US Dairy Farming Industry On The Downslide

LOS ANGELES , November 5, 2019 () – The U.S. dairy farming industry is struggling. There’s no two ways about it. Consider the recent headlines from Industry Intelligence:

Wisconsin has lost 1,745 dairy farms since January 2017, according to government data; net farm income in the state is projected to be down 29% from 2013 levels this year, while debt is projected to hit a record

US dairy and cattle industry will collapse by 2030 as 'precision fermentation'--the production of animal proteins via microbes--disrupts food production, according to prediction by think tank RethinkX

Connecticut dairy farmers tell state lawmakers they need the state's help to ensure the industry remains financially healthy, given the challenges of low, federally set milk prices and expensive production costs

Minnesota Dept. of Agriculture rolls out state program that aims to inject cash into the state's struggling dairy industry; more than 1,100 state dairy farms closed between 2012 and 2017, leaving only about 3,600 remaining

Why the struggles across the country? The following facts may shed some light:

In the U.S., minimum farm milk prices are set by the U.S. Department of Agriculture using complicated formulas based on the wholesale market value of various dairy products such as butter and cheese. It's a complex system, and most farmers don't know what they'll be paid for their milk until 30 days after it's hauled off the farm. When it’s all said and done, that leads to incredible uncertainty for dairy farmers.

Also, small dairy farms in the country are struggling in an industry increasingly driven by large operations with greater efficiencies. Wisconsin, for example, has been losing dairy farms at the rate of more than two a day, most of them small, family-run businesses. Some farmers have been hemorrhaging money — or barely breaking even — for the last five years. The loss of farms, along with the impact on businesses and communities that rely on an agricultural economy, isn't likely to be reversed.

And finally, there’s the changing tastes of consumers. Milk is facing a slew of new competitors as beverage companies have flooded the market with sports drinks, energy drinks, plant-based sodas, fruit juices and designer coffees. Just in the last six or so years, the average grocery store has added nearly 600 new beverage options to its coolers and shelves, according to Dairy Management Inc., a nonprofit funded by government-mandated payments from dairy farmers to promote milk products.

USDA Secretary Sonny Perdue recently said that small dairy farms need to get bigger in order to survive. It’s a sobering thought, but one that seems to be ringing true.

Nevin Barich is the Consumer Products Analyst for Industry Intelligence, which can help YOU better address your own industry challenges. We invite you to come take a look at our service. Call us today at 310-553-0008 and we’ll schedule you for a 15-minute demo.

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