The Van Trump Report

Interesting Longer-Term Trends Impacting the Dairy Industry… Think About Changes That Will Be Hitting Your Industry As Well!

The dairy sector has struggled with low milk prices and rapid consolidation in the industry that continues to force producers out of business. There has been even greater complications in the wake of COVID-19. Farm bankruptcies jumped by nearly +20% in 2019, and Wisconsin, a top dairy-producing state, had the most. I suspect the bankruptcy numbers will move even higher in 2020. Recent bankruptcies of major dairy processors Dean Foods and Borden Dairy have more sharply highlighted the challenges facing the industry. Fluid milk consumption per capita in the U.S. has been falling for decades, but a recent analysis from Agricultural Economic Insights shows that consumers are actually buying more dairy goods overall, including more butter and cheese. Below are some of the highlights. The full report, “U.S. Dairy Consumption Trends in 9 Charts,” is available HERE.
Butter and Cheese Trending Higher: Cheese consumption per capita has doubled since 1975, with mozzarella and cheddar each representing about 30 percent in 2018; butter consumption has grown by one third since 2001. Part of that surge has come since fat has lost some of its stigma among dietary health advocates.

Ice Cream, Yogurt Trending Lower: Annual per-capita consumption of “regular” ice cream has declined from more than 18 pounds annually to less than 12 since 1975. Reduced-fat ice cream, with steady consumption over time, has been mostly immune to declines. Another dramatic observation in dairy consumption has been the recent about-face in yogurt. After decades of steadily increasing per-capita consumption (at an average rate of 5.2% from 1975 to 2014), yogurt consumption has contracted in the last five years. Specifically, annual per capita consumption fell from 14.9 pounds per person (2014) to 13.5 pounds (2018).
Fluid Milk Consumption has Nosedived: 
Meanwhile, fluid milk consumption dropped more than -40% since 1975, or roughly -1.2% per year, while alternatives like almond and soy milk have grown in popularity. The charts below show annual fluid milk sales of the four largest categories. Before 2009, the trend had been less whole milk, more 2% (especially before the 1990s), more 1%, and more skim milk (especially during the 1990s). However, over the last decade, these trends have flipped. Whole milk sales have turned higher for the first time in decades. At the same time, sales of 2%, 1%, and skim milk have all contracted.
The Big Picture: 
Total per capita dairy consumption in the U.S. can vary from year to year, but since the mid-1990s, the trend has been higher. Although consumption has plateaued in recent years, consumption in 2018, the most recent data point, is the highest since 1975. “Overall, the dairy industry is primarily driven by slow rates of changes unfolding over several decades,” wrote AEI farm economist David Widmar. As consumer trends continue to unfold, AEI says to expect even more changes in the supply chain: grocery store displays, processing, and, eventually, at the farm-level.

Leave a Comment

Your email address will not be published. Required fields are marked *