Wisconsin Association of Dairy Field Plant Representatives. The Dairy Industry and the Effects of Tariffs

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1 Wisconsin Association of Dairy Field Plant Representatives The Dairy Industry and the Effects of Tariffs Lisa Stout Economic Development Consultant February 5, 2019

2 Canada: $636 Million/ WI $81 million Mexico: $1.3 Billion/ WI $ 55 million China: $577 million/ WI $50 million Japan: $290 Million/ WI $24 million South East Asia: $690 Million / WI $19 million DAIRY EXPORTS datcp.wi.go $5.5 BILLION 2017

3 Canada: $289 Million/ WI $44 million Mexico: $1.1 Billion/ WI $ 57.9 million China: $279 million/ WI $44.7 million Japan: $215 Million/ WI $24 million South East Asia: $519 Million / WI $13.7 million DAIRY EXPORTS datcp.wi.go $3.9 BILLION OCTOBER 2018

4 U.S. Dairy Exports

1,500,000,000 1,000,000,000 500,000,000 0 274,215,592 251,632,150 298,611,863

5 Dairy Exports 5,000,000,000 4,500,000,000 4,000,000,000 4,448,509,166 3,906,263,824 4,482,265,178 3,899,383,236 3,500,000,000 3,000,000,000 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000, ,000, ,215, ,632, ,611, ,252,762 ANNUAL 2015 ANNUAL 2016 ANNUAL 2017 OCT 2018 YTD US Dairy Exports WI Dairy Exports

6 1,600,000,000 1,400,000,000 1,200,000,000 1,393,058,188 Cheese Exports 1,208,789,843 1,457,182,787 1,237,335,060 1,000,000, ,000, ,000, ,000, ,000, ,268, ,862, ,766, ,872,090 0 ANNUAL 2015 ANNUAL 2016 ANNUAL 2017 OCT 2018 YTD US Cheese Exports WI Cheese Exports

7 May June July August September October November December ('000 MT) 2.5 US Cheese Exports: YTD Comparison Source: USDEC

700,000,000 600,000,000 500,000,000 556,108,971 Whey Exports 624,124,516 518,355,082 486,076,627 451,440,983 400,000,000 300,000,000 200,000,000

8 700,000, ,000, ,000, ,108,971 Whey Exports 624,124, ,355, ,076, ,440, ,000, ,000, ,000, ,000,000 96,404, ,562, ,247, ,389,978 91,408,143 0 ANNUAL 2015 ANNUAL 2016 ANNUAL 2017 OCT 2017 YTD OCT 2018 YTD US Whey Exports WI Whey Exports

9 Source: USDEC China Current export products: whey, cheese, other dairy products Tariff rate varied from 2%-15% and now vary from 27% to 45%. U.S. is #1 producer of whey. 42% of U.S. whey exported to China. Who will supply China now? Lost sales in China are expected to cost U.S. dairy farmers $1.1 billion in 2018 and an estimated $2.2 billion in 2019.

10 May June July August September October November December ('000 MT) 30.0 US Whey Exports to China: YTD Comparison Source: USDEC

11 Mexico Current export products: cheese, whey, other dairy products Tariff rate went from 0 to 25% Mexico imports 70% of U.S. dairy products Mexico is our largest export market for dairy products

12 USMCA Signed by leaders of all 3 countries Waiting for ratification by US Congress Eliminates Canada s Class 7 dairy pricing system Establishes new ways to oppose GIs for common cheese names Mexican tariffs still on cheese, until metal tariffs are eliminated

13 Source: US DEC

14 Effects of Tariffs Increase sales price Reduce competitiveness Lose market share/ revenue

gov Ashwini Rao Latin America/Europe/India Processed foods and Ingredients 608-224-5119 Ashwini.Rao@wi.

15 The International Agribusiness Center Lisa Stout Canada/Asia/Middle East Processed foods and ingredients Ashwini Rao Latin America/Europe/India Processed foods and Ingredients Jennifer Lu Asia Livestock feed, genetics, lumber and forestry Enrique Gandara Latin America/Russia/Middle East; Livestock feed, genetics, equipment

16 IABC Services Export Education Buyers Missions Trade Missions Reverse Trade Missions Food Show Plus services Export Funding Program

17 Dairy Export Initiatives Wisconsin Initiative for Dairy Exports Reverse Buyers Mission SBA s State Trade Export Promotion Grant Participation with USDEC at trade shows Participation in Food Export activities