Grain growers and cattle producers typically capture most of the limelight when it comes to discussions about contributions made to the American agricultural economy.

But last year dairy farmers generated a record $6.7 billion in export revenues, which was more than corn, poultry, beef or pork exports for the same period. Indeed, only soybeans, wheat and tree nuts amassed larger export revenue receipts last year.

Dairy product exports totaled less than $1 billion in 2000, so the growth rate in sector receipts has been an important driver of overall U.S. agribusiness health in recent years. What’s more, thanks to blistering demand growth in Asia and other regions, dairy looks set to see additional growth in exports going forward that may allow the dairy industry to steal even more of the limelight from the crop and meat arenas.

Climbing the Diet Ladder

The improving diets of hundreds of millions of people across a sway of developing markets has been the defining narrative of the rise in global agricultural product consumption over the past decade or so, and has certainly been a chief driver behind the steep gains in worldwide grain consumption as higher quantities of meat were added to the menu across much of the developing world.

Since 2000, global corn demand has increased by nearly 60 percent as global meat production increased roughly 32 percent. This uptick in meant supply in turn generated a 55 percent rise in global poultry demand, a 30 percent climb in pork consumption, and an 8 percent rise in beef consumption over that period.

But it is clear that more and more dairy products have also made their way onto the dinner table, with global milk consumption up roughly 30 percent since 2000, butter consumption up 63 percent, and dry whole milk powder consumption up 82 percent.

It is also clear that dairy demand growth has accelerated at a faster pace than demand for grains and meat products over the past five years, with dry whole milk power demand up by more than 55 percent since 2008 compared with a 23 percent rise in corn demand and a 12 percent rise in pork demand over the same period.

This trend is reflective of yet another wave in the ongoing westernization of diets across much of the developing world, especially in Asia where a majority of the world’s butter and whole milk powder is consumed. Chinese consumers in particular have developed a taste for milk, yogurt and cheeses to complement their higher intake of meats and other fats.

Enduring Appetite

As impressive as the recent rise in trade receipts has been, dairy exporters are likely to face even steeper growth in overseas demand going forward should the recent trends seen in Asia take hold in other regions such as the Middle East, Africa and Eastern Europe.

The value of U.S. dairy exports to the Middle East and North Africa has climbed more than 1,200 percent since 2000, but remain a fraction of those stemming from Asia. Receipts from African nations also pale in comparison to those from Asian nations.

Yet the continuing growth in population sizes in those regions, alongside a further rise in the proportion of meat, fats and oils in diets, should ensure that dairy producers in the United States and elsewhere will encounter further demand growth for their products over the coming years.

For domestic consumers of dairy products the heightened demand from foreign buyers may mean more competition for certain products.

But for dairy producers and distributors the escalating demand from global buyers mean potentially beefier and more reliable revenue flows as well as the chance to further emerge from the shadows cast by their meat and crop counterparts in the agricultural arena. (Reuters)