Economic

Research

Service

Economic

Research

Report

Number 278

December 2020

Prospects for Growth in U.S. Dairy 

Exports to Southeast Asia

Christopher G. Davis and Jerry Cessna
Economic Research Service 

www.ers.usda.gov

Recommended citation format for this publication:

Davis, Christopher G. and Jerry Cessna. December 2020. Prospects for Growth in U.S. 

Dairy Exports to Southeast Asia, ERR-278, U.S. Department of Agriculture, Economic 

Research Service.

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Economic

Research

Service

Economic

Research

Report

Number 278

December 2020

Prospects for Growth in U.S. Dairy 

Exports to Southeast Asia

Christopher G. Davis and Jerry Cessna

Abstract

Food demand in Southeast Asia (SEA) is expected to grow in the coming decades, creating 

opportunities for exporters of dairy products. The top dairy product suppliers to the region are 

New Zealand, the European Union (EU), the United States, and Australia. This study analyzes 

trends in market share over the 2006-18 timeframe and the price sensitivity for the top four 

U.S. dairy products imported by SEA countries: skim milk powder (SMP), whey products, 

cheese, and lactose. In 2018, these four products accounted for 85 percent of the total value of 

SEA dairy imports from the United States. Our findings show differing trends in market share 

and price sensitivity across products and countries. Our analysis reveals that SEA importers are 

more likely to substitute U.S. products for EU dairy products than for dairy products from New 

Zealand or Australia. Our research indicates that the United States has the potential to gain 

market share as import expenditures increase (holding prices constant) for cheese in Indonesia; 

whey products in Malaysia, Singapore, and the Philippines; SMP in Indonesia and Vietnam; 

and lactose in the Philippines, Indonesia, and Malaysia. SEA imports of U.S. dairy products are 

sensitive, in varying degrees, to changes in U.S. prices—as well as price changes for products 

from competing suppliers, such as the EU, Australia, and New Zealand.

Keywords: Southeast Asia dairy imports, ASEAN, dairy trade, international dairy markets, 

dairy price elasticities, dairy expenditure elasticities, Rotterdam model, dairy price sensitivity, 

dairy market share, dairy competition.

Acknowledgments

The authors thank Stephen Devadoss of Texas Tech University; Frank Kyekyeku Nti, Paul 

Kiendl, Eric Mullis, Ryan Bedford, William Verzani, Lisa Ahramjian, Megan Francic, Joseph 

Degreenia of USDA, Foreign Agricultural Service; and one anonymous reviewer for taking 

time to review the report, and for providing helpful comments. They also thank Fred Gale and 

John Dyck of USDA,ERS for their expertise in Asian markets, and Jonathan Law of ERS for 

map design; Christopher Whitney and Angela Brees of ERS for editorial services; and Chris 

Sanguinett and Cynthia Ray of ERS for design services. 
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Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

A Look at SEA Dairy Imports by Product, Trading Partner, and Over Time . . . . . . . . . . . . . .7

A Closer Look at SEA Dairy Imports by Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Elasticity Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Objectives of Empirical Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Rotterdam Model for Import Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Brief Discussion on Dairy Tariffs of SEA Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Data for Empirical Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Summary of Empirical Results Concerning SEA Imports From the United States . . . . . . . .23

Scenario Analyses To Illustrate Trade Implications for the United States . . . . . . . . . . . . . . . .26

Baseline for the Scenarios ......................................................26

Impact of a 10-Percent Reduction in the Import Price for U.S. Whey Products .............26

Impact of 10-Percent Increase in Whey Products Expenditures by SEA Countries ..........29

Summary and Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

Detailed Empirical Results .....................................................34

Cheese Imports ..............................................................34

Whey Product Imports .........................................................37

SMP Imports ................................................................40

Lactose Imports ..............................................................43

Butterfat Product Imports ......................................................45

Whole Milk Powder Imports ....................................................46

Contents
ERS is a primary source 

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analysis from the U.S. 

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providing timely information on economic and policy 

issues related to agriculture, 

food, the environment, and 

rural America.

A report summary from the Economic Research Service December 2020

Prospects for Growth in U.S. Dairy 

Exports to Southeast Asia

Christopher G. Davis and Jerry Cessna

What Is the Issue?

The demand for dairy products in Southeast Asia (SEA) is expected to grow in the coming 

decades, creating opportunities for exporters in the United States and other countries. Top dairy 

suppliers to the region include New Zealand, the European Union (EU), the United States, 

and Australia. This study examines the prospects for growth of U.S. dairy exports to the SEA 

region, U.S. competitors in these markets, and the price sensitivity of SEA demand for the four 

top U.S. products imported by the region. In addition, this study explains how the U.S. potential 

to gain or lose market share varies from one SEA country to another and among products.

What Did the Study Find?

Trends in market share and sensitivity to prices for U.S. dairy products vary across countries 

and products. By examining trade patterns and using a statistical modeling approach, this study 

shows: 

• SEA total dairy imports have grown in recent years, from $3.8 billion in 2006 (valued in 

constant 2018 U.S. dollars) to $6.3 billion in 2018. SEA dairy imports from the United 

States grew from $401 million in 2006 (valued in constant 2018 U.S. dollars) to $738 

million in 2018. Over this period, the United States moved from the fourth to the third 

largest SEA dairy product supplier, behind New Zealand and the EU.

• Skim milk powder (SMP), whey products, lactose, and cheese are the major U.S. dairy 

products imported by SEA countries. SMP was SEA’s top dairy product imported, by 

value, from the world and from the United States in 2018. Although the EU was the 

top supplier of SMP to the region in 2018, the United States was the largest supplier of 

SMP to the Philippines and Indonesia. And while the EU was the largest supplier of 

whey products to the region, the United States was the largest supplier of whey products to Vietnam; the United States was the second largest supplier of whey products to 

Indonesia. The United States was the top supplier of lactose to the region and supplied 

over half of the lactose imports, by value, to the SEA region in 2018. The region imported 

less cheese from the United States than from New Zealand, the EU, and Australia in 

2018; however, SEA cheese imports from the United States have grown significantly 

since 2006.

www.ers.usda.gov

Summary
• Cheese has been the dairy product most consistently imported by SEA countries from most trading partners. Each of the five major SEA importing countries imports cheese from several trading partners almost

every month. In addition to New Zealand, the EU, Australia, and the United States, consistent suppliers to

the region also include Switzerland and Japan.

• SEA countries were sensitive to changes in U.S. export prices of dairy products in varying degrees. An

analysis of 2006-16 data found that Malaysia and Singapore were the most sensitive to changes in U.S.

cheese prices, while Malaysia and Indonesia were the most sensitive to changes in U.S. SMP prices.

Malaysia was also sensitive to fluctuations in U.S. whey product prices. In some cases, SEA demand for

U.S. dairy products increased or decreased significantly in response to price changes for products from

competing suppliers, such as the EU, Australia, and New Zealand.

• If past trends continue, rising import expenditures in SEA could lead to an increase in U.S. market share

for cheese, whey products, SMP, and lactose in some countries. If dairy import expenditures grow in SEA,

the United States could gain market share for cheese in Indonesia; whey products in Malaysia, Singapore,

and the Philippines; SMP in Indonesia and Vietnam; and lactose in the Philippines, Indonesia, and

Malaysia. By contrast, the United States could lose market share for cheese imports in the Philippines,

Malaysia, and Singapore. Although imports of cheese from the United States could grow for these countries, cheese imports from other trading partners may grow at a faster rate.

• The EU has been the chief competitor for the United States in the SEA dairy market. Over the 2006-16

timeframe, SEA importers were more likely to substitute U.S. dairy products for EU dairy products than

for products from New Zealand or Australia. There are substitute relationships between the United States

and the EU for cheese in Singapore; whey products in the Philippines and Malaysia; SMP in Indonesia

and Singapore; and lactose in the Philippines, Indonesia, and Vietnam. The magnitude of these relationships between U.S. and EU dairy products could identify which of the two countries will benefit the most

in trade, given a change in price.

Note: Sensitivities to prices and expenditures may potentially be much different than this study would indicate 

under conditions brought about by the coronavirus COVID-19 pandemic. At the time of publication, the potential impacts of the virus on economic trade are uncertain. The findings discussed below would be most representative if market conditions post-COVID-19 are similar to those in the 2006-16 time period.

How Was the Study Conducted?

The study examined trade patterns and used a statistical modeling approach—the Rotterdam model—to estimate the sensitivities of price and dairy import expenditures on demand for dairy imports from five SEA countries. A Rotterdam model is a system of equations often used in econometric studies of consumer demand. The 

trade data were accessed through the Global Trade Atlas (GTA) database. Monthly import data from 2006 to 

2016—including volumes, values, and tariff rates—were used for the Philippines, Indonesia, Malaysia, and 

Singapore. Since Vietnam import data are not published, export data of Vietnam’s trading partner countries 

were used. Annual tariff data from the World Integrated Trade Solution (WITS) database were employed for 

each country. Unit values (trade values divided by volumes) plus tariffs were used as import price proxies. 

Sensitivity measurements, known as elasticities, were calculated for prices of dairy products from each 

supplying country (own-price elasticities), prices of dairy products from competing suppliers (cross-price elasticities), and dairy import expenditures of importing countries (import expenditure elasticities). 

www.ers.usda.gov
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Prospects for Growth in U.S. Dairy Exports 

to Southeast Asia 

Introduction

Southeast Asia (Philippines, Indonesia, Malaysia, Vietnam, Thailand, Singapore, Brunei 

Darussalam, Cambodia, Laos, and Myanmar [see figure 1]) is a region characterized by rapid 

economic growth, urbanization, and changing food consumption patterns. Most Southeast Asia 

(SEA) countries produce only small milk quantities. High-production milk cow breeds do not 

perform very well in hot, humid conditions that exist in much of the SEA region. Many of the SEA 

countries have a lack of grassland, which also limits milk production capacity. With expectations 

for strong economic growth but limited potential for milk production growth, SEA countries are 

a growing market for imported dairy products. In 2018, SEA countries imported dairy products 

totaling about $6.3 billion (table 1), up 66 percent from 2006 (valued in 2018 constant dollars). 

Figure 1

Southeast Asian countries

Source: Environmental Systems Research Institute (ESRI) based map data, 2019.
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In 2018, the top six dairy products imported into SEA, by value, were skim milk powder (SMP)1, 

whole milk powder (WMP), infant formula, butterfat products (including butter, anhydrous milk fat, 

butteroil, and some high-fat dairy spreads), cheese, and whey products (including dry whey, modified whey, whey protein concentrate, and milk albumin) (table 1). The major products imported 

from the United States in 2018 were SMP ($382 million), whey products ($114 million), cheese ($73 

million), and lactose ($58 million, included with “other dairy products” in table 1). Cheese was the 

dairy product most consistently imported by SEA countries from 2006 to 2018; each of the top five 

SEA importing countries imported cheese from more than one trading partner almost every month. 

Cheese imports to SEA from the United States were substantially less than each of its major trading 

partners (New Zealand, the European Union (EU), and Australia) in 2018. 

Table 1

Southeast Asia dairy product import values for all trading partners and the United States 

(millions of constant U.S. 2018 dollars)

Product

2006 2018

All trading partners United States All trading partners United States

Skim milk powder 1,074.3 237.3 1,337.4 381.6

Whole milk powder 946.9 17.9 1,018.2 57.3

Infant formula 358.0 0.4 838.2 5.8

Butterfat products 232.6 0.9 798.0 3.0

Cheese 188.8 10.1 642.0 72.5

Whey products 310.1 70.3 504.8 113.5

Other dairy products 708.8 64.1 1,207.2 104.7

Total 3,819.5 401.0 6,345.6 738.3

Totals may not add precisely due to rounding.

This table aggregates imports of Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, 

Thailand, and Vietnam.

Import data are used for countries that report such data. For countries that do not have import data reported in the Global Trade Atlas, 

export data of trading partners are used.

Sources: Global Trade Atlas, Trade Data Monitor, U.S. Bureau of Labor Statistics, and USDA, Economic Research Service 

calculations.

1Export data do not distinguish between two very similar products, nonfat dry milk and skim milk powder. In this report, 

skim milk powder (SMP) refers collectively to both nonfat dry milk and skim milk powder. Nonfat dry milk is defined by a 

U.S. Food and Drug Administration Standard of Identity. Skim milk powder is defined by Codex Alimentarius international 

standards. SMP is often used when talking about the products collectively since SMP has an international standard. The products traded under HS code 040221 (Harmonized System code used by member countries of the World Trade Organization) 

are identified as “SMP” in this report. For a discussion of domestic and international standards for milk powders, see Growth 

of U.S. Dairy Exports by Cessna, et al., Appendix B, Discussion of Domestic and International Standards for Milk Powders. 
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The SEA market is a potential growth market for U.S. dairy products, but U.S. products must 

compete with products from other exporters (figure 2). In 2018, SEA dairy imports from the United 

States totaled $738 million. This total was well below imports from New Zealand (USD 2.084 

billion) and the EU (USD 1.557 billion) but more than dairy imports from Australia (USD 602 

million). While SEA dairy imports from New Zealand, the EU, and the United States all grew from 

2006 to 2018, dairy imports from Australia fell. The United States rose in rank from fourth to third, 

while Australia fell from third to fourth. There has also been some dairy trade among countries 

within the region. Three SEA countries—Singapore, Thailand, and Malaysia—supplied SEA dairy 

imports totaling USD 882 million in 2018. 

Figure 2

Southeast Asia dairy import values by trading partner

Southeast Asia includes Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, 

and Vietnam.

Import data are used for countries that report such data. For countries that do not have import data reported in the Global 

Trade Atlas or Trade Data Monitor, export data of trading partners are used.

Sources: Global Trade Atlas, Trade Data Monitor, U.S. Bureau of Labor Statistics and USDA, Economic Research Service 

calculations.

The top SEA importer of dairy products from the world by value in 2018 was Malaysia 

(figure 3). Malaysia also had the greatest growth of dairy imports, from $702 million in 2006 

(valued in constant 2018 U.S. dollars) to $1.229 billion in 2018. The country with the second highest 

dairy import value in 2018 was Indonesia, with dairy imports valued at $1.152 billion, followed by 

the Philippines at a close third of $1.121 billion. Vietnam had the greatest percentage increase, more 

than doubling from $340 million in 2006 (in constant 2018 U.S. dollars) to $836 million in 2018. 

Indonesia, the Philippines, Singapore, and Thailand also had substantial growth of dairy imports. 

The Philippines was the largest SEA importer of U.S. dairy products in 2018 by value and had the 

largest growth between 2006 and 2018 (figure 4). Indonesia, Vietnam, Malaysia, and Singapore 

all increased imports of U.S. dairy products between 2006 and 2018. Of the top six SEA dairy 

importing countries, Thailand was the only country for which U.S. dairy imports (valued in 2018 

constant dollars) declined over the period.

