ERS Charts of Note
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Monday, April 11, 2022
Extreme temperatures can have a negative impact on dairy cow production, as well as the growth and development of crops used for feed. New research from USDA, Economic Research Service calculates how often during a calendar year temperatures are within the optimal range for a dairy cow's maximum productivity (41–77°F), as well as the growth and development of feed crops (50–86°F), such as corn, sorghum, barley, and oats. The number of days outside these optimal temperature ranges are used to predict the effects of extreme temperature on dairy cows and feed crops. Findings indicate that all herd-size classes in several States experienced reduced growth in total factor productivity (TFP) because of extreme temperatures. TFP is an index that measures the rate of growth in milk output compared to the rate of growth in total inputs used in milk production. On the other hand, extreme weather in most States did not cause a decline in TFP by limiting feed availability. Farmers can use adaptive strategies to lessen the impacts of unfavorable temperatures on cows, which include building shade structures, installing cooling and heating systems, altering the nutrient mix, and raising heat-tolerant breeds. Similarly, farmers may resort to purchasing feed from other regions of the United States in response to adverse weather conditions that impact feed crop development in areas where dairy operations are located. This chart was drawn from the Sources, Trends, and Drivers of U.S. Dairy Productivity and Efficiency report, published in February 2022.
Wednesday, March 30, 2022
The U.S. dairy sector has experienced a gradual shift in milk production away from small farms toward larger dairy operations. USDA, Economic Research Service (ERS) research indicates that this shift in production from small dairy herd-size farms to large dairy herd-size farms mirrors total factor productivity (TFP) growth across the dairy sector. Total factor productivity (TFP) is a broad measure of agricultural productivity that compares the total output to the total land, labor, capital, and material inputs used in farm production. TFP measures how inputs are combined to produce output. When the total output increases faster than total inputs, TFP is said to be growing. Between 2000 and 2016, the largest dairy operations (those with more than 1,000 milk cows) experienced a TFP growth rate of 2.993 percent per year. Meanwhile, TFP growth for the smallest operations (those with fewer than 100 milk cows) increased at an annual rate of 0.639 percent. TFP growth across all operations was primarily driven by technological progress—growth associated with innovations in systems, processes, and techniques that convert inputs into milk output—and environmental effects that positively impacted feed availability. The slow growth in TFP across smaller dairy operations was primarily due to not operating the farms at a higher, optimal scale; the inability of managers to successfully combine various inputs at their disposal to maximize output; and unfavorable environmental factors that impacted the general well-being of cows. This chart was drawn from the ERS report Sources, Trends, and Drivers of U.S. Dairy Productivity and Efficiency, published February 17, 2022.
Wednesday, March 23, 2022
Canada is an important market for U.S. dairy products, second only to Mexico. From 2010 to 2021, total dairy exports from the United States to Canada, adjusted for inflation, rose 48 percent from $466.4 million in 2010 to $691.5 million in 2021. Canada’s proximity to the United States favors imports such as fluid milk, cheese, and infant formula, among others. Supplemental imports of fluid milk, butter, and butterfat in addition to cheese and cream from the United States often meet the shortfall in Canada’s production. By value, infant formula has been the top U.S. dairy product exported to Canada, accounting for $151.3 million in 2021 and representing 22 percent of the total. Coming in second, the combined export value of fluid milk, cream, and milk-based drinks reached $128.5 million in 2021—an inflation-adjusted increase of $85.2 million from 2010. U.S. exports of cheese to Canada have grown by 12 percent to $68.1 million in 2021. U.S. product groups such as butter and butterfat products; fluid milk, cream, and milk-based drinks; cheese; and whey products continue to gain popularity among Canadian buyers. Accordingly, the value of export sales of butter and butterfat products have increased by $41.7 million, after adjusting for inflation. This chart is from data in USDA, Economic Research Service (ERS) Foreign Agricultural Trade of the United States (FATUS) dataset as of February 2022. See also ERS’ Livestock, Dairy and Poultry Outlook, January 2022.
