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(Continued from page Al 6)
percent higher than a year ago and
7.4 percent more than January
2000. Clearly more milk is being
translated into more butter and
cheese, and part of that is ending
up in the form of higher stocks.
Now for the more interesting
news. A number of dairy farmers
have asked me to look at import
levels for dairy products. USDA
just released dairy trade numbers.
First, some background.
Imports and exports of dairy
products are regulated by our
world trade agreements. The idea
is you open your borders, and
we'll open ours. We agreed to
convert our import quotas (fixed
amounts of trade) to tariffs. You
can import various dairy products
into the U.S. at reduced tariff
rates (essentially a tax), but only
within a certain quota. Beyond
that quota level, imports are
subjected to a very high tariff.
Likewise, we have greater
access to the European market,
and can export butteroil and
nonfat dry milk using our Dairy
Export Incentive Program (DEIP).
Remember, trade works both
Under our trade agreements,
we agreed to raise our import
quotas over time. That will result
in greater imports. And, we
agreed to phase out our DEIP
program. But we also have (in
theory) greater access to overseas
The numbers in Tables 3 and 4
below show quantities and values
of imports and exports of various
dairy products. For the most part,
we only trade in dairy products,
not liquid milk products. The
data show imports rising and
exports being relatively flat.
Imports are especially high for
butter (in 1998), cheese (in 1998
and 1999), and milk protein
What's going on here? Well, it
should be of no surprise that
record high butter prices (in 1998)
and record high cheese prices (in
1998 and 1999) resulted in greater
imports. This is especially true
when world prices were lower
than U.S. prices. The U.S.
became a magnet to world
Even with very high tariff
rates, it was profitable to import
product into the U.S and still pay
the high tariff rates.
What is alarming is that there
appears to be a trend towards
more and more net imports (net
imports are equal to imports less
exports). I am quoting this figure
m dollar values. It is very
difficult to look at net trade on a
milk eqivalent basis (what is the
equivalent amount of raw milk
that we imported?). In 1997 net
imports were $122.3 million. But
1999 net imports were $404.9
million. That's an increase of 231
Now, for some perspective.
U.S. sales of milk at the farm
level are typically $22-24 billion
a year. In 1999 we produced
162.711 billion pounds of milk
and the U.S. all-milk price was
$14.37 per cwt. Thus farm milk
sales in 1999 were $23.38 billion.
Imports net of exports on a dollar
value in 1999 were 1.73 percent
of the value of U.S. milk
production. It’s hard to argue
whether that is a lot, or a little.
But the bigger question is what
will happen this year? My guess
is that imports will slow down
considerably due to record low
U.S. milk prices.
Who would import above
quota levels and pay those very
high tariff rates when U.S. prices
are so low?
My conclusion from this very
quick review of the data is that
higher imports were the result of
high domestic prices. Likewise,
low domestic milk prices should
lower imports. If this is true,
imports did not cause milk prices
to fall; this had more to do with
Sets Beef Ball
Co.) Adams County Beef
Producers Association, Inc. has
announced plans for the 24th
annual Adams County Beef Ball
and Parade of Bulls.
The event is scheduled April
15 at the Bonneauville Fire
Hors d’oeuvres are scheduled
at 4:30 p.m. followed by dinner
at 5:30 p.m. and dance at 8 p.m.
Adults are $l7 each ($2O after
Lancaster Farming, Saturday, April 1, 2000-A33
continued growth in the U.S. milk
For more information on
market and federal order data, see
my Penn State Dairy Outlook
April 1) and children 6-12 are
$8.50 each ($11.50 each after
April 1). Children less than 6
years old are admitted free.
The event features Adams
County pit beef, door prizes, a
queen contest, and country
music. No glass containers, in
cluding beer, soda, and wine
coolers, are allowed.
To order tickets, call (717)
337-3921 or (717) 677-7115.
2%" OD 10 gauge High Tensile Galvanized Steel Tubing
Hot Dipped Galvanized Clamp and Mounting Hardware
Gall j/M, JLiieAatuAe. a*td P>uci*ujJ
255 Holtzman Road, Reinholds, PA 17569