Exports are becoming a crucial part of dairy farming in Washington as demand increases for products overseas, particularly in Asia.
That's a shift for Pacific Northwest dairy farmers, who until about 15 years ago used to sell almost all of their products locally or at least domestically, said Jim Werkhoven, a dairy producer who owns and operates a 1,200-cow dairy near Monroe with his brother, Andy, and their spouses.
"This is absolutely the future for this area," said Jim Werkhoven, who also serves as chair of the Northwest Dairy Association cooperative board, which owns Darigold. "Any growth will come out of exports."
Nationwide, 13 percent of dairy products are shipped out of the country. Nearly half of what Darigold produces in Washington, Oregon, Idaho and Montana is exported. That's significant because Darigold processes virtually all dairy products produced in this state.
Washington exports more dairy products than any state except California.
Most of the dairy products shipped overseas from the Pacific Northwest are processed into whey or milk powder first, then reconstituted and added to other products overseas.
On a recent trip to China, Werkhoven found a wider variety of milk products in a corner convenience story than he would here, including milk drinks flavored with papaya and peanuts.
Some countries may not have the land for dairy farms or the infrastructure to ship the products domestically, he said.
That's where Washington's dairy farmers can step in. But the U.S. has to compete with other exporters, such as New Zealand, Australia and the European Union, for that business.
Washington has an advantage over other areas of the country because of its ability to ship easily to Asia. Plus, cows like the mild climate here better than California and produce more milk, Werkhoven said.
Mexico is this state's top foreign customer, buying $98 million in dairy products exported from Washington in 2012. Right behind are the Philippines ($39 million), Indonesia ($32 million), China ($13 million) and Malaysia ($7 million).
Darigold has done a lot to get that overseas business, said Kima Simonson, U.S. Dairy Export Council board member. She owns a dairy farm north of Spokane with her husband.
Although the milk her family farm produces goes mostly to their region, the success of exporting benefits all dairy farmers in the state because of the cooperative nature of the business.
Washington dairy farmers produce plenty of milk to meet the needs of domestic customers. If the surplus wasn't exported, it would mean depressed prices here.
There's pride in feeding other countries, she said, and "we take a lot of pride in how we take care of our farms and our cows. We're proud of the quality of the milk we produce."
While the interest in Washington dairy products is heartening to dairy producers, exporting is not a panacea.
Dairy farmers everywhere are struggling. Milk prices are more volatile than in years past.
What's hurting dairy producers most today is the high cost of feed. Last summer's drought in the Midwest pushed up the price of grain crops.
While it used to cost Werkhoven $5 a head daily to feed his cattle, it now costs $7. That tightens profit margins.
Exporting numbers have been on the rise in the past 15 years. When the economy fell apart in 2009, so did exports. The numbers have nearly returned to pre-recession numbers.
Dairy export numbers dropped by 20 percent last year, from roughly $291 million to $233 million, according to statistics from the state Department of Agriculture.
The potential for growth offers promise to dairy producers.
"The dairy business isn't an easy business," Werkhoven said. "It's not for the faint-hearted. But exporting is one of the most helpful things we have."
More from The Herald Business Journal: www.theheraldbusinessjournal.com
MORE HBJ HEADLINES
Our new comment system is not supported in IE 7. Please upgrade your browser here.