 
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Figure 3

Total dairy imports for Southeast Asia countries

Import data are used for Indonesia, Philippines, Malaysia, Singapore, and Thailand. For Vietnam and some other Southeast Asia 

countries, export data from trading partners are used because import data are not reported in the Global Trade Atlas or Trade Data 

Monitor. Other Southeast Asia countries include Brunei Darussalam, Cambodia, Laos, and Myanmar. 

Sources: Global Trade Atlas, Trade Data Monitor, and USDA, Economic Research Service calculations.

Figure 4

Dairy imports from the United States for top six Southeast Asia dairy importing countries

Import data are used for all countries except Vietnam. Since Vietnam import data are not reported in Global Trade Atlas or 

Trade Data Monitor, export data for partner countries are used.

Sources: Global Trade Atlas, Trade Data Monitor, and USDA, Economic Research Service calculations.

Rising incomes and population growth in SEA contributed to the growth of dairy product consumption. Real gross domestic product (GDP) in SEA grew by 81.1 percent from 2006 to 2018, the population grew by 14.3 percent, and real per capita GDP grew by 58.5 percent (table 2). 

As GDP has grown throughout the region, SEA countries have been following a dietary transition 

common throughout Asia: Per capita consumption of meat and dairy products tends to rise while 

consumption of staple foods like rice and coarse grains falls (Pingali, 2007).

 

2006 2018

 

2006 2018
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Table 2

Selected macroeconomic data for Southeast Asia

Country

Real GDP, billions of

constant 2010 U.S. dollars Population in millions

Real per capita GDP, 

constant 2010 U.S. dollars

2006 2018

Percent

increase 2006 2018

Percent 

increase 2006 2018

Percent 

increase

Indonesia 603 1,147 90.3 232.2 262.8 13.2 2,595 4,364 68.2

Thailand 298 442 48.3 65.5 68.6 4.8 4,550 6,437 41.5

Malaysia 216 382 76.7 26.4 31.8 20.3 8,183 12,013 46.8

Singapore 188 328 74.4 4.7 6.0 27.2 39,952 54,777 37.1

Philippines 165 322 95.2 86.7 105.9 22.2 1,905 3,044 59.8

Vietnam 91 188 105.6 85.5 97.0 13.5 1,068 1,934 81.0

Other S.E. Asia1 61 130 112.5 69.56 79.76 14.7 880 1,631 85.3

Southeast Asia 1,623 2,939 81.1 570.5 651.9 14.3 2,844 4,509 58.5

1Other Southeast Asia countries include Brunei Darussalam, Cambodia, Laos, and Myanmar.

Source: World Bank and U.S. Department of Commerce, Bureau of the Census.

Indonesia had the highest population of the region by far (262.8 million) in 2018. The Philippines 

population size was a distant second (105.9 million), followed by Vietnam (97.0 million), Thailand 

(68.6 million), and Malaysia (31.8 million). Singapore’s population was much smaller (6.0 million).

There is wide diversity in incomes across the SEA region. Singapore, with real GDP per capita 

among the highest in the world at $54,777 in 2018 (valued in 2010 constant dollars), has been in 

dietary transition to greater consumption of milk products for decades. The transition is in very early 

stages in countries in the region with low incomes—such as Myanmar, Cambodia, and Laos—all 

with GDP per capita of less than $1,000 in 2018. The rest of the countries—Indonesia, Thailand, the 

Philippines, Malaysia and Vietnam—are in the middle of the dietary transition. These differences 

influence the rate of growth and the mix of dairy products consumed in each country. 

None of the SEA countries produce large quantities of milk. Most countries have tropical climates 

that limit milk yield per cow, and some countries have little land suitable for dairy farming. Most 

milk produced in the region is used for domestic fluid beverage milk needs. Thailand was the largest 

SEA milk producer in 2018, with dairy farms producing 2.7 billion pounds of milk (solid-corrected 

milk, or SCM 2) (table 3). Thai government support for the dairy sector contributed to its growth 

over the last 20 years (Chungsiriwat and Panapol, 2010). Indonesia was the second largest milk 

producer, producing 2.0 billion pounds, followed by Vietnam, which produced 1.9 billion pounds. 

With intervention by the Vietnamese Government through a National Dairy Development Plan 

(NDDP), Vietnam had the greatest increase in milk production from 2005 to 2018, an increase of 1.5 

billion pounds.3 The NDDP focused largely on a breeding strategy of developing Holstein-Friesian 

cross-bred cattle (Phong, 2010). 

2SCM = solid corrected milk. The SCM calculation adjusts for milk components to allow milk production estimates 

comparable from one country to another. The International Farm Comparison Network computation for milk production data 

presented in table 3 adjusts milk production to 4 percent milk fat and 3.3 percent protein using the following formula: SCM = 

(milk production X (fat percent + true protein percent) / 7.3).

3For table 3, 2005 milk production data are displayed in contrast to other tables that show data from 2006. Comparable 

milk production data for 2006 are not readily available.
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Table 3

Milk production and per capita milk production in selected Southeast Asia countries

Country

2005 2018

Milk production

(mil. pounds, SCM)

Per capita milk

production (pounds)

Milk production

(mil. pounds, SCM)

Per capita milk

production (pounds)

Thailand 1,874 28.8 2,668 38.9

Vietnam 419 5.0 1,962 20.2

Indonesia 1,124 4.9 1,896 7.2

Malaysia 44 1.7 88 2.8

Philippines1 22 0.3 44 0.4

SCM = solid-corrected milk, assuming 4 percent milk fat and 3.3 percent true protein.

SCM = (milk production X (fat percent + true protein percent) / 7.3

1International Farm Comparison Network indicates that milk production for the Philippines includes that of cows and buffalos. 

Only milk production of cows is indicated for the other countries in this table.

Sources: International Farm Comparison Network, U.S. Census Bureau; USDA, Economic Research Service calculations.

Thailand had the highest milk production per capita in 2018, at 38.9 pounds of milk (SCM) per 

person. For all the countries, milk production per capita has been increasing, with the greatest percapita increase for Vietnam (from 5.0 pounds in 2005 to 20.2 pounds in 2018). However, for all 

the SEA countries, milk production per capita has been relatively low. As a frame of reference, the 

United States had milk production per capita of 642.2 pounds of milk (SCM) in 2018. 

Countries with relatively low milk production per capita are more likely to have greater import 

needs as incomes rise. Taking population, income, and milk production into account helps us gain 

an understanding of the differences in dairy import values among the SEA countries. For example, 

although Indonesia had more than eight times the population of Malaysia in 2018 (table 2), Malaysia 

had the highest dairy imports (figure 3). Malaysia’s milk production is very small for its population size, only 2.8 pounds per person compared to Indonesia’s 7.2 pounds per person. Dairy imports 

for the Philippines were almost as high as those for Indonesia. Per capita milk production for the 

Philippines is extremely small at 0.4 pounds per person. It is interesting that Singapore, with a population of only 6.0 million in 2018, had higher dairy imports by value than Vietnam, with a population of 97.0 million. Singapore’s high income and lack of milk production have undoubtedly been 

important reasons for the relatively high dairy import value for such a small country.
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A Look at SEA Dairy Imports by Product, Trading Partner, 

and Over Time

Table 4 provides for an examination of SEA dairy import values along three dimensions: by product, 

trading partner, and over time (showing data for 2006 and 2018). Trading partners for the region are 

listed in order from top to bottom by import value for 2018, and dairy products are listed from left to 

right in order by import value. 

New Zealand was the top supplier of WMP, butterfat products, cheese, and casein products in 2018. 

The EU was the top supplier of SMP and whey products. The United States was the top supplier of 

lactose. Singapore was the top supplier of infant formula to the region. Singapore has virtually no 

milk production; dairy products supplied by Singapore are manufactured from dairy ingredients 

supplied by other countries. Imports of dairy products such as ice cream, evaporated milk, and 

yogurt were largely supplied by countries within the SEA region (Thailand and Malaysia) since 

these products are bulky (with high water content) and perishable, making them expensive and difficult to transport long distances.

The United States was the second highest supplier of SMP and whey products to SEA in 2018. Of 

the total SEA dairy imports from the United States of $738.3 million in 2018, SMP accounted for 

most of the value (51.7 percent). Whey products, cheese, and lactose accounted for 15.4 percent, 9.8 

percent, and 7.9 percent of total SEA imports from the United States, respectively.

SEA imports of dairy products grew from $3.820 billion in 2006 (valued in constant 2018 dollars) 

to $6.346 billion in 2018, an increase of 66.2 percent. U.S. market share increased from 10.5 percent 

to 11.6 percent over that period. Market shares for New Zealand and the EU also increased, but the 

market share for Australia declined.
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Table 4Southeast Asia dairy product import values by trading partner and product (millions of constant U.S. 2018 dollars) 

2018

Trading partner

Skim 

milk 

powder

Whole 

milk 

powder

Infant 

formula

Butterfat 

products Cheese

Whey 

products

Fluid 

milk 

and 

cream

Ice 

cream

Evap. 

and 

cond. 

milk Lactose Yogurt

Cas

produ

New Zealand 304.3 761.1 29.1 538.3 221.4 20.6 81.9 2.1 1.5 8.5 0.7 35European Union 431.2 104.5 166.8 153.0 153.7 288.6 76.1 22.6 21.7 36.5 13.5 8United States 381.6 57.3 5.8 3.0 72.5 113.5 6.2 16.8 4.4 58.3 1.1 0

Australia 171.5 44.6 20.5 58.0 144.8 32.7 82.6 2.9 8.4 4.0 22.8 0

Singapore 1.7 6.1 292.8 0.5 5.9 0.4 5.0 0.8 1.9 0.1 0.5 0

Thailand 2.6 8.0 84.5 2.2 3.3 3.2 93.4 62.2 12.5 0.6 34.6 0

Malaysia 10.3 16.7 82.1 9.6 1.4 1.3 2.2 17.6 87.4 0.1 4.6 0

Rest of world 34.3 20.0 156.6 33.6 38.8 44.5 15.9 91.6 16.3 7.1 10.1 6

Value per product 1,337.4 1,018.2 838.2 798.0 642.0 504.8 363.3 216.5 154.2 115.1 87.9 49

Percent per product 21.1 16.0 13.2 12.6 10.1 8.0 5.7 3.4 2.4 1.8 1.4 0

2006

Trading partner

Skim 

milk 

powder

Whole 

milk 

powder

Infant 

formula

Butterfat 

products Cheese

Whey 

products

Fluid 

milk 

and 

cream

Ice 

cream

Evap. 

and 

cond. 

milk Lactose Yogurt

Cas

produ

New Zealand 420.0 365.7 17.4 108.3 60.4 13.1 19.6 1.1 3.7 11.4 0.5 25

European Union 103.0 118.1 139.9 54.4 33.6 142.2 12.2 9.0 2.2 19.3 2.3 47

United States 237.3 17.9 0.4 0.9 10.1 70.3 2.7 3.2 5.8 41.1 0.5 0

Australia 275.5 200.8 26.3 57.3 73.6 67.2 28.7 2.8 16.1 5.3 5.4 5

Singapore 7.3 66.4 99.8 4.2 2.8 3.0 3.1 0.7 24.0 0.4 0.3 0

Thailand 1.9 21.8 24.6 0.4 0.2 6.4 33.4 22.2 84.9 0.2 9.9 0

Malaysia 4.9 51.3 36.9 1.7 0.6 0.6 1.4 11.1 10.6 0.1 4.6 0

Rest of world 24.4 104.9 12.6 5.4 7.7 7.3 16.4 16.2 8.9 2.8 3.7 8

Value per product 1,074.3 946.9 358.0 232.6 188.8 310.1 117.7 66.4 156.2 80.6 27.0 88

Percent per product 28.1 24.8 9.4 6.1 4.9 8.1 3.1 1.7 4.1 2.1 0.7 2

Notes: Evap.=Evaporated milk. Cond.=Condensed milk. Totals may not add precisely due to rounding.This table aggregates imports of Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.Import data are used for countries that report such data. For countries that do not have import data reported in the Global Trade Atlas, export data of trading pSources: Global Trade Atlas, Trade Data Monitor, U.S. Bureau of Labor Statistics, and USDA, Economic Research Service calculations.
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A Closer Look at SEA Dairy Imports by Country

Tables 5 through 10 provide data for each of the top six SEA dairy importing countries by product, 

by trading partner, and by changes over time. The tables are listed in order of rank by import value 

from the United States in 2018 (the Philippines, Indonesia, Vietnam, Malaysia, Singapore, and 

Thailand), and imports from the United States are emphasized in this brief discussion. 

Of the top six SEA dairy importing countries in 2018, dairy import values from the United States 

ranged from $212.0 million for the Philippines (18.9 percent of the Philippines total dairy imports) 

to $38.1 million for Thailand (5.1 percent of Thailand’s total dairy imports). For the Philippines, 

Indonesia, and Singapore, the U.S. market-share percentage increased from 2006 to 2018. However, 

for Vietnam, Malaysia, and Thailand, the U.S. market-share percentage declined. 

For the Philippines, Indonesia, and Malaysia, SMP was the top dairy product imported by value 

in 2018; infant formula was at the top for Vietnam; and whole milk powder was at the top for 

Singapore and Thailand. Considering only dairy imports from the United States, SMP was the top 

dairy product imported by value for the Philippines, Indonesia, Vietnam, Malaysia, and Thailand. 

For Singapore, lactose was the top dairy product by value imported from the United States, totaling 

$14.2 million in 2018 (included in table 9 as part of “other dairy products”).