Tuesday, February 22, 2022
Organic dairy farms must follow a variety of USDA regulations to obtain certification and maintain their organic status. For example, they have to use organic grains and feed supplements, and they mostly rely on pasture-based feeding, which makes them more vulnerable to weather shocks such as drought or sudden and intense storms. These challenges mean productivity on organic dairy farms grows at a slower rate than on operations using conventional processes. Productivity is measured as total factor productivity (TFP), the ratio of the total amount of goods (in this case, milk) produced relative to all the inputs—such as labor, fertilizer, and other costs—used to produce those goods. USDA, Economic Research Service (ERS) researchers studied the difference in TFP growth between organic and conventional farms using data from organic dairy farms between 2005–16 and from conventional dairy farms between 2000–16. TFP grew at an annual rate of 0.66 percent for organic dairy farms compared with 2.51 percent among conventional dairy operations. Both organic and conventional farms saw productivity growth due to technological progress such as advanced equipment and improved genetics. While weather-related feed factors reduced productivity for organic farms, they contributed to a productivity growth for conventional dairy farms. Technical efficiency increased productivity slightly on organic farms, but reduced productivity on conventional farms, while scale-and-mix efficiency reduced productivity for both types of farms. This chart was included in the ERS report Sources, Trends, and Drivers of U.S. Dairy Productivity and Efficiency, published in February 2022.
Monday, January 10, 2022
The supply of fluid cow’s milk available for U.S. consumers to drink decreased by 42 percent from 1979 to 2019, from 28.1 gallons per person to 16.3 gallons, according to USDA, Economic Research Service (ERS) food availability data. Whole milk availability drove this decline, falling nearly 67 percent to 5.7 gallons per person in 2019 from 17.4 gallons in 1979. The amount of low-fat, skim, and 1 percent milk available for U.S. consumption grew slightly over the last 40 years to a combined 3.3 gallons per person in 2019 from 3.0 gallons in 1979. Availability of 2 percent milk initially grew from 6.1 gallons per person in 1979 to a high of 9.2 gallons in 1989 before falling to 5.4 gallons in 2019. Whole milk was replaced by 2 percent milk as the most consumed milk type in 2005. Availability of flavored milk and buttermilk remained relatively steady over the last four decades, totaling 1.8 gallons per person in 2019. Several factors affect trends in U.S. per person milk availability, including competition from alternative beverages, an aging population, and changing consumer attitudes and preferences regarding milk fats. The data for this chart come from the ERS Food Availability (Per Capita) Data System.
Wednesday, July 14, 2021
U.S. residents have been scooping less of their favorite frozen treats than two decades ago. In 2019, the most recent year for which complete data are available, U.S. residents consumed around 21 pounds of frozen dairy products per capita, about 4 pounds per capita less than in 2000. Consumption of regular ice cream in 2019 totaled 12.1 pounds per person, a decrease of about 4 pounds, or 25 percent, from 2000. At 6.6 pounds, per capita consumption of low fat and nonfat ice cream was about the same in 2019 as in 2000. Consumption of other frozen dairy products, which include frozen yogurt, sherbet, and miscellaneous frozen dairy products, decreased from 3.4 to 2.3 pounds per person. The downward trend in consumption of frozen dairy products corresponds with a 17 percent decline in consumption of caloric sweeteners between 2000 and 2019, reflecting increased consumer awareness about sugar intake. This chart is drawn from Dairy Data published by USDA, Economic Research Service (ERS). Information concerning caloric sweeteners is from ERS Sugar and Sweeteners Yearbook Tables.
Tuesday, June 1, 2021
According to the most recently available data, in 2016, 62 percent of U.S. dairy farms with at least 2,000 cows generated gross returns that exceeded total costs, compared with 43 to 44 percent of farms in the two next-largest classes (500-999 cows and 1,000-1,999 cows). In the smallest classes (10-49 cows and 50-99 cows), less than 10 percent of farms generated positive net returns. Total costs include cash expenses such as those for feed, fuel, and hired labor, but they also include estimates of the costs of the farm’s capital and of the family labor provided to operate the dairy farm. A farm that does not cover total costs can continue to operate, and to provide a living for the family operating the farm, if it covers cash expenses and the costs of the family’s labor (total cost except capital recovery). For example, while about 20 percent of farms with 100-199 cows earned positive net returns in 2016, 46 percent earned enough to cover all cash expenses and to provide a living for the farm family. However, these farms did not earn enough to cover annual costs of capital recovery (the replacement value of the capital, such as equipment and structures, used on the farm). Continued operation makes financial sense for those farms until the cash expenses of maintaining an aging plant rise enough to cut into the family’s income from dairy farming. This chart appears in the Economic Research Service report Consolidation in U.S. Dairy Farming, released July 2020. It also appears in the August 2020 Amber Waves feature, Scale Economies Provide Advantages to Large Dairy Farms.
