Trade agreements, as critical as they are, do not in themselves create trade. Trade happens when people connect with people, a reality five Dairy Management Inc. board members – all dairy farmers – witnessed during an Oct. 20-25 governance mission to Mexico. It was organized by the U.S. Dairy Export Council.
Simply put, one-to-one business connections matter. They always have. They always will.
“That was my biggest takeaway, my ‘aha’ moment, realizing how valuable the relationships are,” said Marilyn Hershey, a Pennsylvania dairy farmer who chairs the Dairy Management Inc. board that oversees the U.S. Dairy Export Council, a nonprofit subsidiary. “It’s not something that’s accomplished in one year. It’s something that happens over the years through developing relationships and increasing collaboration. That’s when the payoff comes, when you see that collaboration.”
Other Dairy Management Inc. board members had the same takeaway when seeing what almost 25 years of U.S. Dairy Export Council work in Mexico has accomplished.
“Relationships are vital,” said Larry Hancock, a Texas dairy farmer with 4,200 cows who was recently elected the U.S. Dairy Export Council chairman. “The thing I want to really get across to the (Dairy Management Inc.) and (the U.S. Dairy Export Council) boards after this trip is how important relationships are and how well the U.S. Dairy Export Council facilitates those relationships. It was a really cool and amazing for me to see.”
The U.S. Dairy Export Council sells no products. Its mission is to see U.S. dairy-exporting companies do the exporting, benefiting farmers and the entire industry. Sales to Mexico in 2018 reached $1.4 billion, about one-fourth of all U.S. dairy exports around the world.
Because value is dependent on world prices, which increase and decrease, volume may be a more-reliable indicator of year-after-year progress. The chart shows the results of sustained effort -- a 450 percent increase in 25 years.
Consistent export-volume growth means more and more U.S. milk has crossed the border to Mexico through dairy products and ingredients.
Twenty-five years ago the North American Free Trade Agreement opened a door of opportunity for tariff-free trade with Mexico. Processors and farmers alike were united in the belief that an organization was needed to facilitate U.S. dairy exports not just to Mexico, but the world.
Dairy Management Inc. founded the U.S. Dairy Export Council 24 years ago. Through the dairy checkoff, farmers continue to fund the council, accounting for about three-fourths of the council’s budget.
Missions to Mexico and other U.S. dairy markets give Dairy Management Inc. board members an opportunity to assess with their own eyes and ears the U.S. Dairy Export Council programs and activities, the return on investment for farmers and the potential for continued growth.
“This is a two-way relationship,” said Evan Hillan, who milks 350 cows and farms 1,400 acres in Ladysmith, Wisconsin. “We’re not just exporting our products to them. We are also importing their knowledge to us. What they have done in the fluid market and the yogurt market has just been tremendous. You see it walking down the aisles of supermarkets like Walmart and H-E-B. It’s an eye-opening experience.”
Kathleen Skiba, who runs a 180-cow dairy in North Branch, Minnesota, was equally impressed by the dairy products on display in Mexico.
“The Impact of (the North American Free Trade Agreement) on U.S. Dairy Exports to Mexico” by Informa Economics is a 35-page analysis commissioned in 2017 by the U.S. Dairy Export Council and the National Milk Producers Federation. One of the most striking findings of the Informa study is that every $1 of U.S. dairy exports to Mexico generates $2.50 of economic activity in the United States.
Put another way, the U.S. dairy industry’s investment in Mexico has yielded more than “double the bang for the buck” in the U.S. economy, with benefits spread out to farmers as well as the broader U.S. economy.
“The biggest ‘aha’ moment for me was seeing how the U.S. and Mexican dairy industries need each other,” said Chace Fullmer, who runs a 2,500-cow dairy in Sigurd, Utah.
Through the years the dairy industries of the United States and Mexico have found ways to cement their common interests with partnerships.
The U.S. Dairy Export Council and the National Milk Producers Federation in 2016 created the U.S.-Mexico Dairy Alliance with ANGLAC, the Confederación Nacional de Organizaciones Ganaderas and Cámara Nacional de Industriales de la Leche. Dairy leaders from both countries met Oct. 21 in Torreón, Mexico. They issued a statement agreeing to work collaboratively on 12 issues that will benefit the dairy sectors of both countries. It was the fourth-annual meeting between U.S. and Mexican dairy leaders.
The U.S. Dairy Export Council has taken several actions this year.
- Represented U.S. dairy in the United States-Mexico-Canada trade agreement – Funded by membership dues, not checkoff resources, council trade-policy staff played a critical role in providing technical input to U.S. negotiators about U.S. dairy’s needs in the agreement. That input is critical because the new agreement will replace the North American Free Trade Agreement if and when approved by the U.S. Congress and the legislative bodies of Canada and Mexico.
- Fought for common cheese names – The Consortium for Common Food Names, founded by the council, battled the European Union’s campaign to monopolize common cheese names through geographical indications.
- Helped keep the border open -- The council addressed a threat to close the U.S. border with Mexico because of immigration through swift and far-reaching communication efforts.
- Worked to eliminate tariffs – The council stressed the need to remove Section 232 tariffs on Mexico that triggered retaliatory tariffs on U.S. cheese. The United States lifted its tariffs and Mexico eliminated its retaliatory tariffs on cheese.
- Promoted dairy ingredients – The council launched two ingredient seminars aimed at increasing dairy utilization by the Mexican food-processing industry.
- Formed new retail partnerships – The council launched partnerships with two major Mexican retailers this year – Costco Mexico and Chedraui.
- Explored new opportunities – The council held two seminars for Mexican feed manufacturers to highlight the benefits of using permeate and lactose in swine-feeding programs.
- Put more boots on the ground – Edgar Garcia is the council’s new business-development manager in Mexico to bolster in-country representation and become closer to buyers and consumers.
The U.S. dairy industry has seen exports grow in other parts of the world, particularly Asia, but the mission showed Dairy Management Inc. board members that the U.S. Dairy Export Council does not take its No. 1 market for granted.
It’s about maintaining and building relationships.
“You can’t just come in to a different country, slap down a trade agreement and expect people to buy your product,” Hershey said. “There has to be this back and forth. There has to be respect by both parties and I really feel like we are making headway with that.”