Dr. Cameron Thraen, Milk Marketing Specialist, Ohio State University, Additional milk marketing information by Dr. Thraen
Much discussion these days centers on national milk production and how it can be managed, voluntarily or involuntarily, with the aim of keeping milk prices strong. But, the truth of the matter is that a strong and growing demand for product is what is required over the long haul to ensure good market prices for milk. A demand that continues to grow will simultaneously absorb a growing supply and provide good market prices. In this article, I will review some of the longer term trends in per capita demand for fluid milk and dairy products. My source of data is the USDA Livestock, Dairy and Poultry Outlook, United States Department of Agriculture, Economic Research Service (http://www.ers.usda.gov/publications/ldp). The time period is 1975 through 2004 (see Figure 1). The dairy products are: fluid milk, cheese, ice cream, butter, cottage cheese, and yogurt.
Fluid Milk Products: The news here is not good. The long term trend for all beverage milk products is down. Per capita sales of all beverage milk is only 74% of what it was in 1975. Whole milk is down to 35% of 1975 levels. Lower fat milk peaked in the early 1990's at 100 lb per capita and has declined over the last decade to 50 lb per person. In spite of clever and attractive ads and renewed efforts to get younger people back to drinking milk, the beverage group continues to lose out to other types of beverage drinks.
Cheese: The news here is much better than the fluid beverage category. The All Cheese group (American, Italian, and Miscellaneous) has increased steadily over the 1975 to 2004 period. All cheese per capita consumption was 14 lb in 1975 and was 32 lb in 2004. The real growth product in the cheese group has been the Italian Mozzarella. Mozzarella use per person was 2 lb in 1975 and increased to 10 lb in 2004. For the natural American cheeses, Cheddar leads the way with 11 lb per capita in 2004. However, this has not been a growth product since the mid 1980's. In the miscellaneous group (cream cheese, Neufchatel, Swiss, Munster, and others), it is the cream cheese and Neufchatel group showing the growth potential. This category accounts for just over 2 lb per capita in this group which showed 5.5 lb per person use in 2004.
Butter and Cottage cheese: There is not much to report for these products. Per capita butter use has been flat over the past 30 years. It appears that we have a use for just under 5 lb per person and no more than that amount. Per capita cottage cheese use has declined over the 30 year period from about 5 lb to just over 2 lb per person.
Ice Cream and Yogurt: The trend for ice cream over the 1975 to 2004 period is down. Per capita use for ice cream was just over 26 lb back in 1975 and now stands at 23 lb. Yogurt, on the other hand, has increased over this period from 2 lb per person to 9 lb.
In summary, this chart tells us what we need to know about the demand for dairy products in the United States (source: Marketing Service Bulletin, FMMO 32, August 2005). On a milk equivalent basis, we consume over 300 lb of milk in the form of cheese. This is 100 lb more than our consumption of fluid milk and cream products.
Figure 1. Per capita consumption of dairy products in the US from 1975 through 2004.
If you like to stay up-to-date as to the opportunities for getting better than average prices for your milk, be sure to bookmark my Ohio Dairy Web (http://aede.osu.edu/programs/ohiodairy/) and visit daily. My current milk price outlook can be viewed on the web. This outlook is updated each month (http://aede.osu.edu/programs/ohiodairy/ProActivePricing/priceforecast.htm).
For a complete update on current market conditions, futures, and options markets, and policy issues of importance to Ohio and Federal Order 33 producers go to my web site, Ohio Dairy Web 2004, and click on Cam's Price Outlook.