Monday, January 11, 2021
Dairy consumption is on the rise in Southeast Asia, a region characterized by rapid economic growth, urbanization, and changing food consumption patterns. To meet rising demand, many dairy products must be imported because the region’s climate limits its ability to produce milk. The value of imported dairy products in Southeast Asia grew from $3.8 billion in 2006 (adjusted for inflation) to $6.3 billion in 2018. Dairy products imported from the United States grew from $401 million to $738 million over that time, and dairy imports from most other trading partners rose as well. Imports from Australia, however, declined after years of drought resulted in lower milk yields and smaller dairy herds, and the United States overtook Australia in rank, rising from the fourth to the third largest dairy import supplier for the region. Southeast Asian countries also import dairy products from their regional neighbors and the rest of the world. The top dairy products imported by Southeast Asian nations are skim milk powder, whole milk powder, infant formula, butterfat products, cheese, and whey products. The United States is a major supplier of skim milk powder, whey products, cheese, and lactose to the region. This chart was drawn from the Economic Research Service report, Prospects for Growth in U.S. Dairy Exports to Southeast Asia.
Monday, November 16, 2020
In 2019, Wisconsin’s production of fluid milk was second only to California’s. According to data from USDA’s National Agricultural Statistics Service, Wisconsin generated 30.6 billion pounds of milk that year, with milk sales totaling $5 billion. In recent years, Wisconsin dairy farms have been exposed to substantial weather volatility characterized by frequent droughts, storms, and temperature extremes (both hot and cold). This has resulted in considerable fluctuations in dairy productivity. Researchers from the Economic Research Service (ERS) among others, found that total factor productivity (TFP), which measures the rate of growth in total output (aggregate milk produced) relative to the rate of growth in total inputs (such as the number of cows, farm labor, feed, and machinery), increased at an average annual rate of 2.16 percent for Wisconsin dairy farms between 1996 and 2012. This increase was primarily driven, at an annual rate of 1.91 percent, by technological progress—such as improved herd genetics, advanced feed formulations, and improvements in milking and feed handling equipment. However, trends in rainfall and temperature variation were responsible for a 0.32 percent annual decline in the productivity of Wisconsin dairy farms during the same period. For example, an average increase in temperature of 1.5 degrees Fahrenheit reduced milk output for the average Wisconsin dairy farm by 20.1 metric tons per year. This is equivalent to reducing the herd size of the average farm by 1.6 cows every year. This chart appears in ERS’s October 2020 Amber Waves finding, “Climatic Trends Dampened Recent Productivity Growth on Wisconsin Dairy Farms.”
Tuesday, September 8, 2020
Organic dairy production costs were substantially higher than those for conventional dairy in 2016—about 50 percent higher per hundredweight (cwt) of milk produced. Production costs include operating costs for feed, energy, and bedding, as well as the costs of capital and of the paid and/or family labor provided to the farm. Organic production costs were highest among farms with 10-49 cows at $48.87 per cwt, while production costs on conventional farms of that size were $33.54. Among farms with 100-199 cows in the herd, organic production costs amounted to $35.82 per cwt, while conventional farms in that category reported lower costs of $23.68. However, organic operations received much higher prices for their milk—organic gross returns per cwt of milk produced were about twice the gross returns realized by comparably sized conventional operations in 2016. With higher costs, but much higher gross returns, small organic dairy farms realized higher net returns on average than small conventional farms. (Net returns are the difference between gross returns and costs.) This chart appears in the Economic Research Service report, Consolidation in U.S. Dairy Farming, released July 2020. It also appears in the September 2020 Amber Waves finding, “Organic Dairy Farms Realized Both Higher Costs and Higher Gross and Net Returns Than Conventional Dairy Farms.”
Friday, August 14, 2020
Large dairy operations have significant financial advantages over small and midsized farms, primarily because of lower average production costs per pound of milk produced. Therefore, larger farms can earn profits during times when smaller farms bear losses. In every year between 2005 and 2018, average net returns increased with herd size and returns for herds of 1,000 head or more (the largest class for which the Economic Research Service (ERS) publishes annual estimates) exceeded those for all other herd sizes. While net returns fluctuate from year to year, farms with 1,000 head or more generated positive net returns of $1.12 per hundredweight on average between 2005 and 2018. These farms had positive net returns in 10 out of 14 years. By contrast, the smallest herd sizes (50-99 head and 100-199 head) never covered total costs, so their net returns were negative in every year. While some farms in each size class realize positive net returns, these class averages indicate that most small and midsize farms face persistent financial pressures. The persistent differences in net returns have led to structural changes in the dairy industry, with cows and production shifting away from smaller farms and toward larger ones. This chart appears in the ERS report, Consolidation in U.S. Dairy Farming, released July 2020. It also appears in the Amber Waves feature, “Scale Economies Provide Advantages to Large Dairy Farms.”
