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Dairy heifer exports slow and headed for challenging year

Progressive Dairy Editor Dave Natzke Published on 07 April 2022

After setting a three-year high in 2021, the export of U.S. dairy heifers is off to a slow start in 2022. Although February’s numbers were boosted by a large shipment to Pakistan, dairy heifer exporters warn the outlook for the rest of the year has turned cloudy.

Dairy heifer export totals for the month were estimated at 2,619 head, up from just 195 head in January, based on USDA Foreign Ag Service (FAS) data. Nearly all of the February exports went to Pakistan at 2,584 head. The remaining 35 head moved to Canada.

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Through the first two months of the year, FAS reported U.S. dairy heifer exports at just 2,814 head, the smallest two-month total since 2016. Year-to-date exports to Canada and Mexico stand at just 81 and 134 head, respectively.

Challenges ahead

“Things are off to a slow start, [and] frankly I think we are at the high point of the year for heifer exports,” according to Tony Clayton, Clayton Agri-Marketing Inc., Jefferson City, Missouri. He cites limited heifer supplies, higher prices and transportation costs, and geopolitical unrest.

Supplies of U.S. dairy heifers for export continue to be tight as more U.S. dairy cows are bred with beef sires. One indicator of that management change is reflected in the annual sales of dairy semen, as reported by the National Association of Animal Breeders (NAAB).

Based on latest sales reports, 2021 annual domestic dairy semen sales were estimated at about 17.15 million, the lowest total since 2004. In contrast, unit sales of beef semen rose to 8.7 million, up nearly 1.5 million from 2020 and the highest total on record.

Over the past three years, annual domestic unit sales of dairy semen fell from 21.87 million in 2018 to 19.5 million in 2019 and 18.38 million in 2020. U.S. dairy cow numbers were down by about 57,000 head when comparing 2021 to 2018.

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Under a different management system, the number of beef semen units sold domestically increased from 4.04 million in 2018 to 5.83 million in 2019, 7.2 million in 2020 and nearly 8.7 million in 2021. Despite the large increase in beef semen sales, the number of U.S. beef cows that calved were down by about 1.34 million head when comparing 2021 to 2018.

Clayton fears the pendulum has swung too far, with available dairy heifers in the hands of producers who plan to use them at home, and many heifer growers who traditionally supplied heifers for export exiting that market. With smaller inventories, prices and costs to acquire them are rising.

“I don't think you will see many if any shiploads of cattle being exported from the U.S. in the near future because many buyers around the world are in a bit of ‘sticker shock’ of what cattle will cost,” Clayton said.

Transportation costs are being driven even higher due to the Ukraine-Russia conflict, which is also affecting regional heifer supplies, he added. With Russia not importing cattle, a few more cattle are available for sale in Denmark, Germany and the Netherlands. Even so, the European Union will not have the numbers available to satisfy the world demand for pregnant dairy heifers, Clayton said.

Pakistan market changing

Pakistan has been the largest import market of U.S. dairy cattle for the last couple of years, importing more than 9,300 head in 2021. After February’s large shipment, however, that market may be closing. Clayton said the Pakistan government has imposed a 22% tax on imported cattle, creating financial difficulties for importers and forcing heifer suppliers to look for other markets where export costs are more favorable.

One bright spot is Bangladesh, which is in search of high-genomic cattle and providing a new market for registered U.S. Holstein cattle. Clayton’s company recently made a fifth shipment of registered Holstein cattle to that emerging market, with two more shipments planned for May.

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Gerardo Quaassdorff, T.K. Exports Inc., Boston, Virginia, said the challenges to cattle exporters that emerged last fall are growing as 2022 gets underway.

“Last November, most of the decisions to import cattle were on standby due to volatile [currency] exchange rates in importing countries and the increasing cost of fuel for transportation,” Quaassdorff explained.

In March there’s the added uncertainty of war and economic sanctions, he said. Furthermore, logistical challenges, including ongoing port backlogs and unreliable shipping schedules, are preventing heifer exporters from making shipments due to concerns over low profitability, which has resulted in postponements of export decisions until later in the year.

Creating additional roadblocks are European animal welfare regulations and cumbersome government animal health or genetic requirements.

Despite the cloudy outlook, inquiries seeking U.S. dairy and cattle continue to come from all regions of the world, Quaassdorff said. Religious festivals also create demand for U.S. feeder cattle for beef.

Although the perception that U.S. cattle are more expensive and transportation costs are less competitive than those sourced from Europe, the U.S. is becoming the largest supplier of live cattle.

The dwindling supplies of dairy animals worldwide is impacting global milk production and marketing, Clayton said. Shortages of fresh milk are forcing some countries to import powdered milk. “That, along with the shortage of wheat for bread, will really challenge a couple of the basic foods of life around the world,” he said.

Because of that, Quaassdorff sees potential for the market to improve after the Ukraine-Russia war is settled and as COVID-19 restrictions continue to scale back.

“Importing countries need to replenish dairy and beef populations to maintain regular supplies of dairy and beef products and meet food securities goals,” Quaassdorff said.  end mark

Dave Natzke
  • Dave Natzke

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