A circular sound system in the form of industry collaboration is needed to grow domestic and global dairy product demand, or else the U.S. dairy industry is not going to be successful, according to Tom Gallagher, chief executive officer of Dairy Management Inc.
Gallagher pointed out that the world population is currently at 7 billion people, 330 million of whom are in the U.S. By 2050, the population will grow to 10 billion people, and 350 million of them will live in U.S.
“While there are opportunities to grow consumption, particularly cheese, in the U.S., our growth is going to come in Southeast Asia, Africa the MENA [Middle East and North Africa] countries,” he said, adding that the current trade endeavors of the U.S. are really important. “Even though they are hurtful right now, they are important to us.”
The U.S. dairy industry currently exports about 18% of its production, but Gallagher said farmers have no end to what they can produce, and as more of the world population moves into the middle class, they want more animal protein.
“Consumers are going to be available to us, and I don’t think we’re going to be at 18% of production 25 years from now. We’re going to be at a much more significant number, and we’ve got to look to that,” he said.
Gallagher outlined some of the current global efforts with foodservice companies to increase use of U.S. dairy products.
In Southeast Asia, where 700 million people reside, the U.S. Dairy Export Council (USDEC) is working with Pizza Hut to use more cheese on pizzas. Currently, a consumer in that region eats only one pizza every 35 days. USDEC put an insights person in the region to help with product development in Southeast Asia and Singapore, and after one year, even though it’s on a small scale, cheese consumption on pizza has increase by 30%.
“Our goal is to get more cheese on the pizza there and increase the frequency,” Gallagher said.
USDEC is also working with KFC to develop cheese-centric menu items for South America. “Our product development there is going to be very successful for KFC in the 40 countries that represent about 650 million people in the different South American countries,” he said.
According to Gallagher, when deals are made with the foodservice companies, they have to use U.S. cheese for a minimum of two years.
On another front, USDEC is working with dairy cooperatives that Gallagher said “are really trying to do all the things that need to be done to have a successful export business.”
These companies include Darigold, Land O’Lakes and Dairy Farmers of America, as well as others.
USDEC’s role is to assist them with their customer service in Asia, in particular, and to assist with their product development, particularly in Mexico, for placement of butter, Gallagher explained.
Emphasizing the importance of having a presence in each country, he said, “I’m really positive about the exports -- not just people but also possibly an innovation lab. That’s what it’s going to take to make the buyers there comfortable.”