Wednesday, July 22, 2020
Large dairy operations have significant financial advantages over small and midsized farms, primarily because of lower average production costs per pound of milk produced. Therefore, larger farms can earn profits during times when smaller farms bear losses. In 2016, average total costs of milk production fell from $33.54 per hundredweight among farms with 10-49 cows to $20.85 among farms with 200-499 cows. The latter costs were 21 percent higher than the average costs realized at the largest farms—those with at least 2,500 head. Larger herds realized lower gross returns because many are in regions with lower milk prices. Gross returns include milk sales, plus revenues from the sale of culled dairy animals, milk cooperative dividends, and the fertilizer value of manure. Despite their lower gross returns, lower costs led to much larger net returns among larger operations than among smaller farms. In 2016, farms with more than 1,000 head realized positive net returns on average, whereas farms with fewer head realized negative net returns on average. This chart appears in the Economic Research Service report Consolidation in U.S. Dairy Farming, released July 2020.
Monday, May 18, 2020
Cheese is the largest product category for the dairy industry. Wholesale prices—prices paid to manufacturers—of Cheddar cheese serve as benchmarks for pricing many types of cheese and affect the pricing structure for most U.S. milk at the farm level. Between March 7 and May 2, wholesale prices for Cheddar cheese fell 35 percent because of effects of the COVID-19 pandemic. For the week ending May 2, the weighted-average price for Cheddar cheese was $1.134 per pound, and the lowest since 2009, when the Great Recession had a significant impact on global dairy demand. By the week ending May 8, that price had risen to $1.146 per pound. As research has shown that declining incomes usually have a negative effect on cheese consumption, Americans facing financial hardships caused by the pandemic are likely buying less cheese. Furthermore, cheese consumption has shifted from food service establishments, where people eat higher proportions of cheese, to at-home consumption. This shift has caused supply chain bottlenecks due to logistics and smaller unit-packaging needs of retail stores. At the same time, the dairy industry has entered its peak season of milk production. Global dairy trade is also affected by the pandemic, limiting the ability of U.S. suppliers to export cheese and other dairy products. Cheese prices are currently expected to strengthen as the year progresses. This chart is based on Economic Research Service’s Livestock, Dairy and Poultry Outlook, April 2020.
Friday, March 6, 2020
According to Economic Research Service (ERS) food availability data, the per person supply of fluid cow’s milk available for Americans to drink decreased by 40 percent over 1977-2017, from 29.0 to 17.3 gallons per person. Whole milk availability drove this decline, falling from 18.7 gallons per person in 1977 to a low of 5.1 gallons in 2014, then up to 5.7 gallons in 2017. Availability of milk with 2 percent milk fat grew from 5.5 gallons per person in 1977 to a high of 9.2 gallons in 1989 before falling to 5.8 gallons in 2017. In 2005, 2 percent milk replaced whole milk as the most popular milk type. Availability of 1 percent milk has held steady at around 2.5 gallons per person for the last two decades, and skim milk reached its peak in 1997 at 3.9 gallons per person. Several factors—including competition from alternative beverages, an aging population, and changing consumer attitudes and preferences regarding milk fats—affect trends in U.S. per person milk availability. The data for this chart come from the ERS Food Availability (Per Capita) Data System.
Friday, August 16, 2019
Whey products and lactose are the top dairy products exported, by value, from the United States to China. China’s imports of whey products (dry whey, whey protein concentrate, whey protein isolate, and modified) and lactose have declined sharply in recent months. African Swine Flu (ASF)—a virus that has affected the country’s pig and hog population—may have affected the markets for these products because they can be fed to pigs and hogs. In addition to ASF, tariffs by China, in response to U.S. tariffs on certain imports from China, may have contributed to the decline in imports of whey products and lactose from the United States. The U.S. market share declined from 57 percent in 2017 to 51 percent in 2018 and to 38 percent for the first 5 months of 2019. The United States’ largest competitor in this market is the European Union. In the first 5 months of 2019, the European Union increased its market share to 42 percent, up from 36 percent in 2018 and 34 percent in 2017. This chart is drawn from discussions in the ERS Livestock, Dairy, and Poultry Outlook newsletter, released in July 2019.
Wednesday, August 14, 2019
In 2018, the farm share of the retail price of Cheddar cheese—the ratio of what dairy farmers received for the milk used in the cheese (farm value) to what consumers paid in grocery stores (retail price)—decreased to 28 percent from 32 percent in 2017. Although the average retail price of Cheddar cheese increased from $4.90 per pound in 2017 to $5.14 in 2018, the farm value of the 10.3 pounds (1.2 gallons) of milk used to make a pound of Cheddar cheese fell from $1.54 to $1.43 after adjusting for the value of the whey coproduct. During 2015-18, cheese supplies (sum of production, beginning inventories, and imports) grew more quickly than the sum of domestic consumption and exports—a situation that put downward pressure on wholesale cheese prices. According to projections released by ERS in June 2019, prices received by farmers for their milk are forecast to increase in 2019 and the average wholesale price of Cheddar cheese is forecast to rise from $1.54 per pound in 2018 to $1.64 in 2019. More information on ERS’s farm share data can be found in the Price Spreads from Farm to Consumer data product, updated in June 2019.
