Inside Milk
US dairy sector does not get production country out
Major logistical disruptions have already cost US dairy exporters nearly $1 billion (almost €880 million) this year. At the end of last week they themselves were the subject of a top meeting of the American dairy organization NMPF with the White House, but there is no solution yet.
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American dairy farmers will feel the consequences in their wallets and large processors anticipate significant losses. Dairy cooperatives California Dairies, which accounts for about 20% of American milk processing, says it is losing about $45 million a month, and America's largest mozzarella producer Leprino Foods is also investing tens of millions. About 20% of American dairy production crosses the border, mainly to (Southeast) Asia and Mexico.
Reliability as a supplier at stake
According to CEO Mike Durkin, American dairy exports are suffering 'irreparable damage' due to all the problems. He complains that almost all of his company's export shipments have been rebooked and delayed at least once, while about a hundred shipments had to be rebooked XNUMX times before they could leave the country, causing months of delays. The reliability of the US as a supplier is at stake, says Durkin.
European dairy exporters benefit from this, because without the export problems in the US, American dairy would be a formidable competitor. Especially on price. However, now that the US is not a stable supplier, European companies can take advantage of this.
The cause of the problems is not only the transhipment problems in the major container ports on the West Coast, such as Portland and Los Angeles, but also widely varying container rates for incoming and outgoing containers (which means that shippers prefer to return containers quickly rather than wait for a slow shipment of dairy products). and a major shortage of truck drivers in the US.
Emergency ports included
The US Department of Agriculture (USDA) already provided a $500 million (€440 million) aid package in September, but much more money is needed. There are also calls for improving railway lines and making additional port capacity available, or even building emergency container ports.
These are all matters that the Supply Chain Disruption Task Force is concerned with. They can draw from the enormous pot of money the large Infrastructure Fund that Biden is busy dragging through the US Congress and Senate.