Reports from CoBank Knowledge Exchange focusing on the dairy industry.
Once cast as nutritional villains due to their high saturated fat content, full-fat dairy products and other animal fats fell out of favor beginning in the 1970s. Nutrition research in the past 15 years suggests full-fat dairy has a much more nuanced role – and potentially protective effect – on health, and consumers have responded.
Abysmally dry weather conditions across the U.S. have led to extensive culling in the beef cow herd and will tighten beef supplies for years to come.
Average U.S. mailbox milk prices have dropped more than $6.00/cwt since peaking last May. While milk supply here and in Europe has been edging marginally higher since late 2022, we would argue that the price decline is largely due to broader economic factors that are limiting dairy demand both in the U.S. and abroad.
Federal Milk Marketing Orders establish the minimum prices that regulated processors must pay for farm milk.
Prices for retail butter are outpacing nearly all other goods — up 13% YTD according to the Bureau of Labor Statistics — and the worry about its impact on demand is legitimate.
The U.S. is one of the world leaders in whey production and exports. Technological advances have created new value streams beyond commodity whey. In the last 20 years, whey has been transformed from a cheese-making waste byproduct often spread on farm fields as a low-value fertilizer to a highly valuable co-product, driven by rising global consumer demand for protein.
Over the past decade, U.S. milk production has increased by an average annual growth rate of 1.5% while domestic demand has increased at a slightly slower pace.
The U.S. Dollar Index saw rapid deflation in 2020 and has coincided with a rally in commodity prices.
The pandemic in 2020 caused unprecedented market volatility in dairy prices, leading to lower milk checks for dairy producers. However, the price spread is expected to realign in the first half of 2021, bringing normalcy to producer price differentials and mailbox milk prices.
California’s 1.4 million dairy cows are the largest source of methane in the state, and the biggest concentration of dairy-related methane in the country.
On Nov. 1, 2018, the U.S. Department of Agriculture took over the role of managing California’s milk pricing system from the California Department of Food and Agriculture when the Golden State became Order 51 in the Federal Milk Marketing Order system.
A dwindling share of the U.S. workforce is engaged in agriculture and the population as a whole is becoming further removed from the farm. As the population moves toward urban centers and consumers become more affluent, a disconnect widens between those producing food and those consuming it.
Consolidation on dairy farms in the U.S. has driven the industry into what may be a new era of longer, more drawn out price cycles.
Consumption of traditional cow’s milk as a beverage has been declining for decades due to lifestyle changes and cultural shifts that have led to fewer occasions at which Americans drink milk. Meanwhile, plant-based alternatives made from soy, almond, pea and a myriad of other non-mammalian sources have surged in recent years.
Automation and robotics have made their way into milking parlors across Europe, Canada, and most recently the U.S. These technologies are helping sustain small and medium sized farms and relieve some labor challenges and costs; but for now, they are not a clear financial home-run for most.
As the dairy industry evolves and modernizes, the processing sector has become increasingly capital intensive. At the same time, high-quality, reliable milk supply, manufacturing expertise, and strong branding and marketing are more important than ever to compete in the global marketplace.
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