Would U.S. Dairy Firms Increase Long-Term Profits By Becoming Bigger Exporters and Bigger Investors in Foreign Dairy-Food Businesses?

William D. Dobson

No 12735, Marketing and Policy Briefing Papers from University of Wisconsin-Madison, Department of Agricultural and Applied Economics

Abstract: The answer to the question posed in the title is arguably, yes. U.S. firms appear to be well positioned to profitably expand exports of highly differentiated dairy products and selected dairy ingredients, especially dried whey products. However, U.S. bulk cheese, butter and nonfat dry milk (NFDM) are, for the most part, priced out of foreign markets by U.S. border protection and the dairy price support program. If, as claimed by a former Nestle CEO, the U.S. dairy-food market is "flat and fiercely competitive," U.S. companies may find it profitable to expand direct investments in foreign dairy-food businesses both in the near term and over the longer-run. Failure of U.S. companies to take advantage of opportunities in foreign dairy markets poses risks and will continue to cede early-mover advantages for serving the growth markets of Asia and Latin America to the New Zealanders, Australians, Western Europeans, and others. U.S. firms are doing some things right to prepare for a world where foreign dairy sales will be more important.

Keywords: Industrial Organization; International Relations/Trade; Livestock Production/Industries (search for similar items in EconPapers)
Pages: 17
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:ags:waaebp:12735

DOI: 10.22004/ag.econ.12735

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