Can the United States Compete with Dairy Exporting Nations?

The position of the United States dairy industry under a more liberal import policy is evaluated. The breakeven prices for major dairy products that cover milk costs, assembly of milk to plants, manufacturing, exports, and transportation to the United States were computed for several potential supply areas to the United States. Results show that the United States can compete price-wise for the United States market with all countries except New Zealand and Australia. However, the potential supply from New Zealand and Australia is small relative to world production and is not sufficient to drive world prices to their low production costs in the long run. If worldwide trade barriers for dairy products were reduced or eliminated, prices and, therefore, milk production likely would decline in Canada, the United States, and Europe. Consumption would rise. These decreases in production and increases in consumption quickly would absorb much of the potential growth in milk production in New Zealand and Australia. Imports into the United States would increase about 1.58 million metric tons or about 1% of the domestic production of the United States.