Paradigm Shift

Milk components are driving dairy demand.

- Mark Moore

USDA monthly milk production data has been the bellwether when it comes to measuring milk supplies. However, a consumer shift away from fluid milk consumption toward manufactured dairy products has brought with it an increased demand for production that relies on milk components.

Corey Geiger, lead dairy economist with CoBank, broke down his 2024 study that suggests the dairy industry would benefit from a more comprehensive monthly report from the USDA, including milk, protein, and butterfat production levels.

SF: When we think about milk production, we think about total pounds of fluid milk. Your study says we need to rethink that measurement.

CG: Our basic question is to ask if dairy production is stagnant or is it growing. If you look at [July 2023 through August 2024], milk production has been down compared to the same month a year [prior]. So, by that metric, you’d say dairy’s not growing. But at the same time, milk components, largely butterfat and protein, have been up 12 of those 14 months. That is what is important today, especially when you consider that over 80% of the milk in the United States goes to manufactured dairy products, like cheese, butter, ice cream, yogurt, and sour cream. That is what the dairy processors are demanding. Consumers are eating their dairy today instead of drinking it.

SF: What has changed in the component makeup of milk?