Table 5

Philippines dairy product import values by trading partner and product 

(millions of constant U.S. 2018 dollars)

2018

Trading Partner

Skim milk 

powder

Butterfat 

products Cheese

Infant 

formula

Evap. and 

cond. milk

Other 

dairy 

products

Value 

per 

partner

Percent 

per

partner

New Zealand 50.0 165.2 56.7 0.2 0.0 104.3 376.4 33.6

European Union 73.5 7.2 20.2 27.8 1.1 89.9 219.6 19.6

United States 136.9 0.0 23.7 0.0 0.1 51.3 212.0 18.9

Singapore 0.8 0.0 0.0 82.7 0.9 5.3 89.7 8.0

Rest of world 1.4 0.1 0.0 8.1 56.1 65.1 223.2 19.9

Value per product 286.1 186.4 135.2 126.3 71.2 315.9 1121.0 100.0

Percent per product 25.5 16.6 12.1 11.3 6.3 28.2 100.0

2006

Trading Partner

Skim milk 

powder

Butterfat 

products Cheese

Infant 

formula

Evap. and 

cond. milk

Other 

dairy 

products

Value 

per 

partner

Percent 

per

partner

New Zealand 103.4 13.6 22.8 5.7 0.1 118.5 264.2 38.9

European Union 3.6 0.8 2.5 51.9 0.1 45.7 104.6 15.4

United States 58.4 0.2 1.8 0.1 0.1 25.7 86.2 12.7

Singapore 1.0 1.0 0.4 29.6 0.6 7.1 39.6 5.8

Rest of world 69.5 6.8 10.2 10.3 20.2 68.1 185.2 27.2

Value per product 235.9 22.4 37.8 97.5 21.1 265.0 679.7 100.0

Percent per product 34.7 3.3 5.6 14.4 3.1 39.0 100.0

Sources: Global Trade Atlas, U.S. Bureau of Labor Statistics, Trade Data Monitor, and USDA, Economic Research Service 

calculations.
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Table 6

Indonesia dairy product import values by trading partner and product 

(millions of constant U.S. 2018 dollars)

2018

Trading Partner

Skim milk 

powder

Whole 

milk

powder

Whey 

products

Butterfat 

products Cheese

Other 

dairy 

products

Value 

per

partner

Percent 

per

partner

New Zealand 41.5 144.4 1.9 96.8 69.8 24.0 378.4 32.8

European Union 96.2 21.5 108.6 46.4 18.8 49.4 340.8 29.6

United States 104.6 5.6 21.5 0.0 21.8 17.4 170.9 14.8

Australia 72.4 0.8 16.9 3.1 20.4 7.0 120.6 10.5

Rest of world 8.1 0.1 12.4 5.3 5.9 109.9 141.7 12.3

Value per product 322.8 172.4 161.2 151.6 136.7 207.7 1152.3 100.0

Percent per product 28.0 15.0 14.0 13.2 11.9 18.0 100.0

2006

Trading Partner

Skim milk 

powder

Whole 

milk

powder

Whey 

products

Butterfat 

products Cheese

Other 

dairy 

products

Value 

per

partner

Percent 

per

partner

New Zealand 77.6 46.1 3.3 13.4 9.1 30.7 180.1 23.8

European Union 26.5 12.4 37.9 11.1 2.0 34.3 124.3 16.4

United States 78.4 9.1 9.7 0.0 4.1 6.4 107.8 14.3

Australia 39.0 66.5 26.5 6.3 22.3 10.7 171.4 22.7

Rest of world 12.0 129.0 1.1 0.6 0.7 28.7 172.2 22.8

Value per product 233.4 263.2 78.6 31.3 38.3 110.9 755.7 100.0

Percent per product 30.9 34.8 10.4 4.1 5.1 14.7 100.0

Sources: Global Trade Atlas, Trade Data Monitor, U.S. Bureau of Labor Statistics, and USDA, Economic Research Service 

calculations.
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Table 7

Vietnam, trading-partner value of dairy products exported 

(millions of constant U.S. 2018 dollars)

2018

Trading Partner

Infant 

formula

Skim 

milk 

powder

Whole 

milk

powder

Butterfat 

products

Whey 

products

Other 

dairy 

products

Value 

per 

partner

Percent 

per

partner

New Zealand 1.5 23.5 121.1 84.7 0.0 29.8 260.6 31.2

European Union 37.0 68.2 5.0 8.5 18.1 42.7 179.6 21.5

United States 2.2 67.2 30.6 0.0 21.9 22.4 144.4 17.3

Singapore 72.7 0.3 0.3 0.0 0.0 1.6 74.9 9.0

Rest of world 84.4 15.6 6.5 5.1 6.6 58.1 176.3 21.1

Value per product 197.8 174.9 163.5 98.3 46.6 154.6 835.7 100.0

Percent per product 23.7 20.9 19.6 11.8 5.6 18.5 100.0

2006

Trading Partner

Infant 

formula

Skim 

milk 

powder

Whole 

milk

powder

Butterfat 

products

Whey 

products

Other 

dairy 

products

Value 

per 

partner

Percent 

per

partner

New Zealand 0.0 22.8 68.9 20.6 0.4 4.4 117.1 34.4

European Union 27.5 23.7 2.1 3.6 11.7 11.2 79.8 23.5

United States 0.0 42.3 0.4 0.0 8.8 14.5 65.9 19.4

Singapore 0.1 0.9 7.8 1.4 0.5 0.5 11.1 3.3

Rest of world 13.5 16.8 20.9 5.0 2.7 7.3 66.3 19.5

Value per product 41.1 106.5 100.1 30.7 24.0 37.8 340.1 100.0

Percent per product 12.1 31.3 29.4 9.0 7.1 11.1 100.0

Sources: Global Trade Atlas, U.S. Bureau of Labor Statistics, Trade Data Monitor, and USDA, Economic Research Service 

calculations.
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Table 8

Malaysia dairy product import values by trading partner and product 

(millions of constant U.S. 2018 dollars)

2018

Trading Partner

Skim 

milk 

powder

Infant 

formula

Whole 

milk

powder

Butterfat 

products Cheese

Other 

dairy 

products

Value 

per

partner

Percent 

per

partner

New Zealand 89.7 14.0 183.0 93.0 39.0 48.3 467.1 38.0

European Union 79.4 70.1 5.8 14.8 27.3 104.9 302.4 24.6

Australia 22.5 5.5 9.8 16.5 39.1 31.7 125.1 10.2

United States 58.5 1.2 2.4 0.4 11.7 26.3 100.5 8.2

Rest of world 11.5 160.2 1.3 2.6 7.1 51.0 233.6 19.0

Value per product 261.6 251.1 202.3 127.3 124.3 262.3 1,228.7 100.0

Percent per product 21.3 20.4 16.5 10.4 10.1 21.3 100.0

2006

Trading Partner

Skim 

milk 

powder

Infant 

formula

Whole 

milk 

powder

Butterfat 

products Cheese

Other 

dairy 

products

Value 

per 

partner

Percent 

per 

partner

New Zealand 82.8 9.8 75.2 16.8 11.6 23.0 219.3 31.2

European Union 8.7 28.6 36.8 4.4 2.7 41.9 123.1 17.5

Australia 37.0 7.8 49.6 12.7 15.1 28.0 150.2 21.4

United States 31.9 0.0 2.7 0.1 1.7 22.9 59.4 8.5

Rest of world 2.0 54.8 8.3 0.5 1.4 82.7 149.7 21.3

Value per product 162.4 101.1 172.6 34.5 32.5 198.6 701.7 100.0

Percent per product 23.1 14.4 24.6 4.9 4.6 28.3 100.0

Sources: Global Trade Atlas, Trade Data Monitor, U.S. Bureau of Labor Statistics, and USDA, Economic Research Service 

calculations.
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Table 9

Singapore dairy product import values by trading partner and product 

(millions of constant 2018 U.S. dollars)

2018

Trading Partner

Whole 

milk 

powder

Skim 

milk 

powder

Butterfat 

products

Fluid 

milk and 

cream Cheese

Other 

dairy 

products

Value per 

partner

Percent 

per 

partner

European Union 47.2 60.5 59.2 23.4 33.6 60.0 283.9 31.1

New Zealand 115.3 43.5 48.2 5.7 14.4 29.7 256.8 28.1

Australia 10.3 22.1 13.8 36.1 29.9 26.5 138.8 15.2

United States 12.8 6.5 2.2 1.6 6.8 39.6 69.4 7.6

Rest of world 10.7 7.9 13.0 52.3 10.3 71.1 165.2 18.1

Value per product 196.3 140.4 136.4 119.3 95.0 226.8 914.1 100.0

Percent per product 21.5 15.4 14.9 13.0 10.4 24.8 100.0 0.0

2006

Trading Partner

Whole 

milk 

powder

Skim 

milk 

powder

Butterfat 

products

Fluid 

milk and 

cream Cheese

Other 

dairy 

products

Value per 

partner

Percent 

per 

partner

European Union 48.3 6.6 31.8 4.9 15.3 35.7 142.7 21.6

New Zealand 46.9 65.1 22.0 2.6 9.2 18.3 164.3 24.9

Australia 49.3 60.9 17.8 13.4 19.6 33.9 194.9 29.5

United States 1.7 9.7 0.4 1.5 2.1 15.4 30.9 4.7

Rest of world 44.0 3.0 2.8 20.4 4.1 52.6 126.9 19.2

Value per product 190.2 145.3 74.9 42.8 50.4 156.0 659.6 100.0

Percent per product 28.8 22.0 11.4 6.5 7.6 23.6 100.0

Sources: Global Trade Atlas, Trade Data Monitor, U.S. Bureau of Labor Statistics, and USDA, Economic Research Service 

calculations.
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Table 10

Thailand dairy product import values by trading partner and product 

(millions of constant 2018 U.S. dollars)

2018

Trading Partner

Whole 

milk 

powder

Skim 

milk 

powder Cheese

Butterfat 

products

Infant 

formula

Other dairy 

products

Value per 

partner

Percent 

per 

partner

New Zealand 144.2 49.6 26.4 43.6 12.5 32.7 309.0 41.0

European Union 12.8 48.9 28.3 14.9 3.1 82.7 190.7 25.3

Australia 20.2 26.9 21.5 20.7 0.0 10.6 100.1 13.3

Singapore 0.0 0.0 0.0 0.0 44.8 0.1 44.9 6.0

United States 0.0 7.9 6.5 0.2 0.1 23.4 38.1 5.1

Rest of world 5.1 3.0 6.9 3.6 17.8 34.8 71.1 9.4

Value per product 182.3 136.4 89.6 83.0 78.3 184.2 753.9 100.0

Percent per product 24.2 18.1 11.9 11.0 10.4 24.4 100.0

2006

Trading Partner

Whole 

milk 

powder

Skim 

milk 

powder Cheese

Butterfat 

products

Infant 

formula

Other dairy 

products

Value per 

partner

Percent 

per 

partner

New Zealand 55.1 68.0 6.1 20.4 0.0 22.8 172.4 30.5

European Union 12.8 33.8 4.0 2.5 13.8 75.6 142.4 25.2

Australia 19.2 60.4 5.7 11.4 15.4 16.2 128.3 22.7

Singapore 0.1 0.0 0.1 0.2 35.6 0.3 36.2 6.4

United States 0.0 16.7 0.2 0.2 0.1 33.4 50.6 9.0

Rest of world 3.8 5.7 2.3 0.3 15.8 6.8 34.8 6.2

Value per product 91.0 184.7 18.5 34.9 80.7 155.0 564.7 100.0

Percent per product 16.1 32.7 3.3 6.2 14.3 27.5 100.0

Sources: Global Trade Atlas, Trade Data Monitor, U.S. Bureau of Labor Statistics, and USDA, Economic Research Service 

calculations.
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Elasticity Definitions

To fully comprehend the objectives and results of this study, it is necessary to understand some elasticity definitions.

Elasticity is a measure of a variable’s sensitivity to a change in another variable. It can be quantified 

as the ratio of the percentage (%) change (Δ) in one variable (X) to the percentage change in another 

variable (Y), when the latter variable has a causal influence on the former. 

Elasticity = %ΔX / %ΔY

If the absolute value of the ratio is less than 1, changes in variable X are relatively insensitive to 

changes in Y, and the relationship is said to be relatively inelastic. If the absolute value of the ratio 

is greater than 1, changes in variable X are relatively sensitive to changes in variable Y, and the relationship is said to be relatively elastic. 

Own-price elasticity, as used in this study, is an importing country’s percentage (%) change (Δ) 

in import quantity demanded from a particular exporting trading partner (Qx

) corresponding to a 

1-percent change in that exporting country’s export price (Px

), all other things being equal.

Own-Price Elasticity = %Δ(Qx

) / %Δ(Px)

Thus, a negative sign for own-price elasticity is consistent with demand theory: Holding all things 

constant, as the price of a dairy product rises, the quantity demanded will decline. If a trading partner’s own-price elasticity is negative and elastic (absolute value greater than 1), a decline in price 

would cause market value to go up because the increase in imports would be more than enough to 

offset the decrease in price. Conversely, if the own-price elasticity is negative and inelastic (absolute 

value less than 1), a decrease in price would result in lower import value because the increase in 

imports would not be large enough to offset the price decline. 

Cross-price elasticity, as used in this study, is an importing country’s percentage (%) change (Δ) 

in import quantity demanded from a particular exporting trading partner (Qx

) corresponding to a 

1-percent change in the export price of another exporting trading partner (P

y

), all other things being

equal.

Cross-Price Elasticity = %Δ(Qx

) / %Δ(P

y

)

A positive cross-price elasticity indicates that the same product imported from the two exporting 

trading partners are substitutes.4 If the absolute value of the cross-price elasticity is greater than 1, 

then there is a strong response to a price change from the competing exporter, while if the absolute 

value of the cross-price elasticity is less than 1, then there is a weak response to a price change from 

a competing exporter.

4A negative cross price elasticity would indicate the same product imported from the two countries are complements. This 

would be unlikely.
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In the context of this study, the expenditure elasticity is the percentage (%) change (Δ) in an 

importer’s quantity demanded for a good from a particular trading partner (Qx

) divided by the 

percentage (%) change (Δ) in total import expenditures of the importing country (Ei

) for the particular good from all trading partners—holding all other things constant. 

Expenditure Elasticity = %Δ(Qx

) / %Δ(Ei)

An expenditure elasticity is usually positive, meaning that imports from the exporter increase as 

total import expenditures for the good increase. An expenditure elasticity greater than 1 indicates 

that imports of a product from a trading partner rise at a faster rate than the growth in the importing 

country’s total imports of that product, while an expenditure elasticity between 0 and 1 indicates a 

slower rate of growth. If the expenditure elasticity is negative, imports of a good from the particular 

trading partner decrease as total imports for the good increase. In this case, the exporter’s good is 

considered inferior compared to the same type of good imported from other countries.
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Objectives of Empirical Analysis

This study uses demand analysis techniques in order to understand the trends and price sensitivity 

of U.S. market share for key SEA dairy imports. The analysis provides insights regarding the U.S. 

competitive position as a dairy supplier in SEA and the U.S. price-competitiveness with other major 

dairy suppliers such as Australia, New Zealand, and the EU by estimating own-price, cross-price, 

and expenditure elasticities of demand for key dairy product imports by five SEA countries. The 

price elasticities take tariffs into account. Thus, the elasticities could be useful for studying the 

effects of changes in prices due to market forces as well as trade policies. The expenditure elasticities could help inform dairy industry stakeholders on how market shares for the United States and 

its competitors are likely to change as SEA importers increase import expenditures for each type of 

dairy product.
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Rotterdam Model for Import Demand

This study uses the Rotterdam model, a system of equations developed by Barten (1964) and Theil 

(1965) for use in econometric studies of consumer demand. The Rotterdam model has a strong theoretical foundation and can be estimated using a system of linear equations. The model is commonly 

used to estimate household price and expenditure elasticities of demand for food products (Seale et 

al., 1992; Muhammad et al., 2014; Davis et al., 2018). This study uses the Rotterdam model to 

analyze (1) the sensitivity of importing countries to changing prices of dairy products from various 

exporting countries and (2) expected changes in imports from each country associated with changes 

in the importing country’s import expenditures for the product being analyzed.

