In the ongoing maturation of the U.S. dairy industry as a global player, we took another step forward in 2012.

Ask any of the 100+ members of the U.S. Dairy Export Council and they’ll tell you market conditions were challenging last year. In the first half of the year, favorable weather and high previous year returns brought forth heavy milk production worldwide, which pushed global prices, on average, around 20% lower than the prior year. In the second half of the year, the U.S. summer drought pinched U.S. supplies and drove our prices above our overseas competitors’ offerings.

Added to the mix: a shaky global economy, the uncertainty of U.S. farm policy, threatened port closures and a steady stream of market access hurdles to jump.

On the positive side of the ledger, global dairy trade expanded significantly for the third straight year. Exports from the five leading suppliers (European Union, United States, New Zealand, Australia and Argentina) were up about 8% in 2012.

Under these conditions, U.S. suppliers continued to show their growing resolve and commitment to global markets. They took the challenges in stride, continued to ship big volumes, and kept their eyes on the long-term prize. When the full-year numbers are in, 2012 will be another record year in terms of both volume and value. Despite a second-half slowdown, U.S. dairy exports topped $5 billion last year, more than double what we shipped in 2009.

A bigger role for exports

In short, these gains reflect a greater industry-wide recognition that exports are the path to growth. If the U.S. dairy business, which has been in a constant state of growth and expansion for more than 35 years, is to continue on that trajectory, it is understood that exports will continue to play a bigger and bigger role.

Beyond the numbers, there is ample evidence that we are becoming “better” exporters in capturing our share of the growing pie. Large and small tangible moves demonstrate exports are no longer an afterthought. Here are five examples:

1. In 2013, significant new whole milk powder capacity will come on-line in the United States for the first time. Manufacturers are broadening their portfolios to make a product the rest of the world wants (but which has limited use at home). Their investment to fill a gap in our supply portfolio reflects the new global business reality.

2. Recently, the dairy-farmer-funded Inno-vation Center for U.S. Dairy released draft voluntary guidelines for product traceability. In a global marketplace, customers increasingly require suppliers to be able to quickly trace products and ingredients through every step in the supply chain. Moreover, with industry-wide adoption of the plan, it reassures our overseas customers that the United States provides the safest dairy products in the world.

3. U.S. skim milk powder manufacturers are making significant investments in systems aimed at catering to the high-spec demands of overseas food and beverage makers. As these buyers expand their product lines and capabilities, they become increasingly demanding in their ingredient specs. U.S. efforts are geared toward producing low-spore milk powder for the infant formula and UHT milk sectors.

4. Commercial opportunities to supply dairy ingredients for food aid continue to expand. Last year, USDA accepted a USDEC request to include WPC-34 and WPC-80 as approved ingredients for food aid. Meanwhile, the U.N. Food and Agriculture Organization agreed to use the Digestible Indispensable Amino Acid Score (DIAAS) in measuring protein quality in food aid. (This score grades whey and other dairy proteins as a superior protein option.)

5. In December, the United States and China agreed on a new dairy certificate, culminating a two-and-a-half year process. USDEC worked closely with the U.S. government and Chinese officials throughout, and helped make sure the market stayed open until a resolution was found.

In each of these developments, the U.S. industry invested its resources with an eye on the global market. And in each, USDEC, funded by U.S. dairy farmers through the check-off, played an important role, partnering with exporters to identify, expand and capitalize on new opportunities.

There are still challenges

At the onset of 2013, we see continued challenging conditions. The specter of drought and global economic uncertainty prevails. The competitive situation is, as always, difficult.

Through it all, the United States has settled into a three-year stretch in which exports have been consistently about 13% of milk production. Now what will it take to get us to 15%?

As identified in the Innovation Center’s farmer-funded Globalization Studies in 2009 and 2011, ensuring our global competitiveness to withstand the steady entry of new suppliers requires reforms in U.S. dairy pricing policy. Some of that discussion is underway in the context of, what is now, the 2013 Farm Bill. The outcome of that process may determine how quickly we maintain and expand our window of opportunity.