OPINION The United States risks losing $5.4 billion in dairy-export business without swift action to deliver a strong trade agreement with one of the world’s largest dairy buyers.
Japan is the largest cheese importer in the world. It’s a significant buyer of whey, lactose and other dairy products. Forecasts suggest Japanese dairy imports will continue to grow in the years ahead due to rising consumption and constraints on the nation’s domestic dairy-farming sector.
But the ability of the United States to win a larger share of that export demand or even maintain its current level of dairy business with Japan is in jeopardy due to recent Japanese trade agreements with U.S. dairy-export competitors. Through preferential market-access provisions in the European Union-Japan Economic Partnership Agreement, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the European Union, New Zealand and Australia have gained a significant market-access advantage.
Without a strong U.S.-Japan free-trade agreement, the U.S. Dairy Export Council estimates competitors could win half of existing U.S. export business in Japan. Lost sales would amount to a total of $5.4 billion when the EU-Japan deal and the Trans-Pacific Partnership are fully phased in.
“There is no question that the U.S. dairy industry can compete in the Japanese market,” said John Wilson, senior vice-president and chief fluid-marketing officer at Dairy Farmers of America. “(But) to maximize opportunities there we need a trade deal that at least puts us on a level playing field with competitors like Australia, New Zealand and the EU. We’re hopeful that a strong U.S.-Japan free-trade agreement can be negotiated soon, and think it’s critical for the continued growth and success of the U.S. dairy economy.”
An effort was organized by the U.S. Dairy Export Council and the National Milk Producers Federation, along with Dairy Farmers of America and 69 other dairy companies, farmer-owned cooperatives and associations. They sent a letter to the U.S. Trade Representative and the U.S. Secretary of Agriculture asking the U.S. government to capitalize on the recent conclusion of Japanese national elections. They said the United States needs to quickly finalize a strong trade deal with Japan that secures critical market access for the U.S. dairy industry.
“Today Darigold supplies over 50 percent of the U.S. American-style cheese exports to Japan,” said Stan Ryan, Darigold president and CEO. “Those sales will soon be lost as competitor trade deals take effect.”
Sue Taylor, vice-president of dairy policy and procurement for Leprino Foods Company, said, “Japan has been a very important market for Leprino Foods Company’s U.S.-produced products for years. We invested heavily in developing lactose and whey-protein exports several decades ago and, more recently, Mozzarella exports into this important market. (We) believe that the market has significant further growth potential. We risk losing these sales and growth opportunities to competitors who recently finalized preferential trade agreements, unless the United States negotiates a strong agreement. We are very supportive of the administration’s efforts to secure an agreement that allows us to retain and grow this important market.”
Wilf Costello, chief commercial officer for global cheese with Glanbia Nutritionals, said, “Japan is an important market for Glanbia Nutritionals, where we have the opportunity to grow our dairy exports. We are at an important juncture where our competitors have secure preferential trading terms that are impacting U.S. dairy ambitions. To ensure we can deliver on the opportunity in Japan, we need our trade negotiators to quickly finalize a trade agreement that secures access for American dairy products and ample room to grow.”
Leroy Plagerman, Darigold board chairman and dairy farmer in Washington state, said, “For our next generation of dairy farmers it’s critical that we continue to create growth opportunities, particularly in important dairy markets like Japan. Free trade matters for farm families in the Pacific Northwest.”