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Dairy exports on the upswing in Washington

Darigold on of industry's key contributors

According to the U.S. Dairy Export Council, Washington is one of the nation's largest producers of milk powder, which is the United States' chief dairy export product.

Exports have allowed the U.S. dairy industry to grow. The U.S. Dairy Export Council reported that U.S. milk production is up 17 percent - a gain of nearly 30 billion lbs. - since 2003. More than 60 percent of the increased milk production has gone to export.

Darigold, which has a plant in Sunnyside, reports half its milk powder production and three-quarters of its whey products are exported. That is reflective of the national average for milk powder and whey exports. According to recent figures, 13.6 percent of all U.S. dairy production is exported.

The state also exports significant volumes of cheese, whey and butterfat.

"Meeting the global demand for dairy products is far more than just shipping milk powder, whey, cheese and butter overseas," said Kima Simonson, a U.S. Dairy Export Council board member. "Our global customers want a consistent product, consistent suppliers and products that are designed for their specific market and culture." Simonson is a second generation family dairy farmer in Deer Park, north of Spokane.

"The challenge is developing products other countries want and can afford," added Dermot Carey, senior vice president of Darigold's ingredients division. "Southeast Asia, China, the Middle East and Northern Africa are growth areas and each has their own requirements."

While Darigold is the largest exporter of U.S. cheese to Japan, China prefers to make its own cheese and yogurt but wants U.S. powder milk.

In the U.S. strawberry yogurt is a favorite but in China green aloe yogurt is preferred.

But even with all the activity in China and Japan, South Korea has become the fastest growing cheese market in the world, thanks largely to the popularity of pizza.

Southeast Asia is building new dairy plants but doesn't have enough milk to fill them so they import U.S. dairy products. Also, cheese for the Southeast Asian market is repackaged into smaller portions so it is more affordable.

Seattle-based Darigold processes and sells over 8 billion pounds of milk annually and is among the top dairy processors in the world. A total of 550 regional dairy farms supply milk to 12 processing plants. The vast majority of Washington dairies ship their milk to Darigold.

The Washington State Department of Agriculture lists milk production as the state's second largest agricultural commodity (behind apples) with a 2011 value of $1.28 billion, 34 percent above 2010.

Carey noted that continued export growth is largely dependent on two factors. First, there's the possibility of taking additional market share from New Zealand and Europe. One distinct advantage is geography. Seattle is ideally located for access to Asia.

Another factor driving increased exports is population growth in emerging countries, especially those that can't produce dairy products for themselves due to climate or infrastructure weakness. The good news is the market for dairy products worldwide is growing.

"With sustained dairy exports Washington's dairy producers have a buffer from the roller-coaster ride that is domestic demand for dairy," observed Leister.

"The weather, the dollar, trade agreements, tariffs and taxes are some of the variables in dairy exports," explained Simonson. "Darigold gets it. They understand the importance of customer service. They have spent years developing relationships and listening to global customers."

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