Thursday, October 4, 2018
Over the past decade, the farm share for a gallon of whole milk—the ratio of what dairy farmers received (farm price) to what consumers paid in grocery stores (retail price)—has fluctuated between 40 and 61 percent. It peaked at 61 percent in 2014 as higher U.S. exports of cheese, butter, and nonfat dry milk allowed farmers to collect higher prices for farm milk. However, U.S. exports weakened in 2015 with changes in international dairy markets and slower growth in global demand for dairy products. Exports of cheese, for example, decreased by 14 percent from 2014 to 2015. The farm price of whole milk fell from $2.26 per gallon in 2014 to $1.65 in 2015 before bottoming out at $1.51 in 2016, or 47 percent of the retail price. In 2017, the farm price of whole milk returned to $1.65 per gallon, and dairy farmers received 51 percent of whole milk’s retail price. According to ERS forecasts released in September 2018, the annual average price received by dairy farmers for milk may be less in 2018 than 2017, but is expected to increase through 2019. This chart is based on the Price Spreads from Farm to Consumer data product on the ERS website.
Thursday, May 24, 2018
USDA’s newly released commodity forecasts for 2019 indicate expected growth in U.S. production of beef, pork, broilers (young chickens), turkey, eggs, and milk. Generally, production growth in meat and animal products is supported by relatively low feed costs, the long term trend of increasing animal weights for meat, and higher yields per animal for milk and eggs. However, veal production is expected to decrease, while no growth is expected for lamb. In 2019, growth of beef and turkey production is projected to exceed the respective 2014–18 averages of 1.2 percent and 0.4 percent. Growth of pork, broilers, and egg production is expected to be relatively consistent with the respective 2014–18 average growth rates of 3 percent, 2.3 percent, and 1.9 percent. The forecast growth rate for milk production is down compared to the 2014–18 average of 1.7 percent. In 2014–18, veal production contracted sizably, averaging annual decreases of 7.9 percent, but contraction has slowed in 2014–18. Similarly, in 2019, lamb, which saw average annual declines of 1.3 percent in 2014–18, is expected to maintain production levels consistent with 2018. This chart appears in the ERS Livestock, Dairy, and Poultry Outlook released in May 2018.
Tuesday, March 20, 2018
U.S. dairy product exports grew from $1.4 billion in 2000 to $7.0 billion in 2014 (valued in 2017 U.S. dollars), about a sevenfold increase. Income growth in East Asia, Southeast Asia, Latin America, and other regions has led to increased dairy consumption and demand. Additionally, China’s market-based reforms opened one of the world’s largest markets for dairy product imports, and the country is now the third largest market for U.S. dairy exports. Further, a reduction in domestic support and export subsidies for dairy products by the European Union (EU) and the United States has brought greater openness to world markets and has expanded overall global dairy trade. However, the value of U.S. dairy exports fell in 2015 and 2016 due to weaker growth in global demand for dairy products (especially from China), a Russian ban on dairy imports from several countries, a strong U.S. dollar, and the discontinuation of milk supply quotas in the EU. Global demand for dairy products rose significantly in 2017, and the value of U.S. dairy exports increased to $5.2 billion, a 14-percent increase compared with 2016. This chart is updated through 2017 and is drawn from the report, Growth of U.S. Dairy Exports, released in November 2016.
Monday, October 2, 2017
Through the 1980s whole milk sales quantities fell at a rapid pace, as reduced fat milk sales grew. Whole milk sales continued to fall through 2013, although at a lesser rate than the 1980s. Since 2013, however, whole milk sales grew, while reduced fat and low fat milk sales declined. The growth in whole milk sales in recent years has been attributed to changing consumer perceptions about the health effects of consuming milk fats. This period has coincided with increases in butter consumption, indicating that consumer concerns over dairy fat have declined. While whole milk sales increased, the overall trend for fluid milk sales remains negative, as losses to the lower fat categories exceed gains made for full fat milk. This downward trend in fluid milk consumption has been occurring for many years. Possible reasons include the declining proportion of young children in the U.S. population, the availability of alternatives, and changing consumer preferences. This chart is drawn from the ERS Livestock, Dairy, and Poultry Outlook newsletter released in September 2017.