The empirical analyses included the top five SEA dairy-importing countries: Indonesia, Malaysia, 

the Philippines, Singapore, and Vietnam. Monthly observations from 2006 to 2016 are analyzed. 

Thailand is excluded from the empirical analysis because of the complications of its tariff rate quota 

(TRQ)5 system; with the data available, in-quota imports cannot be readily disaggregated from over5A TRQ is a two-tiered tariff (tax) where a lower (in-quota) tariff is charged on imports within a quota volume, while a 

higher (over-quota) tariff is charged on imports in excess of the quota volume.

Rotterdam Model Structure

The Rotterdam model for dairy imports can be defined as follows: 

where wit is the share of the import value for a particular dairy product from country i in time

t. D is the log difference operator for any variable v such that Dvt

=log(vt)−log(vt−1). qit is the

quantity of dairy products from country i, time period t, and pjt is the price of dairy products in

country j for time period t. θi is the marginal share of the ith country, which is the additional

amount spent on dairy imports from country i when total dairy imports increase by one dollar. 

DQt is a finite-change version of the Divisia volume index, where n DQt

=∑j=1witDqit . πij= the

(i,j)th Slutsky coefficient of the Rotterdam model. Homogeneity, symmetry, and adding up 

conditions are imposed on all SEA dairy models and can be tested in a straightforward matter 

(Seal, et al., 1992). Demands are homogenous if n ∑j=1πij=0. Adding up conditions are satisfied

when n ∑i=1πij=0 and n ∑i=1θi

=1 . Demand is symmetric if πij = πji . Also, compensated demands

should be negative semidefinite, which they will be if the matrix of [πij] is negative semidefinite. Compensated demand elasticities for importing countries are it i i

% q =q / w D

%Dpj

= πij / wj . The expenditure elasticities are =θi / wi it i i

% q / w

% Exp=q DD where Exp is the total import expenditure for country i for 

the particular product being analyzed. In the analyses presented in this study, the compensated 

demand elasticities are derived for imports of each dairy product by country, showing the relationships between the prices of dairy products and the quantities purchased on the assumption 

that utility is held constant. The number of estimated demand equations for each model is one 

less than the number of trading partner countries to avoid singularity (Attfield, 1985). Barten 

(1969) proved that the system’s estimates are independent of the equation excluded from the 

model. This study used the Time-Series Processor (TSP) software to estimate the demand 

systems.

n DQt

+∑j=1 witDqit = θi πijDpjt+Ɛit
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quota imports. Dairy products included in the empirical analyses include cheese, whey products, 

SMP, and lactose. These are products for which the United States has been a consistent supplier to 

the region, representing 89 percent and 92 percent of the value of U.S. dairy exports to SEA in 2006 

and 2016, respectively. 

To provide a valid Rotterdam model analysis for imports of a particular dairy product for a particular importing country, there must be at least three trading partners with consistent imports (no zero 

values) over the time period. A Rotterdam model will not provide proper results if there are zero 

import values for any month. While a quantity of zero can be determined, a unit value (proxy for 

price) is undefined. In cases where there were only a few instances of zero imports of a particular 

dairy product for a trading partner for an importing country, the average import value, import unit 

value, and import quantity for the time period was substituted. This allows for the data to be used 

and minimizes statistical bias. The model with the most occurrences of zero imports from a particular country where this approach was taken was for Vietnam’s imports of cheese. For the 132-month 

period, there were 9 months of zero imports from Australia. There were no consecutive months of 

zero imports in this case.

In cases where there were more than a few cases of zero imports in a particular month, the trading 

partner’s data was included in an aggregate rest of world (ROW) total. Although each of the trading 

partners within ROW is not a consistent partner, ROW is treated as a trading partner if there are 

consistent imports from ROW over the period. Data from the ROW countries are aggregated to 

compute import values, quantities, and weighted-average unit values (including tariffs) for ROW.

The number of consistent trading partners (with few or no months of zero imports) varies among 

the various importer-product combinations. For example, Singapore had consistent monthly imports 

of cheese from the EU, New Zealand, Australia, the United States, Switzerland, Japan, and ROW 

from 2006 to 2016. In this case, all of these trading partners are included in the Rotterdam model. 

By contrast, the EU, the United States, and ROW were the only consistent suppliers of lactose to the 

Philippines. For the Rotterdam model, New Zealand and Australia cannot be included since they 

were several months when they did not supply lactose to the Philippines.

Altogether, 19 Rotterdam models are estimated for this analysis. For cheese, models are estimated 

for all five countries. For whey products, models are estimated for three countries: Malaysia, 

Singapore, and the Philippines. Data were too inconsistent to provide models for whey product 

imports of Indonesia and Vietnam. For SMP, models are estimated for all five countries. For lactose, 

models are estimated for four countries (the exception being Singapore, which had only consistent 

imports from the United States). A butterfat product model was estimated for Indonesia, and a whole 

milk powder model was estimated for Singapore; since the United States has not been a consistent 

supplier of either product, those models are discussed only in the appendix.
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Brief Discussion on Dairy Tariffs of SEA Countries

Tariffs can affect the competitiveness of U.S. dairy products. As members of the World Trade 

Organization (WTO), each SEA country assesses most favored nation (MFN) tariffs on U.S. dairy 

products. MFN tariffs are rates that WTO members promise to charge other WTO members unless 

a preferential trade agreement exists between the countries.6 As illustrated in table 11, for the 5 

countries included in the empirical analyses, MFN tariffs for dairy products range from zero for 

Singapore—which has no tariffs for any of its WTO trading partners—to 10 percent for some whey 

products imported by Vietnam. On May 25, 2020, Vietnam’s Prime Minister announced that MFN 

tariffs on dairy products would be reduced by 50 percent or more, effective July 10, 2020. Thailand, 

which is not included in the empirical analyses, has some very high MFN tariffs, including a 

216-percent rate for products imported outside its TRQ for SMP. The Thailand Government sometimes changes its tariffs based upon changing needs and market conditions.

All the SEA countries considered in this report are members of the Association of Southeast Asian 

Nations (ASEAN) which has formed an ASEAN Free Trade Area (AFTA), giving preferential treatment for trade among countries in the region. Many ASEAN countries assess no tariffs on dairy 

products from other AFTA members, while others charge tariffs that are well below MFN tariffs 

charged by those countries.

ASEAN countries have also signed several FTAs with countries outside the region. The ASEANAustralia-New Zealand FTA (AANZFTA), with two major dairy-exporting countries, is the most 

important for dairy trade. By 2020, most SEA countries had eliminated most tariffs for dairy products imported from New Zealand and Australia under AANZFTA.

6According to the World Bank, “In current usage, MFN tariffs are what countries promise to impose on imports from 

other members of the WTO, unless the country is part of a preferential trade agreement (such as a free trade area or customs 

union). This means that, in practice, MFN rates are the highest (most restrictive) that WTO members charge one another.” 

(World Bank, 2010).
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Table 11

Tariff rate percentages of selected Southeast Asia countries for dairy product imports from 

major exporters in 2016 and 20201

Exporter

Product Importer

U.S., European Union, 

and most other countries 

(MFN2 rate)

Australia and New Zealand 

(AANZFTA3)

2016 and 2020 2016 2020

Skim milk 

powder

Indonesia 5 5 0-4

Malaysia 0 0 0

Philippines 1 0 0

Singapore 0 0 0

Vietnam 5 0 to 5 0

Cheese

Indonesia 5 5 0-4

Malaysia 0 0 0

Philippines 1 to 7 0 0

Singapore 0 0 0

Vietnam 10 0 to 5 0

Whey products

Indonesia 5 5 0

Malaysia 0 to 5 0 0

Philippines 1 to 3 0 0

Singapore 0 0 0

Vietnam 0 to 10 0 to 5 0

Lactose

Indonesia 5 5 0

Malaysia 0 0 0

Philippines 1 0 0

Singapore 0 0 0

Vietnam 0 0 0

1For some products, ranges are provided because tariffs differ among subcategories for each product. For example, for tariffs for 

whey products could differ for dry whey, whey protein concentrate, and modified whey. 

2MFN = most favored nation. This is the tariff rate used for imports from members of World Trade Organization if no preferential 

tariff treatment program is in effect.

3AANFTZ = ASEAN-Australia-New Zealand Free Trade Area. ASEAN = Association of Southeast Nations.

Sources: World Integrated Trade Solution (WITS) and Schedules of Tariff Commitments for AANFTZ.

Finally, individual countries within the ASEAN region have entered into numerous bilateral free 

trade agreements. Some of these agreements overlap. For example, under AANFTZ, Thailand has 

reduced some tariffs on dairy products from New Zealand and Australia. However, under the bilateral 

Thailand-Australia Free Trade Agreement, Australia receives even more favorable treatment. Although 

Thailand has reached bilateral agreements with New Zealand and Australia, tariffs remain high for 

some dairy products imported from those countries. The only ASEAN country for which the United 

States has a Free Trade Agreement is Singapore, but this agreement is inconsequential for dairy trade 

since Singapore’s MFN rate is zero. 

Although SEA importers buying from the United States often pay higher import tariffs than buyers 

importing from competing countries, many SEA importers continue to buy from the United States. 

Differences in quality and customer service from one supplier to another may influence decisions to 

purchase products from the United States despite the higher tariffs. However, in general, tariffs affect 

prices and therefore impact SEA importers decisions to purchase from a particular country. 
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Data for Empirical Analysis

This study uses data from the Global Trade Analysis (GTA) database from 2006 to 2016. To analyze 

the effects of prices on imports, we include landed costs of the merchandise to the extent that data 

are available.7 The cost, insurance, and freight (CIF) import value plus the tariff are the closest 

approximation to the landed cost. For Indonesia, Malaysia, and Singapore, CIF values are available 

through GTA. For the Philippines, the CIF value is not available; therefore, we use a free on board 

(FOB) import value, which does not include insurance and freight costs. However, assuming that 

these costs are fairly stable, changes in CIF and FOB values should be similar. For Vietnam, import 

data are not available, so export data from trading partners were used instead. Again, changes in 

CIF import values should be similar, assuming that insurance and freight costs are fairly stable. We 

include the Philippines and Vietnam despite the fact that the data are not exactly comparable to what 

is available for other countries in order to provide the most complete analysis across SEA. However, 

we recognize that the results are not as precise as they would be if we had more complete data. Data 

were aggregated at the 6-digit Harmonized System Codes (HS Code)8 for determining basic unit 

values (import values divided by import quantities).

Tariffs at the 6-digit level were collected from the World Integrated Trade Solution (WITS) database.9 For Rest of the World (ROW) tariff estimates, weighted averages were used. The tariffs 

were added to the basic unit values to calculate price proxies for the analysis. Depending upon the 

product, some of the data were further aggregated by combining data from two or more HS codes. 

Products were defined by HS code as follows:

• Cheese: 0406

• Whey products: 0404.10 and 3502.20

• Skim milk powder (SMP): 0402.10

• Lactose: 1702.11 and 1702.19

• Butterfat products: 0405

• Whole milk powder: 0402.21 and 0402.29

7Landed cost is the total price of a product or shipment once it has arrived. It includes the price of the product, transportation costs, customs duties, insurance, and other costs incurred along the way.

8HS codes at the six-digit level are uniform for countries that are members of the World Trade Organization. However, 

many countries further subdivide categories of products using codes at the 8- or 10-digit level. The GTA provides this more 

detailed data for many countries. Data for this report were collected at the most granular level available in the database. Large 

outliers were removed from data collected at this granular level. In most cases, this left sufficient data to analyze imports from 

major export suppliers when data were aggregated at the 6-digit HS level. 

9In some cases, tariffs were not available for a particular year from the WITS database. In these cases, tariffs could sometimes be determined from tariff rate schedules that were readily available. In other cases, it was necessary to estimate a tariff 

by interpolating from tariffs of nearby years that did appear in the WITS database.
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Summary of Empirical Results Concerning SEA Imports 

From the United States

This discussion emphasizes results that are directly applicable to the United States, which are 

summarized in Table 12.10 Notice that all U.S. own-price elasticity estimates are negative, meaning 

that import prices (unit values plus tariff serving as proxies) are inversely related to quantities of 

imported products demanded, as expected.

In most cases, results for own-price elasticities are significant at the 1-percent level. In four cases, 

results for the U.S. own-price elasticities are insignificant (Indonesia and the Philippines imports 

of U.S. cheese, Singapore imports of U.S. whey products, and Philippines imports of U.S. SMP), 

meaning that we are unable to conclude that imports of these U.S. products by these countries are 

significantly responsive to prices. 

Table 12

Summary of price and expenditure elasticities for U.S. dairy products by product and trading 

partner (based on data from 2006-16)

Product

and importing 

country

U.S. product

own-price 

elasticity

Cross-price elasticities for products from

U.S. competitors U.S. product 

expenditure elasEuropean Union New Zealand Australia ticity

Cheese

Philippines –0.129 –0.003 0.308* –0.145 0.931***

Indonesia –0.046 0.117 –0.206 0.146 1.106***

Malaysia –1.375*** –0.061 0.690* 0.881*** 0.686***

Singapore –1.668*** 0.436*** –0.076 0.928*** 0.839***

Whey Products

Philippines –0.318*** 0.179*** 0.016* 1.192***

Malaysia –1.043*** 0.560*** 0.027 –0.007 1.360***

Singapore –0.217 0.029 0.007 0.057 2.311***

Skim Milk Powder

Philippines –0.255 0.027 0.028 0.212*** 0.634***

Indonesia –1.155*** 0.769*** –0.064 0.301 1.275***

Vietnam –0.894*** 0.199 0.389 0.217 1.291***

Malaysia –1.315*** 0.005 0.652* 0.729*** 0.723***

Singapore –0.358*** 1.426*** –1.236 0.314 0.996***

Lactose

Philippines –0.317*** 0.222* 1.027***

Indonesia –0.602*** 0.264*** 0.181*** 1.199***

Vietnam –0.458*** 0.331*** 0.945***

Malaysia –0.212*** 0.073 1.047***

Note the following: (1) first column (highlighted in gray) is the U.S. own-price elasticity for dairy products in Southeast Asia (SEA); 

(2) columns 2 through 4 (highlighted in gold) are the cross-price elasticities for the United States and the top competing suppliers; 

and (3) the fifth column represents the U.S. expenditure elasticity for the SEA importing countries. Note:*** represents significance 

at the 1 percent level and * represents significance at the 10 percent level. Standard errors are reported in the appendix tables.

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade Solution. 

