That’s good news for Idaho’s dairy industry, the state’s top agricultural commodity in terms of total farm-gate revenue.

It’s also good news for the state’s overall economy since, according to the U.S. Dairy Export Council, Idaho’s dairy industry has a $9 billion economic impact on the state and supports more than $400 million in total wages.

According to USDEC, total export value for U.S. milk products reached a record $9.6 billion in 2022, a 25 percent increase over 2021. This was the first time U.S. dairy exports crossed the $9 billion threshold.

Total U.S. dairy product export volume, on a milk-solids equivalent, reached 2.4 million metric tons in 2022, which was also a record and 5 percent higher than the 2021 total.

Last year was the third straight record year for U.S. dairy export volume and the second straight record year for total export value.

“We are excited to be able to keep setting records in both volume and value,” USDEC President and CEO Krysta Harden told Idaho Farm Bureau Federation during a video conference.

She said last year’s record export growth occurred despite some of the strongest dairy export headwinds the industry has ever seen, including slowing economic growth, historic global inflation, ongoing supply chain issues, and severely reduced demand from China.

According to USDEC, total export volume of U.S. dairy products last year was equivalent to 18 percent of all the milk produced in the United States, which was also an all-time high.

Growth in the export market continues to outpace domestic demand for U.S. dairy products.

U.S. dairy exports have grown more than domestic sales, percentage-wise, five out of the last six years.

“We continue to see the growth outside of the country,” Harden said.

A lot of that export growth is occurring in Asia, particularly southeast Asia.

While Americans already incorporate dairy into their diet in a lot of different ways, much of the population in the southeast Asian countries is still learning about dairy and while those nations have some milk production, it’s not enough to feed the growing demand, Harden said.

“They are also going to need other sources,” she said. “We want to be that source of choice. We want to be that reliable, high-quality, high-value source.”

While global demand for dairy products is growing, Harden said, the United States dairy industry’s two main competitors, the European Union and New Zealand, are facing challenging supply outlooks as well as government policies limiting their capacity to grow.

“We’re kind of in this perfect situation coming where our biggest competitors have limitations that we really don’t have,” she said. “We still do have a robust support for agriculture in our country. Our farmers are getting more and more sustainable, and they are doing this the right way, which will put us I believe at the top of the heap in the short term.”

U.S. cheese exports rose 12 percent in volume in 2022, hitting a record 451,000 metric tons, which is good news for Idaho since most of the 13 billion pounds of milk produced in the state each year is used to make cheese.

Idaho ranked No. 3 in the U.S. last year in total milk production and the record export numbers certainly are welcome news since the vast majority of dairy products produced in Idaho are exported, said Rick Naerebout, executive director of the Idaho Dairymen’s Association.

“It’s definitely good news for a state like Idaho that makes so many milk ingredients that are exported,” he said.

While dairy export growth is good news for the U.S. and Idaho dairy industry, he added, current farm-level dairy prices are not doing so well right now.

Farm-level milk prices in Idaho and the U.S. reached record levels last year but prices on the futures market are currently below the cost of production.

At the same time, dairy production expenses remain at record levels.

“All of these inflationary costs are hitting the bottom line now,” Naerebout said. “We’ve never seen our costs this high. It’s astounding.”

Idaho dairy producers need to make about $21 to $22 per hundred pounds of production to break even right now.

“There are a lot of $17s and $18s on the futures board right now,” Naerebout said.

Depending on how the year plays out, that could amount to some significant losses for Idaho dairymen, he said.

“It’s a little bit scary what might transpire if we see those significant losses play out throughout the year,” Naerebout said.

If those losses do play out, Idaho dairymen will lose a significant amount of money this year and the end result will be more consolidation in the industry, he said.

“We will still have a healthy dairy industry in Idaho, we’ll just have fewer dairymen be a part of it,” Naerebout said.