Dive Brief:
- Milk is a global commodity, much like oil — though consumers may not see much difference at the grocery store.
- This year, NPR estimates that dairy farmers are getting about 20% less for their milk than last year, and 40 percent less than in 2014.
- Quotas, international purchases and economic sanctions worldwide reverberate throughout the dairy market, impacting farmers worldwide.
Dive Insight:
According to Rabobank, the total value of dairy sales worldwide has fallen this year. Sales from the world's top 20 producers combined for $194 billion in 2015, which is a 13% drop from 2014. United States dairy producers are also feeling this pain. Dean Foods reported an 8% dip in second-quarter net sales.
A bipartisan coalition of members of Congress recently petitioned Agriculture Secretary Tom Vilsack to help dairy producers struggling with declining prices through federal laws designed to help stabilize prices. Last week, he announced an additional $11.2 million in aid to producers.
Milk is waning in terms of its popularity as a drink. NPR estimates that just a quarter of milk produced in the United States is sold as milk or cream. The rest is refined into other products, like cheese, yogurt, milk powder, whey concentrate or proteins. Though, as demonstrated by China's overbuying of milk powder in 2014 and Russia's boycott on Western cheese imports in 2014, these avenues are not necessarily solid investments either.
The two areas in dairy that are continuing to grow in the United States are premium dairy and ice cream. Americans spent nearly $6.5 billion on the frozen treat in the 52 weeks ending on May 28. Brands like Dean Foods, which acquired the ice cream manufacturing and retail business of Friendly's Ice Cream in May, are hoping to capitalize on the trend.
Plant-based dairy alternatives are also hovering on the horizon. Those products have been eating away at traditional dairy's market share, and are beginning to be treated more equally by the FDA, which recently allowed vitamin D to be added to them.