10The Slutsky coefficients used to compute elasticities are not presented in order to limit the length of the report. 
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There are some fundamental reasons that elasticity estimates could differ in magnitude by country 

and product: 

1. Demand for products that are considered necessities is generally less sensitive to price changes 

than demand for other products. Consumers will tend to continue purchasing necessities even 

if prices increase substantially. Demand for products that are considered luxuries, on the other 

hand, is generally more sensitive to price changes.

2. Price competition from other suppliers: If there is substantial price competition from other 

suppliers, relatively small price changes could result in large percentage changes in import 

volumes. The importing country can easily substitute products from one country with products 

from another country. The opposite is the case if there is not substantial price competition 

from other suppliers. 

3. The relative size of the import volume from a particular country: If imports from a particular country are small, relatively small changes in import volumes from that country could 

appear as large changes in percentage terms. The opposite is the case when imports from a 

country are relatively large; relatively large changes in import volumes could appear small in 

percentage terms.

4. Product differentiation: If a country produces a particular product that is perceived as having 

higher quality or characteristics that are significantly different from the same types of products produced in other countries, there may be less sensitivity to price changes for the product 

than if the product is homogenous with products of other countries.

Notice that there are wide ranges of importers’ sensitivities to U.S. prices. Although it is not practical to discuss each elasticity in table 12, examples at the extremes provide some context. The 

largest own-price elasticity is for Singapore’s imports of cheese from the United States. A 1-percent 

increase in the U.S. price of cheese results in nearly a 1.7-percent decrease in Singapore’s imports of 

U.S. cheese. There are several possible reasons why Singapore’s demand for U.S. cheese would be 

elastic with respect to price:

1. Cheese has not traditionally been a part of diets in SEA countries (Ishige 2008). Although 

Singapore is a high-income country, and high-income countries tend to consume more cheese, 

it is not likely to be considered a staple for most Singaporeans.

2. Singapore imports cheese from many suppliers. From 2006 to 2016, Singapore had six consistent suppliers of cheese imports: EU, New Zealand, Australia, the United States, Switzerland, 

and Japan.

3. Singapore imports only small quantities of cheese from the United States (see table 9). Even 

small quantity changes could appear as large changes in percentage terms.

At the other end of the spectrum, a 1-percent change in the U.S. lactose price results in only about a 

0.2-percent change in Malaysia’s imports of lactose; thus, Malaysia’s demand for U.S. lactose is relatively inelastic.

1. Lactose is often used as an ingredient in infant formula, confections, dry mixes and blends, 

and pharmaceuticals (as a filler or diluent in tablets or capsules). In many of these applications, lactose is a necessary ingredient that accounts for a modest share of the cost. Thus, a 

relatively inelastic demand estimate for lactose seems reasonable (Zadow, 1984).
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2. Malaysia has had only two major suppliers of lactose from 2006 through 2016, the EU and the 

United States. U.S. exports of lactose to Malaysia (4,281 metric tons in 2016) have been much 

higher than EU exports (991 metric tons in 2016), suggesting that Malaysian importers generally have more well-established relationships with U.S. lactose exporters than EU exporters. 

3. Although Malaysia’s imports of lactose are relatively small compared to Malaysia’s other 

dairy product imports, they are relatively large compared to imports from other countries. 

Therefore, a relatively large change in exports could appear as a small change in percentage 

terms.

For cross-price elasticities, we would usually expect positive signs, meaning that products from 

competing countries are substitutes for U.S. products. In all the cases where we have statistically 

significant results, this is the case, as indicated in Table 12. There are many cases where cross-price 

elasticities are statistically insignificant, meaning that our results are inconclusive concerning price 

competition between the United States and other major suppliers. Notice that there are more cases 

with statistically significant results for EU cross-price elasticities than for New Zealand cross-price 

elasticities. This suggests that the United States generally competes in pricing with the EU more than 

it does with New Zealand. Perhaps factors besides price (factors that are outside of the scope of this 

study) play a more significant role in the competition between New Zealand and the United States for 

SEA dairy import markets. In some cases, cross-price elasticities indicate that imports of U.S. dairy 

products are sensitive to Australia’s prices. For cheese, this is the case for Malaysia and Singapore. For 

SMP, this is the case for the Philippines and Malaysia. Cross-price elasticities were not estimated for 

several New Zealand and Australia products because their imports were too inconsistent to include in 

the models. 

In most cases where significant results are found for cross-price elasticities, the estimates are relatively 

inelastic, meaning that a 1-percent change in the foreign country’s price results in less than a 1-percent 

change in imports from the United States. The exception is the EU cross-price elasticity for Singapore’s 

imports of SMP; the results show that a 1-percent change in the EU price results in an increase in 

Singapore’s imports of U.S. SMP of about 1.4 percent. Since Singapore’s imports of SMP from the 

United States have been very small (see table 9), small quantity changes could appear relatively large 

in percentage terms. 

In all cases, expenditure elasticity estimates are statistically significant and positive. This means that 

as total import expenditures of a particular dairy product for a country increase or decrease, imports 

from the United States increase or decrease in the same direction. There is a wide range of expenditure 

elasticity estimates. The greatest is the estimate of about 2.3 for Singapore’s imports of whey products. 

This means that for a 1-percent increase or decrease in Singapore’s total imports of whey products, 

Singapore’s imports of whey products from the United States increase or decrease in the same direction by about 2.3 percent. At the other end of the spectrum, given a 1-percent increase or decrease 

in Philippine imports of SMP, Philippine imports of SMP from the United States would increase or 

decrease in the same direction by only about 0.6 percent. Since Philippine imports of SMP from the 

United States have been relatively large, relatively large changes in imports could appear relatively 

small in percentage terms.

Specific import demand analyses of cheese, whey products, SMP, and lactose for various SEA countries are estimated and highlighted in the appendix section. There were other dairy products in which 

the United States did not display a consistent flow of trade transactions. However, Rotterdam models 

for other countries were developed for SEA imports of butterfat products and whole milk powder, 

which are both important products of global dairy trade. The elasticity estimates for butterfat products 

and whole milk powder are also highlighted in the appendix section. 
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Scenario Analyses To Illustrate Trade Implications for the 

United States

This section demonstrates how the elasticity estimates can be used to evaluate markets for U.S. products. Using imports of whey products as an example, we illustrate how elasticities can be used for 

quantitative analysis by calculating the impact on SEA imports of a 10-percent reduction in the U.S. 

whey product price (see tables 13 and 14) and a 10-percent expansion in import expenditures (see 

tables 15, 16, and 17). Similar analyses could be conducted for cheese, SMP, or lactose.

Baseline for the Scenarios

As a baseline for the scenario analyses, we used average import volumes and unit values from 

2014 through 2016. Using the whey product imports for the Philippines as an example, the baseline 

average for U.S. whey product imports over the 3 years (2014 – 2016) was 22.66 million metric tons 

(mmt), with a value of $25.34 million (not including tariffs), which accounted for 42.1-percent of 

the market share in terms of value (tables 13 and 15). Although tariffs can vary depending upon 

the type of product within the whey-product category, we assume a 2-percent MFN tariff for the 

purpose of this illustration, the midpoint of the range of MFN tariffs for 2016 within the category. 

With the tariffs included, the value for imports from the United States is $25.85 million, adding 

$0.51 million that importers from the Philippines pay for dairy products from the United States. The 

MFN rates are applied to imports from the EU, the United States, and most of the ROW. Imports 

from New Zealand are assessed tariffs of $0, due to the AANZFTA. The values including tariffs are 

proxies for the totals paid by Philippine importers, while the values not including tariffs are proxies 

for the totals received by trading partners.

The same types of calculations are used for Malaysia (tables 14 and 16) and Singapore (table 17). For 

Malaysia, a MFN tariff of 2.5 percent is assumed since this was the midpoint of the range of tariffs 

for whey products in 2016. The MFN rate is applied to imports from the EU, the United States, 

and the ROW. Imports from New Zealand and Australia have no tariffs due to the AANZFTA. For 

Singapore, the values in table 17 are the same for the columns labeled “With tariff included” and 

“Not including tariff” because Singapore has no tariffs for dairy product imports from any country. 

Impact of a 10-Percent Reduction in the Import Price for U.S. 

Whey Products 

Our first illustration outlines the implications for U.S. whey product trade with the assumption that 

prices for imports from the United States are reduced 10 percent for the Philippines and Malaysia. 

Although results of a Rotterdam model were provided for Singapore, they were not included in this 

scenario because the U.S. own-price elasticity estimate is not significant.

Table 13 shows the results of the scenario for the Philippines. The price elasticities apply to the 

values, including the tariffs, since the tariffs affect demand for the products. With a U.S. own-price 

elasticity of -0.318, a 10-percent price reduction in the U.S. whey product price would cause the 

import quantity to rise by 0.77 mmt. Since the U.S. own-price elasticity is inelastic, the impact on 

the import value from the United States is negative; the increase in quantity is not large enough to 

offset the decrease in price. The value of imports from the United States, including the tariffs (a 

proxy for what importers pay), would fall by $1.79 million. The value of imports from the United 
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States, not including the tariffs (a proxy for what exporters receive), would fall by $1.76 million. The 

value impact for U.S. exporters is slightly less than the value impact for the Philippine importers; 

since the tariffs are based on the price as a percentage, the Philippine importers benefit from both 

a lower U.S. price and a slightly lower tariff. Market shares are based on values that do not include 

tariffs. The U.S. market share would decrease by 1.3 percentage points, and market shares for the 

EU, New Zealand, and ROW would increase by 0.8, 0.1, and 0.5 percentage points, respectively. 

Table 14 shows the results of the scenario for Malaysia. With a U.S. own-price elasticity of –1.043, 

a 10-percent reduction in the import price, U.S. whey product price would cause Malaysia’s whey 

product imports from the United States to increase by 1.57 mmt. Since the U.S. own-price elasticity 

estimate is elastic, the impact on the import value from the United States is positive; the increase 

in quantity more than offsets the decrease in price. With a cross-price elasticity of 0.262, the quantity imported from the EU would fall by 1.42 mmt. Import quantities for New Zealand, Australia, 

and ROW are assumed to remain the same because the elasticity estimates from the model were 

insignificant. Market shares for the United States, New Zealand, and Australia would increase by 

0.4, 0.2, and 0.1 percentage points, respectively—but the market share for the EU would fall by 0.7 

percentage points.

In summary, a 10-percent U.S. price reduction for whey product imports would lead to a lower value 

of imports (from the United States) for the Philippines but a higher value of imports for Malaysia. 

With the Philippines’ inelastic demand for whey products from the United States, the fall in price 

more than offsets the rise in the import quantity, causing a reduction in the import value. With 

Malaysia’s elastic demand for whey products from the United States, the rise in import quantity 

more than offsets the fall in price, causing an increase in the import value. While import quantities from the United States increase for both the Philippines and Malaysia, the United States loses 

market share for the Philippines but gains market share for Malaysia.
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Table 13Philippine imports of whey products, 10-percent reduction in U.S. price

Supplier

Baseline

Elasticity 

for change 

in U.S. 

price

Scenario: 10 percent increase in U.S. price Impact (scen

Quantity

1000 mt

With tariff 

included Not including tariff

Quantity

1000 mt

With tariff 

included Not including tariff

Quantity1000 mt

W

i

Value

mil. $

Value

mil. $

Share

percent

Value

mil. $

Value

mil. $

Share

percent

European Union 13.30 20.67 20.26 33.6 0.161 13.08 20.32 19.92 34.4 -0.22 

New Zealand 1.45 1.53 1.53 2.5 0.111 1.43 1.51 1.51 2.6 -0.02 United States 22.66 25.85 25.34 42.1 -0.318 23.43 24.06 23.59 40.7 0.77 

Rest of World 13.93 13.37 13.11 21.8 0.173 13.68 13.13 12.87 22.2 -0.25 

Source: USDA, Economic Research Service analysis.Table 14Malaysia imports of whey products, 10-percent reduction in U.S. price

Supplier

Baseline

Elasticity 

for change 

in U.S. 

price

Scenario: 10 percent increase in U.S. price Impact 

Quantity

1000 mt

With tariff 

included Not including tariff

Quantity

1000 mt

With tariff 

included Not including tariff

Quantity

1000 mt

W

in

Value

mil. $

Value

mil. $

Share

percent

Value

mil. $

Value

mil. $

Share

percent

European Union 52.04 68.89 67.21 63.3 0.262 50.62 67.01 65.38 62.6 -1.42 

New Zealand 3.26 15.45 15.45 14.6 0.000 3.26 15.45 15.45 14.8 0.00 

Australia 3.26 4.49 4.49 4.2 0.000 3.26 4.49 4.49 4.3 0.00 United States 13.55 17.94 17.50 16.5 -1.043 15.12 18.02 17.58 16.8 1.57 

Rest of World 1.39 1.52 1.48 1.4 0.000 1.39 1.52 1.48 1.4 0.00 

Source: USDA, Economic Research Service analysis.
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Impact of 10-Percent Increase in Whey Products Expenditures 

by SEA Countries 

Now let us examine the impact that changes in SEA import expenditures would have on U.S. whey 

product exports. For this 10-percent expenditure-expansion scenario, differences from the baseline 

were calculated similarly as for the 10-percent change-in-price scenario.

Notice from tables 15 through 17 that U.S. whey product import expenditure elasticities for all three 

countries examined are positive and relatively elastic (1.192 for the Philippines, 1.187 for Malaysia, 

and 2.311 for Singapore). For all three countries, as import expenditures increase (assuming that 

prices remain constant), U.S. import quantities increase as well. Since the expenditure elasticities are 

positive for all the suppliers of all three countries, import quantities and values increase across the 

board. 

Given that the expenditure elasticities are relatively elastic for the United States, the United States 

gains market share for all three countries. In most cases, expenditure elasticities for the other countries are relatively inelastic, so they lose market share as expenditures increase. The exception is 

Malaysia’s imports of whey products from New Zealand, which has an elastic expenditure elasticity. 

