricultural producers, input suppliers and agricultural manufacturers.
CONTACT: Heather McElrath, +1-212-309-5181,[email protected], Rabobank America
Web site: http://www.rabobankamerica.com/http://www.rabobankamerica.com/Rabocast