Milk may do the body good, but the volatility of the market shows no overall consensus on the matter. In 2014, U.S. milk sales reached record highs alongside record-high milk prices due to the increasing global demand dairy farmers struggled to keep up with. However, in 2015, those same industry results may not be the case.
To meet that global demand, farmers invested in expanding their herds and equipment. However, China built up a high inventory of milk powder in late 2013 and into 2014, so the country significantly decreased its milk powder imports from the U.S. Also in 2014, Russia banned milk, dairy, and other products in response to Western sanctions. Both of these events led to a surplus of milk, and some dairy farmers had to dump some of their product.
This surplus has since contributed to a sharp decline in prices for milk and other dairy products. In its February World Agricultural Supply and Demand Estimate, the USDA reduced its predicted 2015 all-milk price range to $17.40 to $18.10. According to AgWeb, "Milk prices that exceeded $24 per 100 lbs. — roughly 9 gallons — at times in 2014 have dropped into the $15 range, reminding farmers of 2009, the year prices fell below $12 and many farms lost money."
According to Andrew Novakovic, a professor of agricultural economics at Cornell University and a part-time USDA economist, the volatility is part of a three-year price cycle, and he predicts that for the next few months, milk prices will continue to be on the lower end, AgWeb reports. He said, "It's simply the case that we have a bit of a tendency, when prices are high production goes up and demand goes down. When prices are low, production goes down and demand tends to go up."
With fluctuating supply, demand, and prices, the milk industry is seeing its fair share of highs and lows. Could new products and consumer trends have a significant impact in the coming years?
Coca-Cola moo-ves into the milk sector
In an attempt to avoid going down with the ship as soda sales continue to decrease, Coca-Cola Co. has embraced milk as a new product line with its "premiumization of milk," Fairlife. In 2012, Coca-Cola joined forces with dairy co-op Select Milk Producers to develop healthier beverages Coca-Cola could rely on as it waits for soda sales to bounce back, if they ever do.
As Coca-Cola enters a new market, however, it's no surprise that the company's doing it big. Instead of releasing the same milk product found in stores nationwide, Fairlife lands on the milk aisle with the distinction of having 50% more protein, 30% more calcium, and 50% less sugar. And, of course, that premiumization comes at a price, as Fairlife costs about twice as much as conventional milk.
But in an attempt to offer "value-added dairy," Coca-Cola has created a product that nutritionists dub "Frankenmilk." These nutritionists say that most Americans already consume enough protein and that if consumers want more calcium, they can find it in other healthier alternatives. In addition, a low-sugar milk doesn’t appeal to nutritionists either, as traditional milk comes with lactose rather than processed sugars like Fairlife. Fairlife employs an enzyme that turns lactose into simple sugar, though that is actually good for anyone who is lactose-intolerant.
Can a2 milk bring back the dairy industry?
Another new milk product is slated to hit California grocery shelves with its April launch: a2 milk from New Zealand-based The a2 Milk Company. A2 milk actually harkens back to what milk used to be in terms of certain proteins contained in milk solids. Long ago, cows produced only the A2 beta casein protein, but since about 10,000 years ago, cows now produce the A1 beta casein protein, either exclusively or in addition to A2 proteins. According to research, the A1 protein is linked to the side effects that people who consume milk sometimes feel, such as bloating, nausea, and general discomfort.
According to Food Safety News, "That change occurred primarily in the large breeds such as Holsteins, which produce considerably more milk than other breeds. These heavy-producing breeds were quickly adopted by dairies in Europe and the U.S. and, as a result, just about all the regular milk sold today in U.S. stores and in much of Europe contains the A1 protein."
All other mammals produce only A2 milk, including humans and breastmilk, which means a2 milk could offer a closer experience to drinking the milk that humans are "supposed" to have. The a2 milk manufacturer calls it, "the milk that might change everything."
About 12 years ago, the company introduced a2 milk in Australia and New Zealand, and now a2 milk comprises about 9.3% of milk sold in Australia. The milk is also sold in the UK and China, and if a2 milk succeeds in California, it could expand to other states in the U.S.
But how does the mainstream milk industry feel about this potential shift to A2-only milk? According to The Australian Dairy Farmer, "Major milk companies and scientists have frequently scoffed at the validity of claims that A2 milk is easier for humans to digest than regular cows’ milk." The mainstream dairy industry has also done its part to limit public funding for A2 research, and thus a vast majority of this research is deemed inconclusive by most major dairy parties, says The Milkweed. As a significant portion of the current dairy industry uses cows that produce either A1 milk or A1/A2 milk, it’s no wonder that the mainstream milk industry might feel the pressure if consumers begin demanding A2-only milk.
As Mother Jones reports, Keith Woodford, a professor of farm management and agribusiness at New Zealand's Lincoln University and author of Devil in the Milk, said, "The mainstream industry has always seen it as a threat, whereas another way of looking at it is, hey, this can actually bring more people to drinking milk."
This is crucial at a time when milk sales have declined in the U.S. as consumers turn toward alternatives like almond and soy milks or other beverages entirely, such as juice and water. Many, consumers are also embracing less processed foods, and some health-conscious consumers include pasteurized milk in that avoided group of foods.
Raw milk: health trend or health hazard?
As more consumers move toward unprocessed foods, raw milk is a fixture of debate among government regulatory agencies due to its potential health risks. Proponents of raw milk say that the process of pasteurization—or briefly heating milk at high temperatures to kill off bacteria—also kills a lot of the nutrients contained in milk, such as calcium, vitamin D, and folate, which must then be added back in. Others say that raw milk "contains more natural antibodies, proteins, and bacteria than pasteurized milk, [and] is healthier, cleaner, and tastes better," according to Daily Mail.
However, raw milk opponents, which include the FDA and CDC, insist that the risks of contamination by bacteria not killed in the pasteurization process far outweigh the perceived health benefits. The FDA already banned raw milk being sold from state to state in 1987, leaving individual states with the power to govern if and how raw milk is sold intrastate. Raw milk sales are currently legal in 30 states, eight of which have legalized raw milk since 2004. In 2010, the Farm-to-Consumer Legal Defense Fund filed a lawsuit challenging this ban, but it was later dismissed by a federal judge in 2012.
A study from the CDC published earlier this year followed the number of US outbreaks raw milk caused from 2007 to 2012. These outbreaks, 77% of which were caused by Campylobacter, increased from 30 from 2007 to 2009 to 51 from 2010 to 2012. That rate of outbreaks has quadrupled since the CDC last performed a study for the period 1993 to 2006, when the average rate was only three outbreaks per year.
Another study from researchers at the Johns Hopkins Center for a Livable Future reported that those who drink raw milk are 100 times more likely to be affected by a foodborne illness than if they drank pasteurized milk.
Recently, the director of the California Department of Public Health released a warning that consuming raw dairy products could lead to serious illness. California has the highest retail sales of raw milk of all the U.S., so this statement could be significant in turning the heads of consumers and other food safety agencies.
The dairy industry is in flux, per usual, and new products and trends aim to change the state of the milk market in the coming years. It doesn’t appear that 2015 will be an ideal year for dairy farmers with falling prices causing financial strain on their operations, but innovations may milk the industry for what it’s worth as the year progresses.