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Cheese powering U.S. dairy growth

Michael Dykes

Michael Dykes, president and CEO of the International Dairy Foods Association, contributes this column bimonthly for Cheese Market News®.

As 2023 comes to a close, I am more optimistic than ever about the future of U.S. dairy. The U.S. economy continues to outperform expectations despite a string of adversity, and consumers are showing their resilience at retail, especially when it comes to dairy purchases. Cheese purchases remain above 2022 levels, and that’s great news for cheese considering consumption set an all-time record in 2022.

Since coming to the International Dairy Foods Association in 2016, I have seen the best years of per capita dairy consumption in the history of this country. When USDA began tracking dairy consumption in 1975, fluid milk dominated the category. Today, the dairy category has blossomed into something much more diverse that people enjoy throughout the day.

In 2022, Americans consumed 653 pounds of dairy per person — the second strongest year on record. Cheese consumption set an all-time high to reach nearly 42 pounds per person. And I expect cheese consumption to continue to grow. As I like to say about demand, cheese is leading the way and it is pulling yogurt, butter, sour cream and ice cream along for the ride. Even cottage cheese — a health food from the 1970s and ‘80s — is back in a big way. Like yogurt, nonfat and lowfat versions appeal to health-conscious shoppers.

Outside of nonfat dried milk, cheese and whey are our best performing dairy exports, contributing to a strong trade surplus for U.S. dairy. We export nearly twice as much dairy as we import. While dairy exports overall are slightly down in 2023 versus 2022, cheese exports began to pull even as the year was coming to a close, showing our reputation as a reliable supplier of affordable high-value and commodity dairy products is taking firm hold around the world.

All these examples show how our industry is investing in a new future for U.S. dairy where cheese is central. We are seeing billions of dollars invested in new or expanded state-of-the-art cheese, whey and ingredients plants built in places we don’t normally associate with dairy, like Kansas, South Dakota, Idaho and even back in states that were once major dairy hubs, like upstate New York, which is seeing a resurgence in dairy processing.

Although USDA is forecasting slightly lower milk production in the short term, the value of that milk is changing to meet consumer demands for more solids like fat and protein to make the products people love, like cheese, yogurt and butter.

Our dairy herds are evolving, too, with more Jerseys and fewer Holsteins. And farms are evolving as we see a shift to larger operations to improve economies of scale and competitiveness in markets. On a per-hundredweight basis, large farms face 12% lower feed costs and 20% lower operating costs than smaller operations, according to Rabobank. They are also able to invest in people in different ways — creating specialized positions for technology, nutrition, genetics, sustainability and animal care.

As farms adapt for the marketplace, dairy’s business model continues to evolve. While small operations are innovating with direct-to-consumer models prized for quality and artisanal products like small-batch cheeses, larger operations are building a reputation for delivering a consistent, high-quality milk supply. Processors are taking that milk, breaking it up into value-added components and marketing it to consumers in a host of nutrient-dense and nutrient-rich products. Lactose, nonfat dry milk and whey produced in the U.S. are gaining customers domestically and around the world. The science of milk fractions and milkfat is evolving quickly with applications in nutraceuticals, sports nutrition, adult and infant nutrition formulas, and much more. We’re also reaping the benefit of cheese production with its byproducts. Distillers are turning upcycled whey into vodka and whiskey as well as ethanol for transportation fuel. It’s quite possible that in five years, you may be riding on a city bus powered by the natural gas collected from manure and driving a car powered by milk components.

To win the future, we must fully embrace U.S. dairy’s role as a leader in quality, sustainable and affordable nutrition. America’s cheese producers are central to winning that future.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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