US cheese flood: Uncle Sam lands cheap cheese in Australia

US dairy exporters are undercutting Australian dairy processors, following New Zealand in pushing Australian-made cheese off supermarket shelves.

United States dairy exporters are landing cheese on Australian wharves for $7.29 a kilogram, while its dairy farmers are paid an average $9.65 per kilogram milk solids.

Customs data collated by Dairy Australia shows the US shipped 34,121 tonnes of cheese to Australia in 2022-23 at a landed customs price (including insurance and shipping) of $248.6 million – equivalent to $7.28 a kilogram.

Yet US farmers have been paid a weighted average of $9.65 per kilogram of milk solids this year, based on US Department of Agriculture reporting an “all milk” pooled price of $US20.20 per hundred weight.

Dairy Australia economist John Droppert that while all US milk price may be sitting at $US20.20/cwt, most of what was being poured into US cheese was class-three milk, which in October had a farmgate value of $US16.84/cwt or about $8.05/kgMS.

But even so an average landed price of $7.29/kgMS for US cheese is undercutting Australian dairy processors Saputo, Fonterra and Bega.

US dairy imports soared from $300m to $420m in the 12 months to June 30 this year.

New Zealand cheese, which was landed in Australia for an average price of $7.62/kg in 2022-23, has already pushed Australian-made cheese off supermarket shelves.

Mr Droppert said US cheese imports were doing the same by flooding into local food services and manufacturing sectors.

He said tough economic times meant everyone was looking to protect their margins, and “US product was typically at a very competitive price”.

Customs data shows the value of all US dairy imports soared from $300m to $420m in the 12 months to June 30 this year as the world’s largest economy looks to offload excess milk.

US milk production grew 35 per cent from 2000 to 2022, while per capita domestic consumption fell 32 per cent.

“They’ve (the US) got a large pool of milk and are looking for high value markets to develop,” Mr Droppert said.

“Prior to 10 years ago they were in and out of (export) markets. But they’ve been pushing exports and themselves as reliable suppliers.”