As a result, when Malaysia’s import expenditures of whey products increase and prices remain 

constant, New Zealand gains market share.
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Table 15Philippine imports of whey products, 10-percent increase in expenditures

Supplier

Baseline

Expenditure 

elasticity

Scenario: 10 percent increase in expenditures 

including tariffs Impact 

Quantity

1000 mt

With tariff 

included Not including tariff

Quantity

1000 mt

With tariff 

included Not including tariff Impact

Quantity

1000 mt

Value

mil. $

Value

mil. $

Share

percent

Value

mil. $

Value

mil. $

Share

percent

European Union 13.30 20.67 20.26 33.64 0.943 14.55 22.61 22.17 33.3 1.25 New Zealand 1.45 1.53 1.53 2.54 0.120 1.47 1.55 1.55 2.3 0.02 United States 22.66 25.85 25.34 42.07 1.192 25.39 28.96 28.39 42.7 2.73 Rest of World 13.93 13.37 13.11 21.76 0.997 15.32 14.70 14.41 21.7 1.39 

Source: USDA, Economic Research Service analysis.Table 16Malaysia imports of whey products, 10-percent increase in expenditures

Supplier

Baseline

Expenditure 

elasticity

Scenario: 10 percent increase in expenditures 

including tariffs Impac

Quantity

1000 mt

With tariff 

included

Not including 

tariff

Quantity

1000 mt

With tariff 

included Not including tariff Impact

Quantity

1000 mt

Value

mil. $

Value

mil. $

Share

percent

Value

mil. $

Value

mil. $

Share

percent

European Union 52.04 68.89 67.21 63.3 0.896 56.68 75.03 73.20 62.7 4.64 

New Zealand 3.26 15.45 15.45 14.6 1.410 3.73 17.67 17.67 15.1 0.47 

Australia 3.26 4.49 4.49 4.2 0.339 3.37 4.64 4.64 4.0 0.11 

United States 13.55 17.94 17.50 16.5 1.187 15.17 20.09 19.60 16.8 1.62 

Rest of World 1.39 1.52 1.48 1.4 0.672 1.48 1.62 1.58 1.4 0.09 

Source: USDA, Economic Research Service analysis.Table 17Singapore imports of whey products, 10-percent increase in expenditures

Supplier

Baseline

Expenditure 

elasticity

Scenario: 10 percent increase in expenditures including tariffs Impac

Quantity

1000 mt

With tariff 

included Not including tariff

Quantity

1000 mt

With tariff 

included Not including tariff Impact

Quantity

1000 mt

Value

mil. $

Value

mil. $

Share Value

mil. $

Value

mil. $

Share

percent

percent 

European Union 11.37 18.68 18.68 23.9 0.284 11.68 19.19 19.19 22.4 0.31 

New Zealand 6.07 19.96 19.96 25.6 0.631 6.45 21.20 21.20 24.7 0.38 

Australia 6.11 7.40 7.40 9.5 0.602 6.47 7.84 7.84 9.1 0.36 

United States 4.79 24.87 24.87 31.9 2.311 5.97 31.00 31.00 36.1 1.18 

Rest of World 3.39 7.09 7.09 9.1 0.728 3.63 7.60 7.60 8.9 0.24 

Source: USDA, Economic Research Service analysis.
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Summary and Conclusion

The findings of this report provide insight into the potential for the United States to expand exports 

of dairy products to SEA countries. Rapid growth population and per capita GDP in SEA countries 

is increasing the demand for dairy products in this region, and SEA natural resource constraints 

prevent production in this region from meeting the increased demand for dairy products. 

From 2006 to 2018, SEA dairy imports from the United States gradually increased, and the United 

States moved from fourth to the third largest dairy product supplier to the region. Although the 

United States was the third largest supplier of total dairy products by value to the region in 2018, it 

ranked second behind the EU for SMP whey products, and it was the top supplier of lactose to the 

region. The Philippines was the SEA country with the highest value of dairy product imports from 

the United States, followed by Indonesia, Vietnam, Malaysia, Singapore, and Thailand. Analyzing 

the expenditure and price elasticities of demand for imports can help U.S. exporters evaluate the 

potential for further growth in sales to SEA.

Using a Rotterdam model framework, own-price, cross-price, and expenditure elasticities were estimated for SEA dairy product imports. The importing countries analyzed were Malaysia, Vietnam, 

Singapore, the Philippines, and Indonesia. In most cases, results show statistically-significant ownprice elasticities for SEA’s imports from major global dairy suppliers—including the United States, 

the EU, New Zealand, and Australia. Statistically significant cross-price elasticities indicate that 

imports from major suppliers are substitutes for U.S. products. Statistically significant dairy import 

expenditure elasticities were found for the major SEA importers and suppliers.

In most cases, SEA importers of dairy products from the United States were found to respond to 

changes in U.S. prices, but the estimated responses were relatively inelastic. In these cases, lower 

U.S. prices would likely result in higher import quantities from the United States (with prices of 

other suppliers remaining constant) but import values would be lower because the lower prices 

more than offset the higher import quantities. The exceptions are relatively elastic U.S. own-price 

elasticity estimates for cheese imports by Malaysia and Singapore, SMP imports by Malaysia and 

Indonesia, and whey product imports by Malaysia. In these cases, lower U.S. import prices would 

likely result in both higher import quantities and values.

In most cases where statistically significant cross-price elasticities for SEA imports of U.S. dairy 

products were found, the estimated responses were relatively inelastic. The United States’ largest 

competitor in the SEA dairy market is the EU. There are statistically significant substitute relationships among the U.nited States and EU for cheese in Singapore; whey products in the Philippines 

and Malaysia; SMP in Indonesia and Singapore; and lactose in the Philippines, Indonesia, and 

Vietnam. The magnitude of these positive cross-price elasticities between U.S. and EU dairy products could identify which of the two countries will benefit the most given a change in price. 

For all cases where the United States has been a consistent supplier of the dairy products analyzed, 

expenditure elasticity estimates for imports from all major suppliers were positive and significant. This implies that the increase in SEA expenditures position the United States to benefit from 

all SEA dairy imports. However, our analysis of historical data suggests that the benefits to U.S. 

exporters from rising SEA imports are likely to be uneven. For the Philippines, Malaysia, and 

Singapore, expenditure elasticity estimates for U.S. whey product imports indicate that the United 

States is likely to gain market share as expenditures for these products rise. For cheese, expenditure 
32

Prospects for Growth in U.S. Dairy Exports to Southeast Asia, ERR-278

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elasticities indicate that the United States could gain market share for Indonesia but lose share in 

other markets. For SMP, the United States could gain market share in Indonesia and Vietnam but 

lose market share in other markets. For lactose, the U.S. market share for the Philippines, Indonesia, 

Vietnam, and Malaysia could remain relatively stable since the expenditure elasticities for all of 

these countries are close to 1. 

If SEA dairy product imports continue to grow as expected, expenditure elasticity estimates imply 

that U.S. dairy exports to SEA will continue to grow. However, the analysis clearly indicates that 

the magnitude of the growth and competition for market share will depend upon the relationships 

between import quantities and prices of the United States and the prices of major competitors.
33

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References

Attfield, C.L.F. 1985. “Homogeneity and Endogeneity in Systems of Demand Equations,” Journal of 

Econometrics 27:197-209. North-Holland. 

Barten, A. P., 1964. “Consumer Demand Functions Under Conditions of Almost Additive 

Preferences,” Econometrica 32:1-38

Barten, Anton P. 1969. “Maximum Likelihood Estimation of a Complete System of Demand 

Equations,” European Economic Review 1.1: 7-73.

Cessna, J, L. Kuberka, C.G. Davis, and R. Hoskin. 2016. “Growth of U.S. Dairy Exports”, LDPM270-01, U.S. Department of Agriculture, Economic Research Service.

Chungsiriwat, P. and V. Panapol, 2010. “Thailand: An Industry Shaped by Government Support,” 

Smallholder Dairy Development: Lessons Learned in Asia. Food and Agriculture Organization 

of the United Nations, Regional Office for Asia and the Pacific.

Davis, C, G., J. Cessna, and D. Blayney, 2018. “Southeast Asia’s Import Demand for Skim Milk 

Powder: Implications for U.S. Exporters,” Journal of Dairy Science, 101(5):4676 – 4689. 

Global Trade Atlas (GTA). 2006-2016. IHS Markit. 

Ishige, N. 2008. “The Dietary Culture of Asia,” Asia Blog, Asia Society. https://asiasociety.org/blog/

asia/dietary-culture-asia (Accessed June 2020).

International Farm Comparison Network (IFCN). Dairy Report 2019, IFCN, The Dairy Research 

Network.

Muhammad, A., A.M. Leister, L. McPhail, and W. Chen. 2014. “The Evolution of Foreign Wine 

Demand in China.” Agricultural and Resource Economics 58(3): 392-408.

Phong, N.A., 2010. “Viet Nam: The Emergence of a Rapidly Growing Industry,” Smallholder 

Dairy Development: Lessons Learned in Asia. Food and Agriculture Organization of the United 

Nations, Regional Office for Asia and the Pacific.

Pingali, P. 2007. “Westernization of Asian Diets and the Transformation of Food Systems: 

Implications for Research and Policy,” Food Policy 32(3):281-298.

Seale, J.L., A.L. Sparks, and B.M. Buxton. 1992. “A Rotterdam Application to International 

Trade in Fresh Apples: A Differential Approach,” Journal of Agricultural and 

Resource Economics 17(1):138-149.

Theil, H., 1965. “The Information Approach to Demand Analysis,” Econometrica 33:67-87.

Trade Data Monitor (TDM). 2018. Trade Data Monitor, Inc. 

U.S. Department of Commerce, Bureau of the Census. 2018. International Data Base.

World Bank, 2010. Types of tariffs web page. https://wits.worldbank.org/wits/wits/witshelp/content/

data_retrieval/p/intro/c2.types_of _tariffs.htm (Accessed June 2020).

Zadow, J.G. 1984. “Lactose: Properties and Uses.” Journal of Dairy Science Volume 67, 

Issue 11.
34

Prospects for Growth in U.S. Dairy Exports to Southeast Asia, ERR-278

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Appendix

Detailed Empirical Results

This study applied a Rotterdam model to estimate price and expenditure elasticities of demand to 

dairy import data from five SEA countries. For each of the appendix tables 1-1 through 1-19, ownprice elasticities relevant for each exporter can be found in the gray diagonal boxes. The numbers 

in the orange boxes are cross-price elasticities. Each column displays the own-price and cross-price 

elasticities associated with imports by a SEA country. Expenditure elasticities are presented in the 

blue boxes on the right side of each table (Note that all the elasticities appearing in the rows for the 

United States also appear in table 12).

Cheese Imports

Cheese has been the dairy product consistently imported by most SEA countries from their trading 

partners; each of the top five SEA importing countries imported cheese from more than one trading 

partner almost every month. Thus, sufficient data were available to analyze cheese imports for all 

five importing countries included in the Rotterdam analysis. While the United States has not been 

the leading supplier of cheese imports for any of the SEA countries modeled (as can be seen in 

tables 5 through 9), U.S. cheese exports to the region have increased (GTA, 2006 and 2016).

Model results relative to SEA cheese imports are presented in appendix tables 1-1 through 1-5. 

Notice that the number of consistent suppliers differs from one importing country to another. 

Singapore has had the most diverse sources for cheese imports; the EU, New Zealand, Australia, 

the United States, Switzerland, and Japan have all been consistent suppliers of cheese. Since percapita consumption of a wide variety of cheeses is usually greater in high-income countries, it is 

not surprising that Singapore would have the greatest number of consistent suppliers. At the other 

extreme, Vietnam consumes less cheese and has had only three consistent suppliers: the EU, New 

Zealand, and Australia. Vietnam’s cheese imports from the United States have been inconsistent and 

are included with the rest of the world (ROW).

For the Philippines, cheese from the United States and New Zealand are substitutes. Notice from 

appendix table 1-1, that a 1-percent increase in New Zealand’s price results in a 0.3-percent increase 

in cheese imports from the United States. However, a 1-percent increase in the U.S. price results in 

only a 0.1-percent increase in cheese imports from New Zealand. The model results also suggest 

that SEA cheese imports from the United States are very responsive to changes in the U.S. price 

for cheese exports to Malaysia and Singapore, with own-price elasticities of –1.4 and –1.7, respectively. The model results suggest that SEA cheese imports from the United States are responsive to 

changes in prices of competitors in some cases. For Malaysia, the findings suggest that a 1-percent 

increase in the cheese price for Australia would result in a 0.9-percent increase in cheese imports 

from the United States. Likewise, a 1-percent increase in New Zealand’s cheese price would lead to 

a 0.7-percent increase in cheese imports from the United States. For Singapore, cross-price elasticities indicate that the United States competes with the EU (0.4), Australia (0.9), and Japan (0.04) on 

the basis of price. For Indonesia cheese imports from the United States, the U.S. own-price elasticity 

is not significant, and the cross-price elasticities are not significant.
35

Prospects for Growth in U.S. Dairy Exports to Southeast Asia, ERR-278

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Appendix table 1-1

Price and expenditure elasticities for Philippine cheese imports, 2006-2016

Philippines

Own-price and cross-price elasticities

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia United States Switzerland Rest of world

Percent 

change 

in import 

quantity 

per

exporter

European 

Union

–0.837*** 

(0.212)

 0.618***

 (0.279)

 0.247

 (0.203)

 0.004

 (0.117)

 0.002

 (0.007)

 –0.027

 (0.113)

0.918***

 (0.203)

New

Zealand

 0.102**

 (0.046)

–0.356***

 (0.114)

 0.162***

 (0.074)

 0.076*

(0.040)

 0.004*** 

(0.001)

 0.012

 (0.034)

 1.089***

 (0.077)

Australia

 0.108

 (0.088)

 0.429***

 (0.195)

–0.566***

 (0.182)

 –0.095

 (0.077)

 –0.003

 (0.003)

 0.126*

(0.068)

 0.991***

 (0.154)

United 

States

 –0.003

 (0.078)

 0.308*

 (0.162

 –0.145

 (0.118)

–0.129

 (0.100)

 0.002

 (0.003)

 –0.030

(0.069)

0.931***

 (0.074)

Switzerland 0.109

 (0.325)

 1.215***

(0.441)

 –0.280

 (0.363)

 –0.127

 (0.193)

–0.814***

 (0.212)

 –0.103

(0.221)

0.596***

 (0.301)

Rest of 

world

 0.040

 (0.170)

 0.113

 (0.306)

 0.433*

 (0.232)

 –0.067

 (0.134)

 –0.003

 (0.007)

 0.436***

(0.179)

1.409***

 (0.240)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. ** represent significant levels at 5percent. * 

represent significant levels at 10 percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.

Appendix table 1-2

Price and expenditure elasticities for Indonesia cheese imports, 2006-2016

Indonesia

Own-price and cross-price elasticities

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia United States

Rest of 

world

Percent 

change 

in import 

quantity

per

exporter

European 

Union

–0.791*** 

(0.235)

 0.290

 (0.600)

 0.146

 (0.376)

 0.426 

 (0.428)

–0.071

(0.169)

1.181***

(0.232)

New

Zealand

 0.031

 (0.065)

–0.564*

 (0.309)

 0.368***

 (0.161)

 –0.081

(0.187)

 0.246*** 

(0.070)

1.097***

(0.881)

Australia 0.031

 (0.080)

0.731***

 (0.321)

–0.639***

 (0.261)

 0.113

 0.209)

 –0.237***

 (0.084)

0.881***

(0.125)

United 

States

 0.117

 (0.118)

–0.206

 (0.479)

 0.146

 (0.270)

 –0.046

 (0.422)

 –0.011

 (0.118)

1.106***

(0.163)

Rest of 

world

 –0.089

 (0.211)

2.849***

 (0.809)

–1.381***

 (0.490)

 –0.048

 (0.535)

–1.330***

 (0.311)

–0.140

(0.346)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent.

