Southeast Asia's import demand for skim milk powder: Implications for US exporters

Dairy industries in Southeast Asia are small and produce less than the domestic market demands. As expenditure and population grow in Southeast Asia, it is expected that the expenditures on skim milk powder (SMP) will grow. In this study, we examined the competitiveness of US SMP in the Southeast Asian market with respect to other leading dairy exporters, including the European Union (EU-28), New Zealand, and Australia. Using monthly data from 2006 to 2015, Rotterdam models were used to estimate import demands for SMP in 4 Southeast Asian countries. In a scenario using annual averages from 2013 to 2015 as a baseline, our findings suggest that a 10% reduction in the US price of SMP would cause Indonesia, Singapore, Vietnam, and the Philippines SMP imports from the United States to increase by 3.96, 0.44, 2.68, and 1.94 kt, respectively. Under the same scenario, the value of US SMP imports would decrease for Indonesia, Vietnam, and the Philippines by $4.12, $2.93, and $2.48 million, respectively; however, the value of US SMP to Singapore would increase by $0.20 million. Singapore and Indonesia expenditures for the US SMP are elastic, which means that as expenditure and population in Southeast Asia continue to grow, a 1% increase in SMP expenditure in Singapore and Indonesia would result in 1.25 and 1.20% increases in US SMP exports.