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Would U.S. Dairy Firms Increase Long-Term Profits By Becoming Bigger Exporters and Bigger Investors in Foreign Dairy-Food Businesses?

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  • Dobson, William D.

Abstract

The answer to the question posed in the title is arguably, yes. U.S. firms appear to be well positioned to profitably expand exports of highly differentiated dairy products and selected dairy ingredients, especially dried whey products. However, U.S. bulk cheese, butter and nonfat dry milk (NFDM) are, for the most part, priced out of foreign markets by U.S. border protection and the dairy price support program. If, as claimed by a former Nestle CEO, the U.S. dairy-food market is "flat and fiercely competitive," U.S. companies may find it profitable to expand direct investments in foreign dairy-food businesses both in the near term and over the longer-run. Failure of U.S. companies to take advantage of opportunities in foreign dairy markets poses risks and will continue to cede early-mover advantages for serving the growth markets of Asia and Latin America to the New Zealanders, Australians, Western Europeans, and others. U.S. firms are doing some things right to prepare for a world where foreign dairy sales will be more important.

Suggested Citation

  • Dobson, William D., 2002. "Would U.S. Dairy Firms Increase Long-Term Profits By Becoming Bigger Exporters and Bigger Investors in Foreign Dairy-Food Businesses?," Marketing and Policy Briefing Papers 12735, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    • Handle: RePEc:ags:waaebp:12735
    DOI: 10.22004/ag.econ.12735
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    References listed on IDEAS

    as
    1. Dobson, William D., 1998. "Why Most Small and Mid-Sized Agribusinesses and Cooperatives Don't Export - Implications for the U.S. Dairy Industry," Marketing and Policy Briefing Papers 12729, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    2. Gould, Brian W. & Villarreal, Hector J., 2002. "A Descriptive Analysis of Recent Trends in the International Market for Dry Milk Products," Discussion Papers 37639, University of Wisconsin-Madison, Babcock Institute for International Dairy Research and Development.
    3. Ehui, Simeon K. & Hertel, Thomas W. & Rae, Allan N. & Nin Pratt, Alejandro, 2000. "China: Will They Buy or Sell?," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 15(3), pages 1-5.
    4. Dobson, William D. & Proctor, Richard, 2002. "How Mexico's Dairy Industry Has Evolved Under the NAFTA - Implications for U.S. Dairy Exporters and U.S. Investors in Mexico's Dairy-Food Businesses," Discussion Papers 37628, University of Wisconsin-Madison, Babcock Institute for International Dairy Research and Development.
    5. Esenova, Saulesh & Dobson, William D., 2001. "Doing Business in an Industry With Difficult Economics - Food Master's Experience in Dairy Processing and Marketing in Kazakhstan," Discussion Papers 37656, University of Wisconsin-Madison, Babcock Institute for International Dairy Research and Development.
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