U.S. exports were a record 16.8 percent of milk solids for the first half of 2018. But the industry has “deep concerns” about the impact of tariffs moving forward.
U.S. dairy exports through the first six months of 2018 were equivalent to 16.8 percent of milk solids produced during the period. That is the highest percentage in history for the first half of the year, topping the 16.4 percent shipped over the first six months of 2014.
Today on CNBC’s Squawk Box, U.S. Dairy Export Council President and CEO Tom Vilsack put the situation in perspective.
“We had the six best months of dairy exports in the history of the U.S. dairy industry,” Vilsack said in an interview. “The question is this: will the next six months continue that trend? There are deep concerns that may not be the case because of the tariffs.”
Tariffs creating uncertainty
Strengthening headwinds make the next record-setting performance a more challenging target.
Much uncertainty revolves around China—the engine that has driven global dairy import demand for the past decade. Should the Chinese economic engine sputter given the unknowns surrounding the U.S.-China trade dispute, dairy demand could weaken, with broad implications for the world’s dairy suppliers.
NAFTA would bring “reassurance”
Vilsack said he hopes for a quick conclusion to the North American Free Trade Agreement negotiations so that the retaliatory tariffs now being assigned by Mexico and Canada on U.S. dairy products can be lifted.
That could help preserve Mexico as the United States’ No. 1 market, send a positive message to U.S. dairy farmers and keep the current record export streak alive.
A quick resolution of NAFTA that is satisfactory to agriculture would bring “a lot of reassurance,” Vilsack told CNBC on Monday.
Mark O’Keefe is vice president of editorial services at the U.S. Dairy Export Council.