Dairy demand is getting butter and butter.
A Tuesday report from the U.S. Dairy Export showed increases in total exports of all dairy products at 13%. Other export increases:
- Cheese is up 18.1%
- Nonfat dry milk is up 15.4%
- Condensed and evaporated milk is up an udderly amazing 128% over 2020
Comfort cows: Even with COVID restrictions on restaurants, domestic dairy demand is churning and burning. A USDA report noted people were seeking comfort food—like ice cream and butter—through the pandemic.
In fact, the average American consumed three more pounds of dairy products across all segments in 2020. We all had to get through the pandemic somecow.
Some months even saw an increase of 30% in ice cream sales from grocery stores. Butter increases were around 20-25%.
“Despite challenges posed by the pandemic to all parts of the supply chain in 2020—including the near-overnight loss of the foodservice sector—per capita dairy consumption continued to surge upward thanks to growth in ice cream, butter, and yogurt,” said Michael Dykes, D.V.M., president, and CEO of the International Dairy Foods Association (IDFA).
He added, “Last year’s consumption figures are nearly 70 percentage points above the annual average, showing America’s growing appreciation for their favorite dairy products.”
Dairy pricing is ready to (finally) enter the 21st century.
The industry is making the news again, this time as ag economists and dairy producers call upon Congress to update the long-standing Federal Milk Marketing Orders.
When the orders were created in the 1930s, most milk was sold as fluid milk for beverage consumption. However, dairy consumption today isn’t all milk, as consumers have a larger appetite for cheese, butter, and other dairy products.
The FMMO “promised dairy producers that if their milk is as good as their neighbors’, they will be paid the same price,” said Christina Zuiderveen, managing partner of Black Soil Dairy, LLC.
In her September 15th speech to a Senate subcommittee for reforming the milk-pricing system, Zuiderveen said this sentiment hasn’t held true, as sales of fluid milk have declined. And while she and her family have personally benefited from the current rules, as they sold milk for cheese production in 2020, Zuiderveen is an advocate for fair prices.
Soundbite: “Good intentions to create a system with uniform prices has resulted in a distorted system that is now coming unglued, to the detriment of dairy families whose income depends—at least in part—on the value of a blend of fluid milk, milk powder, and butter,” Zuiderveen said.
The impact is real. Current dairy prices don’t make up for rising inputs for dairy farmers. And the number of dairy farms has decreased 55% between 2003 and 2020.
In case you hadn’t heard, fires in the northwestern portion of the U.S. have been blazing for weeks. And those soaring flames are souring milk production…
The National Interagency Fire Center says more than 2.2M acres have burned in 104 large fires in 12 states.
And where there’s smoke, there’s less milk: Those fires have an impact on human health, and researchers are discovering the implications to animal health as well. University of Idaho assistant professor of animal, veterinary, and food science Amy Skibiel says it’s no cow-incidence poor air quality has an impact on milk production.
Her study on a small group of dairy cows showed they produced three pounds less milk after exposure to poor air quality for seven days.
That’s a major dip: Western dairy farms produce 40% of the nation’s milk—with California topping the charts and Idaho producing the third-largest amount of milk in the states.
Results of their study also showed higher rates of mastitis and increased risk of mortality for calves.
Udderly sad: Not only are the fires, drought, and high temperatures affecting milk production, but the poor conditions are also affecting grazing land quality and quantity.
All these factors are causing some producers to cull their herd ahead of normal schedule.
What’s next: Skibiel hopes more research within the next year will result in a better sense of the impacts smoke has on cattle. Because wildfires, unfortunately, aren’t going away anytime soon.
Yogurt is having an identity crisis.
The FDA set out to clear up the complex that’s been brewing since their last ruling in 1982 and after a National Yogurt Association citizen’s petition in 2000. Needless to say, things have evolved since then.
The ruling took effect July 12 and will allow for new “standards of identity for low-fat and nonfat yogurt” and update labeling requirements.
What it really means: Additional products can be classified as yogurt under certain conditions as long as they are made with suitable milk-derived ingredients. The ruling also defines when certain labels can be used.
Positives: It encourages transparent food labeling (if you say you’re yogurt, you better be milk-based), and… ahem… might help out a certain other dairy labeling issue next June.
Downsides: The International Dairy Foods Association (IDFA) issued a formal objection to the FDA ruling. From their view, the new ruling doesn’t take into account a modernized view of yogurt and will remove some products from shelves. IDFA represents many yogurt manufacturers and offered feedback it says was “largely ignored” by the FDA.
Time will tell if the ruling has time to culture before the dust settles.
The dairy industry seems to be sitting at something of a crossroads.
And the proof is in the puddi….er, yogurt.
Let’s talk supply: Total milk output is growing and it’s not showing signs of stopping. USDA data is pointing to 2.4% growth in daily milk output over 2020, thanks to 82,000 more milking cows all producing 1.5% more milk. The growth is even pushing the U.S. cow herd to a size it hasn’t seen in more than 30 years.
Supply is so strong that areas like Texas have more milk than processing capacity. The state’s 1.32 billion pounds of milk had it flying by New York to become the nation’s fourth-largest milk producer.
Nice timing: Demand is also surging to pre-pandemic levels. Increased traffic at foodservice, re-opened schools, and elsewhere have kept dairy farms busy. Plus, you know what else doesn’t hurt? The estimated $500 million boost in dairy exports that the USDA predicts for 2021 over 2020 levels.
