U.S. Dairy Industry Must Adopt Halal Practices for Expansion

Over the past three decades, the U.S. dairy industry has transformed from a non-participant in the global market to a formidable exporter, shipping nearly 18% of its milk production in the form of dairy products. This impressive trajectory, however, is poised for a new challenge: catering to the evolving preferences of international consumers, particularly the growing demand for halal-certified dairy products.

Southeast Asia, the second-largest market for U.S. dairy exports, is witnessing a surge in the demand for halal products. Home to over 600 million people, including the world’s fourth most populous country, Indonesia, the region boasts a Muslim population of 300 million – a figure comparable to the entire U.S. population. As followers of Islam, these consumers adhere to halal, a set of dietary laws that govern not only food and drink but all aspects of daily life.

Derived from Arabic, ‘halal’ translates to ‘lawful’ or ‘permissible.’ It signifies purity, cleanliness, safety, and quality, making it a crucial consideration for food and beverage manufacturers, restaurants, and retailers catering to Muslim consumers. The concept of halal is akin to the kosher requirements observed in the Jewish faith.

In countries like Malaysia and Indonesia, all dairy ingredients must be halal-certified. Indonesia, in fact, has mandated halal labeling on all consumer foods by October 2024. The silver lining for U.S. dairy processors is that many of their products may already meet halal requirements. They simply need to acquire certification from a third-party organization to validate and communicate their halal compliance.

While some U.S. exporters have already obtained halal certification, they often fail to highlight this to their Southeast Asian customers, unlike their international counterparts. Those who do emphasize their halal status find it enhances customer trust and paves the way for expanded business opportunities. For instance, at an Indonesian trade show, a U.S. business that prominently displayed its halal certification attracted customers in droves.

The halal food market is experiencing rapid growth in non-Muslim countries across Asia, driven by rising incomes and the increasing affordability of nutritious dairy products. Japan and South Korea, two of the top 10 U.S. dairy customers, have started requiring halal certification for imported ingredients to cater to their Muslim consumers, particularly in Southeast Asia.

Halal certification is becoming a prerequisite for conducting business not only in Southeast Asia but also in North Africa and other regions with a significant Muslim population. This trend underscores the growing importance of halal certification for the success of U.S. dairy exports. For dairy exporters, the time is fast approaching when they can no longer afford to selectively target customers to sidestep halal certification.