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.
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Prospects for Growth in U.S. Dairy Exports to Southeast Asia, ERR-278

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Appendix table 1-3

Price and expenditure elasticities for Vietnam cheese imports, 2006-2016

Vietnam

Own-price and cross-price elasticities

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia Rest of world

Percent change 

in import 

quantity per 

exporter

European 

Union

–0.339*** 

(0.112)

0.072

(0.096)

0.118***

(0.040)

0.149*** 

(0.050)

0.722***

(0.074)

New

Zealand

0.224

(0.297)

–0.539

(0.328)

0.128

(0.102)

0.187

(0.119)

0.520***

(0.168)

Australia 1.252***

(0.426)

0.439

(0.351)

–1.623*** 

(0.293)

–0.068

(0.264)

0.820*

(0.439)

Rest of 

world

0.626***

(0.212)

0.256 

(0.163)

–0.145

(0.104)

–1.855** 

(0.200)

2.899***

(0.275)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. * represent significant levels at 10 

percent.

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solutions.

Appendix table 1-4

Price and expenditure elasticities for Malaysia cheese imports, 2006-2016

Malaysia

Own-price and cross-price elasticities for each exporter

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia United States

Rest of 

world

Percent 

change 

in import 

quantity

per exporter

European 

Union

–1.200*** 

(0.161)

 0.563***

 (0.208)

 0.471***

 (0.191)

 –0.031 

 (0.091)

0.198***

(0.083)

0.580***

(0.151)

New

Zealand

 0.182***

 (0.067)

–0.672*** 

(0.182)

 0.284**

 (0.146)

 0.114*

(0.061)

 0.092** 

(0.047)

1.445***

(0.119)

Australia 0.130***

 (0.055)

 0.242**

 (0.125)

–0.525***

 (0.129)

 0.125***

 (0.047)

 0.028

 (0.038)

0.797***

(0.093)

United 

States

 –0.061

 (0.178)

 0.690*

 (0.370)

 0.881***

 (0.328)

–1.375***

 (0.229)

 –0.135

 (0.127)

0.686***

(0.328)

Rest of 

world

 0.467***

 (0.197)

 0.668***

 (0.341)

 0.235

 (0.320)

 –0.163

 (0.154)

–1.207***

 (0.196)

0.852***

(0.253)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent.

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.
37

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Appendix table 1-5

Price and expenditure elasticities for Singapore cheese imports, 2006-2016

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. ** represent significant levels at 5percent. * represent 

significant levels at 10 percent.

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade Solution.

Expenditure elasticities for imports of cheese from the United States are estimated to be inelastic for 

the Philippines (0.9), Malaysia (0.7), and Singapore (0.8). If the future is similar to the past, these 

estimates suggest that the United States would gain if imports grow but could lose market share in 

the cheese market for these countries over time. Indonesia shows a slightly elastic expenditure elasticity for the United States of 1.1. If Indonesia’s cheese imports grow, the United States will likely 

gain market share, assuming prices remain constant.

Although this report emphasizes the competitive position of the United States with respect to SEA 

imports, some values with respect to other suppliers are noteworthy. While the U.S. own-price 

elasticity with respect to Singapore’s cheese imports is estimated to be relatively elastic (–1.7), 

Singapore’s cheese imports from Switzerland and Japan are estimated to be even more sensitive to 

changes in prices—with elasticities of –3.0 and –2.5, respectively. Since Singapore imports only 

small quantities of cheese from these suppliers, small changes could show up as large in percentage 

terms.

Whey Product Imports

In 2016, more than 91 percent of SEA whey product imports were supplied by New Zealand, the EU, 

the United States, and Australia (table 4). Model results relative to SEA whey product imports are 

presented in appendix tables 1-6 through 1-8. Three SEA countries had consistent imports of whey 

products from at least three exporting countries each over the study period: Malaysia, Singapore, 

and the Philippines. Malaysia and Singapore had four consistent suppliers of whey products over the 

study period: the EU, New Zealand, Australia, and the United States. For the Philippines, the list 

of consistent suppliers is the same, with the exception of Australia. The EU has been the greatest 

supplier of whey products to the region, followed by the United States (table 4). 

Singapore

Own-price and cross-price elasticities for each exporter

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia United States Switzerland Japan Rest of world

Percent 

change 

in import 

quantity

per

exporter

European 

Union

–1.138*** 

(0.095)

 0.180***

 (0.069)

 0.706***

 (0.088)

 0.094***

 (0.045)

0.124***

(0.032)

 –0.005

 (0.005)

 0.038

 (0.052)

1.049***

 (0.072)

New

Zealand

 0.355***

 (0.136)

–0.443***

 (0.201)

–0.141

 (0.194)

–0.032

(0.092)

0.087 

(0.063)

 –0.005

 (0.009)

 0.188

 (0.180)

 0.721***

 (0.182)

Australia 0.598***

 (0.075)

–0.061

 (0.084)

–0.744***

 (0.129)

 0.170***

 (0.048)

0.020

(0.034)

 0.005

(0.005)

 0.012

 (0.054)

 1.115***

 (0.094)

United 

States

 0.436***

 (0.207)

 –0.076

 (0.217)

 0.928***

 (0.262)

–1.668***

 (0.193)

0.002

(0.095)

 0.043***

(0.015)

 0.336***

 (0.159)

0.839***

 (0.242)

Switzerland 2.214***

 (0.565)

 0.788

 (0.572

 0.430

 (0.708)

 0.008

 (0.364)

–2.966***

(0.368)

 0.011

(0.047)

 –0.485

 (0.425)

1.607***

 (0.603)

Japan –1.032

 (1.052)

 –0.527

 (0.971)

 1.173

 (1.185)

 1.840***

 (0.665)

0.121

(0.529)

 –2.552***

(0.202)

 0.978

 (0.797)

 –2.459***

 (0.838)

Rest of 

world

 0.233

 (0.321)

 0.559*

 (0.321)

 0.085

 (0.396)

 0.444***

 (0.210)

–0.167

(0.146)

0.030

(0.024)

 –1.184***

(0.338)

0.847***

 (0.346)
38

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For the Philippines and Singapore, it is notable that many of the own-price and cross-price elasticities estimates are statistically significant and relatively inelastic. This suggests that these two 

importers are relatively insensitive to suppliers' prices of whey products. It could also be the case 

that the Philippines and Singapore have well-established relationships with their suppliers of 

whey products and may be reluctant to substitute whey products from suppliers of other countries. 

Malaysia, Singapore, and the Philippines have U.S. own-price elasticity estimates for whey product 

imports of –1.0, –0.2, and –0.3, respectively. It is noteworthy that the EU cross-price elasticity estimate for Malaysia’s imports from the United States is 0.9, about the same as the U.S. own-price elasticity. This suggests that the level of U.S. whey product exports to Malaysia is about as sensitive to 

the EU price as it is to the U.S. price. In the Philippines, whey products from the United States and 

EU are also substitutes. Given the relatively low sensitivity of SEA whey product imports to prices, 

other factors beyond the scope of this study may have more important roles in the decision making 

of SEA importers concerning whey product imports.

For all three countries, U.S. expenditure elasticities are relatively elastic (1.4 for Malaysia, 2.3 for 

Singapore, and 1.2 for the Philippines). Thus, if the future is similar to the period of this study, the 

United States can expect to gain market share for whey products as SEA import expenditures grow. 

Appendix table 1-6

Price and expenditure elasticities for Philippine Whey Product Imports, 2006-2016

Philippines

Own-price and cross-price elasticities for each exporter

Expenditure

elasticities

Effect of 1-percent Change in Price per exporter

European 

Union New Zealand United States Rest of world

Percent 

change 

in import 

quantity per 

exporter

European 

Union

–0.279*** 

(0.026)

 0.022***

 (0.009)

 0.161***

 (0.021)

 0.095*** 

 (0.021)

 0.943***

 (0.090)

New

Zealand

 0.168***

 (0.067)

–0.176***

 (0.052)

 0.111*

 (0.065)

 –0.103

 (0.072)

 0.120***

 (0.260)

United 

States

 0.179***

 (0.023)

 0.016

 (0.010)

–0.318*** 

(0.029)

 0.122***

 (0.022)

 1.192***

 (0.105)

Rest of 

world

 0.148***

 (0.033)

 –0.022

 (0.015)

 0.173*** 

(0.031)

 –0.299***

 (0.042)

 0.997***

 (0.139)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. * represent significant levels at 10 

percent.

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.
39

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Appendix table 1-7

Price and expenditure elasticities for Malaysia whey product imports (2011-2016)

Malaysia

Own-price and cross-price elasticities for each exporter

Expenditure

elasticities

Effect of 1-percent Change in Price per exporter

European 

Union

New 

Zealand Australia United States

Rest of 

world

Percent 

change 

in import 

quantity

per exporter

European 

Union

–0.401*** 

(0.068)

 0.040

 (0.055)

 0.075***

 (0.018)

0.262***

(0.042)

0.023

(0.016)

0.763***

(0.119)

New

Zealand

 0.095

 (0.129)

–0.198

 (0.149)

 0.001

 (0.028)

0.058

(0.071)

0.044* 

0.024)

1.467***

(0.319)

Australia 0.931***

 (0.223)

 0.004

 (0.146)

–0.994***

 (0.175)

0.043

(0.217)

0.016

(0.102)

0.634*

(0.330)

United 

States

 0.897***

 (0.144)

 0.084

 (0.103)

 0.012

 (0.060)

–1.043***

(0.148)

0.050 

(0.047)

1.360***

(0.236)

Rest of 

world

 0.748

 (0.508)

 0.614*

 (0.332)

 0.041

 (0.267)

0.472

(0.444)

–1.876***

(0.305)

0.218

(0.746)

Note: Due to the U.S. limited whey products exports to Malaysia during the first several years of this data source, the estimate 

presented in the above table were derived using data from 2011-2016. Standard errors are in parentheses. *** represent 

significant levels at 1percent. * represent significant levels at 10 percent.

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.

Appendix table 1-8

Price and expenditure elasticities for Singapore whey product imports, 2006-2016

Singapore

Own-price and cross-price elasticities for each exporter

Expenditure 

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia United States

Rest of 

world

Percent 

change 

in import 

quantit per 

exporter

European 

Union

–0.061 

(0.092)

–0.171***

 (0.067)

 0.152***

 (0.064)

 0.027 

 (0.062)

 0.052

(0.051)

0.284***

(0.095)

New 

Zealand

–0.255***

 (0.099)

–0.018

 (0.157)

 0.217**

 (0.096)

 –0.010

 (0.118)

 0.065

(0.086)

0.631***

(0.197)

Australia 0.298***

 (0.126)

 0.286***

 (0.126)

–0.567***

 (0.152)

 0.108

 (0.119)

 –0.124

 (0.089)

0.602***

(0.183)

United 

States

 0.029

 (0.064)

 0.007

 (0.083)

 0.057

 (0.063)

–0.217 

(0.229)

 –0.138***

 (0.064)

2.311***

(0.184)

Rest of 

world

 0.154

 (0.150)

 0.129

 (0.170)

 –0.188

 (0.135)

 0.391***

(0.183)

–0.486***

 (0.171)

0.728***

(0.323)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.
40

Prospects for Growth in U.S. Dairy Exports to Southeast Asia, ERR-278

USDA, Economic Research Service

SMP Imports

Model results relative to SEA SMP product imports are presented in appendix tables 1-9 through 

1-13. All five SEA importers included in this study have been consistent importers of SMP, and these 

importers have consistently imported SMP from the same top four suppliers (the EU, New Zealand, 

Australia, and the United States). In 2016, the United States was the second largest supplier of SMP 

to SEA, behind New Zealand (table 4). Model results indicate that for SEA imports of SMP from 

the United States, the U.S. own-price response is relatively elastic for Malaysia, Indonesia, and the 

Philippines (–1.3, –1.2, and 1.1, respectively), but relatively inelastic for Vietnam and Singapore 

(–0.9, and –0.4 respectively).

The largest own-price elasticity absolute value estimate listed in the tables for SMP imports is –1.8 

for Vietnam’s imports of SMP from New Zealand, suggesting that these imports are very sensitive to 

prices. This contrasts with the U.S. own-price elasticity of –0.9 for Vietnam’s imports of SMP. Since 

the United States has been the largest supplier of SMP to Vietnam, the inelastic demand could be 

the result of well-established trade relationships and the relatively large import volume (as relatively 

large changes in import volumes could appear small in percentage terms).

The cross-price elasticities are particularly interesting for U.S. exports to the region. For Singapore, 

the EU cross-price elasticity estimate for imports from the United States is 1.4, a much greater 

magnitude than the –0.4 own-price elasticity for the United States. This suggests that for Singapore, 

changes in the EU prices tend to have larger impacts on imports from the United States than changes 

in U.S. prices. This may be because a large proportion of Singapore’s SMP imports are from the 

EU, while SMP imports from the United States are relatively small; even a small change in quantity 

imported from the United States is a large percentage change. For Malaysia, the New Zealand and 

Australia cross-price elasticities for SMP imports from the United States are both relatively inelastic, 

about 0.7. For Indonesia, the EU cross-price elasticity estimate for SMP imports from the United 

States is 0.8.

The expenditure elasticity estimates for SMP imports from the United States are mixed. They are 

relatively inelastic for Malaysia (0.7), and relatively elastic for Vietnam and Indonesia (both about 

1.3). For both Singapore and the Philippines, the expenditure elasticities for SMP imports from the 

United States are close to unity. This means that the percentage increase or decrease in Singapore’s 

and the Philippines’ import quantities from the United States would be about the same as the 

percentage increase or decrease in those countries’ total SMP import expenditures, all other things 

being equal.
41

Prospects for Growth in U.S. Dairy Exports to Southeast Asia, ERR-278

USDA, Economic Research Service

Appendix table 1-9

Price and expenditure elasticities for Philippine skim milk powder imports, 2006-2016

Philippines

Own-price and cross-price elasticities 

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia United States

Rest of 

world

Percent 

change 

in import 

quantity

per exporter

European 

Union

 0.146 

(0.149)

 –0.355

 (0.232)

 0.074

 (0.135)

 0.109 

 (0.205)

 0.026

(0.057)

 1.355***

 (0.300)

New

Zealand

–0.091

 (0.438)

–0.104

 (0.267)

 0.158*

 (0.088)

 0.029

 (0.232)

 0.008 

(0.054)

1.180***

 (0.115)

Australia 0.056

 (0.102)

 0.463*

 (0.267)

–1.058***

 (0.194)

 0.647***

 (0.245)

 –0.107

 (0.066)

 1.448***

 (0.237)

United 

States

 0.027

 (0.051)

 0.028

 (0.223)

 0.212***

 (0.080)

–0.255

 (0.236)

 –0.146

 (0.771)

 0.996***

 (0.415)

Rest of 

world

 0.152

 (0.247)

 –0.262

 (0.264)

 0.180

 (0.116)

 –0.007

 (0.035)

 0.268

 (0.169)

 0.666***

 (0.228)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.

