Total US dairy output is up from 2018 despite financial struggles

By Beth Newhart contact

- Last updated on GMT

Dean Foods filed for bankruptcy this week and AMPI closed two dairy plants in the midwest. Pic: Getty/pixinoo
Dean Foods filed for bankruptcy this week and AMPI closed two dairy plants in the midwest. Pic: Getty/pixinoo

Related tags: Dairy Farm, Dairy farmers, Dairy farming, Milk, Milk production, closures, financial report

US dairy numbers from September reveal production was up across the industry when compared to the same time last year. But dairy still shows signs of strain amid bankruptcies and closures.

Total cheese output was 1.08 billion pounds in September, up by 2.1% from September 2018 and down by 3.7% from August 2019, according to the USDA. Italian cheese production was up by 4% from last year while American cheese dropped 1.4%.

Butter was mostly stagnant in September, with a 1.2% increase. But dry milk and whey products are surging, and the industry saw increases from nonfat dry milk (7.9%), skim milk powder (4.6%), dry whey (31.5%) and lactose (5.3%).

Dairy Management Inc. (DMI) reiterated that the US dairy community is strong and diverse, and pointed to its consistent growth in per capita consumption for 25 years in retail. Domestic dairy sales were up 2.5% as of August 2019, cheese and butter are at all-time consumption highs, according to DMI.

“Fluid milk remains a staple in 94% of US households and we’re seeing segments of strong growth in what is a $13.4bn retail category. In whole milk categories alone, there has been almost a billion dollars in growth over the last three years,” ​DMI said.

“We’ve seen pockets of growth in lactose free as we’ve addressed the digestive concerns from consumers. And in flavored milk, we’ve seen growth with innovation and the proof that chocolate milk is the perfect post-exercise recovery beverage on the science side.”

Staying competitive in a dairy downturn 

Despite the positive production numbers, the industry continues to face negative perceptions of fluid milk, scrutiny of farming practices and animal treatment, and competition from plant-based products. This month the dairy checkoff warned farmers against animal advocacy groups threatening dairy agriculture and innovation.

Dean Foods also announced its intent to file for bankruptcy this week, sending shockwaves throughout the US dairy industry. The company produces several well-known brands of milk, cheese, butter and ice cream, and is the largest customer of the Dairy Farmers of America (DFA).

DFA is likely to purchase Dean Foods, and the company will stay afloat for the time being with an $850m loan from its existing lenders. Many dairy organizations weighed in on the news, including the International Dairy Foods Association (IDFA).

Based out of Washington DC, IDFA represents approximately 90% of the milk, cheese, ice cream, yogurt and dairy ingredients produced in the US and sold as exports to international markets.

Michael Dykes, president and CEO of IDFA, said, “We will work across the industry to ensure farmer cooperatives remain competitive, dairy processors have a reliable supply of milk, retailers and grocers continue to put milk on the shelf, and consumers continue to make milk and other dairy products a key part of their diet."

Also last week, the Minnesota-based Associated Milk Producers Inc. (AMPI) announced the closure of two of its facilities - its nonfat dry milk plant in Arlington, Iowa, and its cheese plant in Rochester, Minn.

The cooperative cited the “continued decline in dairy farm numbers and milk production in the region”​ as reason for the news. Minnesota’s dairy downturn has seen a 40% loss of the state’s dairy farms since 2008, and Iowa has lost 50% in the same time period.

All jobs at the two plants were cut, including 49 employees in Arlington and 75 in Rochester. AMPI said it is working with them to provide resources, training and opportunities to apply for available jobs at other company facilities.

The milk processed in the plants is being re-routed to nearby AMPI locations, including its cheese plant in Blair, Wisconsin.

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