Andrew Novaković, the EV Baker Professor of Agricultural Economics in Cornell University’s Dyson School of Applied Economics and Management, comments on the current balance of milk supply and demand.
“A recent headline proclaimed, ‘America Is Drowning in Milk Nobody Wants’. The ensuing story contained accurate information but tended to paint a ‘glass mostly empty’ image for a glass that is mostly full.
“It is certainly the case that the nation's dairy farmers have been struggling with persistently low milk prices since 2015 and that there are some dairy products that are under particular stress, most notably beverage milk products. The larger back drop is that milk continues to outsell, by a large margin, other beverages offered in the grocery store dairy cooler and cheese continues to be the major growth category even as consumers substitute higher quality and specialty cheese for the more economically priced American cheeses. Moreover, America is rediscovering its age-old love affair with butter, creams, high quality ice cream and the like.
“Beyond the U.S., foreign customers are increasingly looking to U.S. dairy foods, with US exports now representing some 15% of all US dairy sales.
“As reported, it is true that there has been some farm milk, in some parts of the country, on a few days, that has been discarded rather than being unprofitably transported to a distant processor. With cows producing milk every day, a product that has to be sold quickly, and with many dairy processors not wanting to run their plants seven days a week, some because labor is hard to find, it is not unusual on a few holidays and weekends to find a difficult match between production and demand. Unfortunately, this has led to some instances of milk being safely discarded as a least loss option. Over the course of the last two years this sort of displacement has been on the rise but remains a barely perceptible percentage of total milk sales.
“It isn't particularly easy being a dairy farmer, and it isn't especially easy coordinating a product that is valuable but highly perishable and expensive to transport with demand that can be a bit fickle, but the U.S. is hardly drowning in milk that can't find a home.”