Exploring Growth Opportunities In Wisconsin Dairy Exports: New Research Insights
While a number of Wisconsin cheese and dairy processors already are exporting their products, many of those are interested in expanding exports while others would like to explore new opportunities to begin exporting if they are able to overcome current barriers, according to recent research.
Chuck Nicholson, University of Wisconsin-Madison associate professor in the Department of Agricultural and Applied Economics, detailed his research and findings on barriers to exporting for dairy processors during a webinar hosted by the Wisconsin Cheese Makers Association (WCMA) for its members this week.
Nicholson says the goals of his project and ongoing research are to assess Wisconsin companies’ engagement in dairy product export markets, both current activity and intended future involvement, looking at barriers as well as opportunities they face.
“We want to start thinking about how Wisconsin, and the Upper Midwest, are positioned, and take a deeper dive into the intentions companies have to export or not,” Nicholson said during Tuesday’s webinar.
Wisconsin Dairy Exports: Data Gathering And Challenges
Nicholson worked with UW students as well as dairy organizations in and outside of Wisconsin to gather export data as well as information on tariffs and other barriers, and to review current resources available to support companies that want to expand their exports.
Some potential challenges for increasing Wisconsin dairy exports, he said, included:
• Product mix — most U.S. exports are powders and whey products, while Wisconsin companies are more focused on cheese;
• Logistics due to geography — Wisconsin is not near major seaports on the West or East Coast; and
• Scale of Wisconsin dairy companies — many are smaller and specialized, with limited production and budgets to go toward exports.
Export Trends Among Wisconsin Dairy Companies
In a survey of 35 Wisconsin companies that responded, 69% of those already had been exporting, though Nicholson notes the percentage of all Wisconsin companies that export would be much smaller. Among the companies already exporting, they reported exporting mostly cheese products to a variety of destinations, including Asia, the Middle East and Mexico.
The Future Of Wisconsin Dairy Exports
“Export volumes were a relatively small proportion of total business. A number of companies said less than 1% or 2% of their total sales,” Nicholson says, adding that companies generally did not receive a premium for their exports compared to domestic sales.
Looking to the future, over a 10-year period most of the respondents who exported were positive about moving forward with expanding their export volumes. They cited a number of different possible challenges to meeting their goals for export growth, led by cost of export logistics, competition from non-U.S. exporters, and supply chain and logistics delays or transportation availability.
Perspectives On Exporting From Non-Exporting Companies
Among the companies that do not currently export, Nicholson says the majority said they were not interested, citing reasons such as their small size, the complexity of the export marketplace or that their sales goals could be met from domestic markets. However, there also were a number of respondents that said they might be interested but it wasn’t really a priority, or that they needed more information on how exports might work for them.
Supporting Wisconsin Dairy Exports
“There is a much greater need by companies for knowledge on how to make the export process work for them,” Nicholson says. “There is a definite role for organizations who have provided that kind of information and expertise.”
Financial and informational support from organizations such as the Wisconsin Department of Agriculture, Trade and Consumer Production (DATCP); U.S. Dairy Export Council (USDEC) and Dairy Farmers of Wisconsin (DFW) have helped companies that currently are exporting.
Expansion Strategies For Wisconsin Dairy Exports
Nicholson notes that additional efforts that would facilitate expansion of Wisconsin dairy exports include:
• Building a Wisconsin brand that is recognizable in export markets, similar to what Ireland has done with its butter and cheese;
• Raising awareness that not all U.S. cheese is commodity; and
• Providing more information to potential exporters on various countries’ cheese export requirements and how to complete paperwork.
Future Research And Resources For Wisconsin Dairy Exports
Nicholson explained some of the next steps in his research would be continuing survey data analysis, holding focus group discussions with current exporters and non-exporters, documentation of logistics cost differences for Wisconsin exporters and the development of potential actions to address challenges, such as cooperation in export logistics or joint branding.
Following Nicholson’s presentation, Danica Nilsestuen, WCMA’s grants and business programs director, talked about grants and resources currently available to assist with dairy product exports. Among these were the Collaborative Market Access Grants (CMAG), which offer awards of up to $15,000 to offset costs of attending specific trade shows; DATCP Export Expansion Grants, which include consultations with exports from MCT Dairies on starting up new export programs or considering new markets; Dairy Business Innovation Alliance (DBIA) grants, available to companies in the 11-state Midwest region to cover expenses related to exports; and a WCMA Export Workgroup meeting planned for this fall.
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Source: Cheese Market News