But don’t forget… even while Commodity Corner has been pretty red as of late, commodity prices are still relatively red hot. Feed costs for dairy farmers continue to be a big burden of a bill. Economists expect the high costs to last well into 2022.
Where this goes: With all signs pointing to no slow in supply, the pressure will be on the demand side of the equation to find a home for all that extra milk.
Milk’s got more going for it than just a mustache these days.
The backstory: With 67% of adults concerned about their stress and anxiety levels, mental health has become a mega-focus.
And as Americans look for new ways to manage stress naturally, one dairy duo is ready to serve them a new-age, scientifically-backed snack.
Stress-snack on this: milk phospholipids.
Launched by dairy ingredient-solutions brand NZMP and backed by colossal dairy cooperative Fonterra, the new products – think snack bars and stir-in powders – use naturally occurring lipids in milk to help consumers manage stress, stay focused, and feel positive. The effects are clinically proven.
A soundbite: “By extending our portfolio into the mental wellness space, we’re helping food brands tap into new consumers’ needs, such as mood-enhancement and cognitive performance under stress — issues that have recently amplified due to the pandemic.” noted Charlotte Ortiz with Fonterra.
Plus this: For Fonterra, it’s a strategic way to put its 4.5 billion gallons of milk to work in an era when global fluid milk consumption is declining while brain-boosting and energy-enhancing foods are on the rise.
Where this goes: Lipid-loaded nutritional bars, ready-to-mix powders, and supplement sachets are launching into the active lifestyle market in the very near future.
Scientists in the Land Down Under may soon be putting your morning glass of milk under a lot of pressure.
The rundown: Naturo, an Australia-based company, just received the go-ahead to begin processing milk using the Haelen technique–an “alternative treatment to pasteurization of raw milk.”
The new method allows the milk to chillax under extreme pressure…killing harmful pathogens without turning up the heat.
To give you some context:
- 161˚F for 15 seconds: The industry standard for traditional milk pasteurization.
- 284˚F for 2 seconds: The industry standard for Ultra Heat Treatment (UHT) milk processing.
The best thing since pasteurization: Naturo founder and CEO Jeff Hastings is calling Haelen “the biggest breakthrough in the global milk industry since pasteurization in 1864.”
Since it’s not subjected to traditional heat treatment, researchers tout that the milk will have higher levels of B-vitamins and essential enzymes while maintaining its natural flavor.
Oh, and this: With Haelen killing more germs than pasteurization and UHT, the milk will stay fresh longer…like, way longer. It’ll stay delicious in the fridge for at least two months.
Where this goes: Naturo says Queenslanders can expect to get their first glasses of the “Wholey Milk Company” brand early this year, with plans to expand to the international market in 2022.
The Canadian dairy industry is telling its 10,000 farmers to ‘pause the palm oil.’
The issue: Buttergate.
Backstory: In late 2020, social media debates surfaced when consumers became curious about what was up with their butter. Many were noticing that their butter spreads were stiff and less spreadable at room temperature than normal. Canadian foodie and cookbook author Julie Van Rosendaal went as far as to call it ‘rubber-like.’
And if there was any year to notice a change in the butter dish, 2020 was it. Sales jumped 12.4% during the pandemic.
So what led to the mystery dairy spread debacle?
Rumors spread that lower-grade butter was hitting retail shelves as it was diverted from closed schools and restaurants. Others simply blamed colder temperatures.
The lead culprit: palmitic acids.
The fatty byproducts of palm oil processing are in the spotlight as producers ramped up its use last year when demand for butter surged. The feed additive increases butterfat components in the milk without increasing the overall quantity. It became the perfect solution to supply the butter boom without flooding a liquid milk market with plummeting demand.
Worth noting: There’s no scientific evidence proving the palm oil derivative is causing the hardened butter…yet.
Where this goes: In late February, the Dairy Farmers of Canada officially asked producers to switch away from palm oil to feed alternatives while they investigate consumer complaints. An expert working group has begun the process of digging into the data to reveal the root issue.
U.S. dairymen and women dream of the good ole days where market volatility and supply chain snafus were as common as oat milk.
But recent economic reports have the industry reflecting on 2020, a rollercoaster of a year. From dumping milk in April to cheering on dairy retail demand in September, dairy folks had all the feels.
Tough stuff: Another 2,500 U.S. dairies closed up shop in 2020, an 8% drop-off from 2019. Wisconsin felt the biggest sting, losing 610 dairies, while Minnesota and Pennsylvania saw 300+ closures each.
But not all is bad… The industry added 97,000 cows and average milk per cow output jumped 1.4% per day. Way to be efficient, ladies.
Looking ahead: When the USDA notes your future as ‘unsettled at best,’ it can be a little unnerving. More supply issues and market volatility could be in the future as experts predict continued foodservice demand flux. Plus, lower government purchases for the Farmers to Families Food Box program won’t help.
Add in the industry’s attempts to combat workforce issues by advocating for H2A programs and immigration reform in D.C., and groups like the National Milk Producers Federation have a lot on their plates.
+ While we’re here: The pandemic boosted fluid and alternative milk product sales throughout 2020. One alt-milk brand, Oatly, is getting a lot of hype. The Sweden-based company with A-list celebrity backing [looking at you, Oprah] filed to go public this week.