Fluid milk consumption continues to decline every year. However, there are two significant growth segments - one is yogurt, which is recently enjoying a significant growth spurt, the other is cheese which is already quite significant and continues to grow.
The two largest cheese states by far are Wisconsin and California.
The graph below shows the growth of the four classes of milk.
From this, it is obvious that Class III milk is the growth driver for the US dairy industry.
Wisconsin as the leading cheese producer has benefited the most. In 2012, milk production was up 4.5% with 80% of the milk headed to cheese producers.
If these trends continue, by 2020 Class III milk will make up nearly 50% of the milk in Federal Milk Order Marketing (FMMO) areas.
To make cheese, a high level of protein is needed, specifically casein protein. Casein protein makes up 80% to 82% of the protein in cows milk.
The original formulas developed by Dr Van Slyke calculated a minimal casein protein to fat ratio of 0.7.
At 80% casein protein, and 3.8% butterfat, 3.3% protein would be required. If the milk does not have this level of protein, nonfat dry milk must be added to increase the protein level.
Obviously, this is an added expense for the cheese makers. Many cheese makers often pay additional premiums for high protein levels above the Federal Milk Marketing Order minimum for protein.
Yogurt, which is currently enjoying a growth spurt, also needs high protein levels as the protein acts as a thickener.
Obviously, protein development is very important for the economic health of the dairy producer.
US-based John Geuss is the editor of US dairy commodities blog, MilkPrice .
For more of John's month-to-month musings on dairy commodities, visit his blog.