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In the last two decades, many trends and policy developments impacted the course of the US dairy industry. Since the mid-1990s two important trade agreements, NAFTA and Uruguayn Round have increased international trade for the dairy industry. As of 2015, a major transportation improvement is expected to be achieved by to the expansion of the Panama Canal. The canal is expected to lower transportation costs for many exporters. In this study, we develop a world dairy trade model to analyze dairy product export quantity from the three dairy producing US regions: west coast, gulf coast, and east coast and great lakes combined. We assess the effect of the Panama Canal expansion on the trade of the US regions. We find that the west coast, which includes California, Oregon, Washington, and Idaho states, is one of the biggest beneficiaries of the expansion. The competitive advantages of this region aid in harnessing the most benefits from the transportation improvements and international demand growth for dairy products.


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