Appendix table 1-10

Price and expenditure elasticities for Indonesia skim milk powder imports, 2006-2016

Indonesia

Own-price and cross-price elasticities for each exporter

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia United States

Rest of 

world

Percent 

change 

in import 

quantity

per exporter

European 

Union

–1.452*** 

(0.299)

 0.804*** 

 (0.262)

 –0.232

 (0.209)

 1.085*** 

 (0.346)

 –0.203***

 (0.083)

 0.879***

 (0.126)

New

Zealand

 0.631***

 (0.206)

–1.437***

 (0.343)

 0.704***

 (0.211)

 –0.071

 (0.332)

 0.172*** 

(0.073)

0.980***

(0.102)

Australia –0.254

 (0.229)

 0.980***

 (0.292)

–1.163***

 (0.323)

 0.463

 (0.373)

 –0.026

 (0.085)

 0.712***

 (0.118)

United 

States

 0.769***

 (0.245)

–0.064

 (0.300)

 0.301

 (0.242)

–1.155***

 (0.480)

 0.149*

 (0.088)

 1.275***

 (0.129)

Rest of 

world

–1.259***

 (0.527)

 1.396***

 (0.591)

 –0.151

 (0.497)

 1.335*

 (0.788)

 –1.284***

 (0.308)

 1.141***

 (0.378)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.
42

Prospects for Growth in U.S. Dairy Exports to Southeast Asia, ERR-278

USDA, Economic Research Service

Appendix table 1-11

Price and expenditure elasticities for Vietnam skim milk powder imports, 2006-2016

Vietnam 

Own-price and cross-price elasticities for each exporter

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia United States

Rest of 

world

Percent 

change 

in import 

quantity

per exporter

European 

Union

–1.415*** 

(0.331)

 1.040***

 (0.327)

 –0.015

 (0.212)

 0.329 

 (0.310)

 0.062

(0.066)

0.795***

(0.175)

New

Zealand

 1.148***

 (0.361)

–1.822***

 (0.645)

 –0.026

 (0.317)

 0.710

 (0.499)

–0.026 

(0.092)

1.200***

(0.165)

Australia –0.046

 (0.054)

–0.073

 (0.877)

–0.754

 (0.820)

 0.109***

 (0.050)

 –0.222

 (158)

0.515***

(0.257)

United 

States

 0.199

 (0.188)

 0.389

 (0.274)

 0.217

 (0.154)

–0.894***

 (0.331)

 –0.090*

 (0.050)

1.291***

(0.099)

Rest of 

world

 0.522

 (0.520)

 0.066

 (0.706)

 –0.613

 (0.438)

 1.258*

 (0.694)

 –1.101***

 (0.208)

0.446

(0.300)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade Solution.

Appendix table 1-12

Price and expenditure elasticities for Malaysia skim milk powder imports, 2006-2016

Malaysia

Own-price and cross-price elasticities for each exporter

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia United States

Rest of 

world

Percent 

change 

in import 

quantity

per exporter

European 

Union

–1.443*** 

(0.162)

 0.786***

 (0.226)

 0.385*

 (0.213)

 0.003 

 (0.102)

 0.275***

(0.076)

 0.795***

 (0.175)

New

Zealand

 0.235***

 (0.068)

–0.760***

 (0.189)

 0.388***

 (0.156)

 0.109*

 (0.064)

 0.026 

(0.043)

1.381***

 (0.124)

Australia 0.099*

 (0.054)

 0.331***

 (0.133)

–0.583***

 (0.140)

 0.104***

 (0.050)

 0.048

 (0.035)

0.806***

 (0.099)

United 

States

 0.005

 (0.181)

 0.652*

 (0.381)

 0.729***

 (0.350)

–1.315***

 (0.237)

 –0.061

 (0.117)

 0.723***

 (0.329)

Rest of 

world

 0.622***

 (0.172)

 0.198

 (0.323)

 0.431

 (0.306)

–0.777***

 (0.148)

–1.174***

 (0.150)

 0.654***

 (0.261)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.
43

Prospects for Growth in U.S. Dairy Exports to Southeast Asia, ERR-278

USDA, Economic Research Service

Appendix table 1-13

Price and expenditure elasticities for Singapore skim milk powder imports, 2006-2016

Singapore

Own-price and cross-price elasticities for each exporter

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia United States

Rest of 

world

Percent 

change 

in import 

quantity

per exporter

European 

Union

–0.616*** 

(0.165)

 0.416***

 (0.136)

 0.081

 (0.212)

 0.032 

 (0.156)

0.087

(0.121)

 0.930***

 (0.092)

New

Zealand

 0.654***

 (0.215)

–0.331

 (0.273)

 –0.078

 (0.094)

 –0.043

 (0.026)

–0.201 

(0.203)

1.200***

 (0.165)

Australia 0.597

 (0.436)

–0.368

 (0.443)

–0.932***

 (0.312)

 0.052

 (0.054)

 0.651

 (0.419)

 0.290

 (0.358)

United 

States

 1.426***

 (0.703)

 –1.236

 (0.744)

 0.314

 (0.329)

–0.358***

 (0.172)

 –0.146

 (0.771)

 0.996***

 (0.415)

Rest of 

world

 0.152

 (0.247)

 –0.262

 (0.264)

 0.180

 (0.116)

 –0.007

 (0.035)

 –0.089

 (0.334)

 1.430***

 (0.150)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.

Lactose Imports

Model results relative to SEA lactose product imports are presented in appendix tables 1-14 through 

1-17. The United States has been the leading supplier of lactose to SEA (table 4). Both the United 

States and the EU were consistent suppliers of lactose to the Philippines, Vietnam, and Malaysia 

from 2006 to 2016. In addition to the United States and the EU, New Zealand has been a consistent 

supplier to Indonesia. A Rotterdam model could not be formulated for Singapore because the United 

States was the only consistent supplier of lactose to the country from 2006 to 2016, with imports 

from the United States totaling $11.5 million in 2016. 

For all four importing countries included in the analysis, own-price elasticity of imports from the 

United States estimates are relatively inelastic, ranging from –0.2 for Malaysia to –0.6 for Indonesia. 

Cross-price elasticity estimates for Indonesia’s imports of lactose from the United States are significant for the EU and New Zealand (0.3 and 0.2, respectively). For Vietnam and the Philippines, 

imports of U.S. and EU lactose serve as substitutes—with cross-price elasticities of 0.3 and 0.2, 

respectively. 

All the U.S. expenditure elasticities for lactose imports of the SEA countries analyzed are close 

to unity, at 1.2 for Indonesia, 1.1 for Malaysia, 0.9 for Vietnam, and 1.0 for the Philippines. This 

suggests that changes in lactose import expenditures for Indonesia, Malaysia, Vietnam, or the 

Philippines would give rise to proportionate changes in total lactose imported from the U.S. for any 

of the four countries. 

For the most part, own-price and cross-price elasticity estimates for lactose imports of all four countries are relatively inelastic, meaning that lactose imports of SEA countries are relatively insensitive 

to price changes. There are some exceptions. For Indonesia, the New Zealand own-price elasticity 

is –1.2 and the ROW own-price elasticity is –1.0. ROW own-price elasticity estimates are also relatively elastic for Malaysia and Vietnam (–1.5 and –1.7, respectively). This suggests that minor players 

can gain or lose significantly in percentage terms when their lactose prices change. 
44

Prospects for Growth in U.S. Dairy Exports to Southeast Asia, ERR-278

USDA, Economic Research Service

Appendix table 1-14

Price and expenditure elasticities for Philippine lactose imports, 2006-2016

Philippines

 

Own-price and cross-price elasticities for each exporter

Expenditure

elasticities Effect of 1-percent change in price per exporter

European Union United States Rest of world

Percent change 

in import quantity

per exporter

European 

Union

–0.347*

 (0.201)

0.366*

 (0.200)

 –0.019 

 (0.056)

 1.095***

 (0.119)

United 

States

 0.222*

 (0.121)

–0.317*** 

(0.130 )

0.094***

 (0.036)

 1.026***

 (0.077)

Rest of 

world

 –0.103

 (0.301)

0.833***

(0.322)

–0.730***

 (0.168)

 0.253

 (0.271)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. * represent significant levels at 10 

percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.

Appendix table 1-15

Price and expenditure elasticities for Indonesia lactose imports, 2006-2016

Indonesia

Own-price and cross-price elasticities for each exporter

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand United States Rest of world

 Percent change 

in import quantity

per exporter

European 

Union

–0.729*** 

(0.152)

 0.194***

 (0.094)

 0.439***

 (0.139)

 0.096* 

 (0.056)

 0.943***

 (0.090)

New

Zealand

 0.445***

 (0.216)

–1.219***

 (0.252)

 0.692***

 (0.259)

 0.082

 (0.100)

 0.764***

 (0.209)

United 

States

 0.264***

 (0.083)

 0.181***

 (0.068)

–0.602*** 

(0.116)

 0.158***

 (0.039)

 1.199***

 (0.084)

Rest of 

world

 0.245*

 (0.142)

 0.091

 (0.110)

0.666*** 

(0.167)

 –1.002***

 (0.111)

 1.054***

 (0.212)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. * represent significant levels at 10 

percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.

Appendix table 1-16

Price and expenditure elasticities for Vietnam lactose imports, 2006-2016

Vietnam

Own-price and cross-price elasticitiesfor each exporter

Expenditure

elasticities Effect of 1-percent change in price per exporter

European Union United States Rest of world

 Percent change 

in import 

quantity

per exporter

European 

Union

–0.790*** 

(0.144)

0.702***

(0.134)

 0.088 

 (0.053)

 0.881***

 (0.106)

United 

States

 0.331***

 (0.063)

–0.458*** 

(0.067)

0.128***

 (0.028)

 0.945***

 (0.059)

Rest of 

world

 0.425

 (0.256)

1.314*** 

(0.289)

–1.739***

 (0.246)

 2.137***

 (0.475)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. * represent significant levels at 10 

percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.
45

Prospects for Growth in U.S. Dairy Exports to Southeast Asia, ERR-278

USDA, Economic Research Service

Appendix table 1-17

Price and expenditure elasticities for Malaysia lactose imports, 2006-2016

Malaysia

Own-price and cross-price elasticities for each exporter

Expenditure 

elasticities Effect of 1-percent change in price per exporter

European Union United States Rest of world

Percent change 

in import 

quantity per 

exporter

European 

Union

–0.568*** 

(0.148)

0.240

(0.157)

0.328*** 

(0.108)

0.943***

(0.090)

United 

States

 0.073

 (0.048)

–0.212*** 

(0.079)

 0.139***

(0.059)

1.107***

(0.059)

Rest of 

world

 0.309***

 (0.101)

0.429*** 

(0.182)

–1.486***

(0.682)

1.037***

(0.174)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. * represent significant levels at 10 

percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.

Butterfat Product Imports

Of the five SEA countries, sufficient data were available to estimate import demand elasticities for 

butterfat products in Indonesia only. The own-price elasticities for butterfat products are negative for 

all sources, as suggested by theory. The United States was not a major exporter of butterfat products 

to Indonesia. Indonesia’s responsiveness to changes in the price of butterfat products is strongest for 

products supplied by New Zealand (appendix table 1-18). 

Appendix table 1-18

Price and expenditure elasticities for Indonesia butterfat product imports, 2006- 2016

Indonesia

Own-price and cross-price elasticities for each exporter

Expenditure

elasticities

Effect of 1-percent change in price per exporter

European 

Union New Zealand Australia

Percent 

Change in 

Import Quantity

per exporter

European 

Union

–0.336* 

(0.181)

0.849***

(0.194)

–0.513*** 

(0.161)

1.088***

(0.106)

New Zealand 0.400***

(0.091)

–0.750*** 

(0.193)

0.033

(0.155)

0.804***

(0.055)

Australia –1.465***

(0.460)

2.118***

(0.940)

–0.652

(0.903) 

1.937***

(0.307)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent. * represent significant levels at 10 

percent. 

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.
46

Prospects for Growth in U.S. Dairy Exports to Southeast Asia, ERR-278

USDA, Economic Research Service

Whole Milk Powder Imports

The United States has been a relatively small exporter of whole milk powder (WMP). In recent 

years, SEA has emerged as a larger WMP importer and is becoming a potential market destination for U.S. WMP. Of the five SEA countries, only one country—Singapore—had trade data from 

2006 to 2016 sufficient for analysis (appendix table 1-19). In Singapore, consumers’ responsiveness 

to changes in the price of WMP is strongest for Australia—followed by Malaysia, the EU, and then 

New Zealand. An implication for Singapore import demand for WMP is that Australia has a sizeable 

influence on WMP products, given the magnitude of its own-price elasticity and volume.

Appendix table 1-19

Price and expenditure elasticities for Singapore whole milk powder imports, 2006-2016

Singapore

Own-price and cross-price elasticities for each exporter

Expenditure 

elasticities

Effect of 1-percent change in price per exporter

European 

Union

New

Zealand Australia Malaysia Rest of world

Percent 

change 

in import 

quantity per 

exporter

European 

Union

–0.549*** 

(0.148)

 0.329*** 

 (0.126)

 0.260*** 

(0.115)

 –0.009 

 (0.042)

 –0.031

 (0.066)

 0.652***

 (0.128)

New

Zealand

 0.193***

 (0.073)

–0.495***

 (0.104)

 0.118

 (0.075)

 0.099***

 (0.026)

 0.085* 

(0.044)

 1.364

 (0.876)

Australia 0.277***

 (0.123)

 0.214

 (0.135)

–0.734***

 (0.168)

 0.127***

 (0.051)

 0.115*

 (0.067)

 0.857***

 (0.125)

Malaysia –0.020

 (0.092)

 0.374***

 (0.100)

 0.264***

 (0.105)

–0.658***

 (0.088)

 0.039

 (0.047)

 0.306***

 (0.081)

Rest of 

world

–0.118

 (0.252)

 0.555***

 (0.288)

 0.412*

 (0.240)

 0.068

 (0.080)

–0.918***

 (0.242)

 1.658***

 (0.404)

Note: Standard errors are in parentheses. *** represent significant levels at 1percent.

Sources: USDA, Economic Research Service calculations using data from Global Trade Atlas and World Integrated Trade 

Solution.