ERS Charts of Note
Thursday, September 1, 2016
In 2012, there were still nearly 50,000 U.S. dairy farms with fewer than 100 cows, but that represented a large decline from 20 years earlier, when there were almost 135,000 small dairy farms. Over the same period, the number of dairy farms with at least 1,000 cows more than tripled to 1,807 farms in 2012. Movements in farm numbers were mirrored by movements in the share of cow inventories. Farms with fewer than 100 cows accounted for 49 percent of the country?s 9.7 million milk cows in 1992, but just 17 percent of the 9.2 million milk cows in 2012. Meanwhile, farms with at least 1,000 cows accounted for 49 percent of all cows in 2012, up from 10 percent in 1992. The shift to larger dairy farms is driven largely by the economics of dairy farming. Average full costs of production (which include the annualized cost of capital, imputed cost of unpaid family labor, and cash operating expenses) are substantially lower on farms with larger herds. This chart is drawn from the December 2014 Amber Waves data feature, ?Milk Production Continues Shifting to Large Scale Farms.?
Thursday, September 1, 2016
Milk production in the United States continues to grow, with year-over-year output increasing each month over the past few years. U.S. average daily milk production in April was 1.2 percent higher than the same period last year, following year-over-year gains of 1.8 percent in March, 1.0 percent in February and 0.2 percent in January. The increases reflect a combination of herd expansion and increasing production per cow.? Despite relatively low farm milk prices in recent months, low feed prices and favorable weather conditions have contributed to growth in milk production. At the same time, as dairy farms have grown larger, many have developed economies of scale that enable them to maintain profitability and in some cases even expand production in the face of lower margins. This chart is from the Livestock, Dairy, and Poultry Outlook: May 2016.
Thursday, September 1, 2016
The Margin Protection Program-Dairy (MPP-Dairy) is a risk management program introduced in the 2014 Farm Act. MPP-Dairy is designed to protect agricultural producers against adverse movements in the difference between milk and feed prices (the margin). Enrollees receive catastrophic coverage, for an annual $100 enrollment fee, that provides payments when a national-average margin falls below $4 (the average monthly margin was $8.30 in 2004-13). Farmers can purchase additional ?buy-up? coverage, for margin thresholds ranging from $4 to $8 in 50-cent increments. Almost 25,000 farms?55 percent of licensed U.S. dairy operations, accounting for 80 percent of 2014 U.S. milk production?enrolled in the program for 2015 coverage. Forty-four percent of enrollees?with more than three-quarters of production covered by MPP?chose catastrophic coverage. Farms may change coverage annually, and many did so in 2016, as the shares of farms and production under catastrophic coverage rose, moving away from all levels of buy-up coverage. This chart is based on data found in the ERS report, Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry, March 2016.
Thursday, September 1, 2016
The U.S. domestic wholesale prices of nonfat dry milk (NDM) have declined from a record high of $2.090 per pound in March 2014 to $0.837 per pound in July 2015, the lowest price since May 2009.? International export prices for skim milk powder (SMP) are also declining, reaching $0.792 per pound in July for Oceania and $0.851 per pound for Western Europe. Since the U.S. market for NDM is highly dependent upon exports (52 percent of production was exported in 2014), domestic prices track closely with international prices. The domestic wholesale price for dry whey, which is also highly dependent upon exports, fell from 42.5 cents in June to 39.4 cents in July, the lowest level since January 2011. Domestic prices for butter and cheese have not fallen as much since those markets are not as dependent upon exports.? The declining prices reflect weak global demand, particularly from China, and the Russian import ban on dairy products from major producers. With lower dairy product prices, milk prices are also declining, with the all-milk price currently forecast to average $16.75-$16.95 per hundredweight in 2015, down from an average of $23.97 in 2014. This chart is from the August 2015 Livestock, Dairy and Poultry Outlook report.
Thursday, September 1, 2016
U.S. milk and dairy product prices have reached record levels in nominal terms and are expected to remain high for the remainder of 2014 because of strong foreign and domestic demand. While U.S. domestic demand has strengthened along with the economic recovery, expanding export demand for U.S. milk powder, cheese, and butter is having an increasing influence on the U.S market. The U.S. domestic price for fluid milk?represented by the ?All milk? price?is closely linked to dairy product prices, and dairy product exports have risen from? 10.9 percent of total U.S. milk production in 2005 (on a skims-solid basis) to? 19.2 percent in 2013.? Export impacts on U.S. prices vary with the composition of exports, reflected in differences between exports evaluated on a ?skims/solids? or ?fats? basis. In 2012 and 2013, relatively small ?fats basis? exports reduced the impacts on U.S. all-milk prices in some quarters. For January and February of 2014, cheese exports are up 39 percent year-over-year, while milk powder exports are up 12 percent and butter/butterfat exports are up 91 percent. Major export destinations for U.S. dairy products are Mexico and South Korea for cheese and North Africa and the Middle East for butter/butterfat. Despite a year-on-year decline so far in 2014, Mexico remains the largest destination for U.S. milk powder exports; Southeast Asia and China are also major export markets. This chart is based on data found in Dairy Data, with analysis in the Livestock, Dairy, and Poultry Outlook: April 2014.
Thursday, September 1, 2016
Costs of production for U.S. milk decline as the size of the dairy operation (measured by the number of cows) increases.? Based on 2013 data, average total economic costs of milk production?a measure that includes the opportunity costs of land, labor, and other owned resources?fell by nearly 60 percent, from an average of about $50 per hundredweight (cwt) for producers with fewer than 50 cows to about $20 per cwt for those with 1,000 cows or more. Average costs are lower on larger farms because fixed cost items, such as management, land, and other resource costs, are spread across a larger number of cows, and because average output per cow increases along with farm size. Mean output per cow was just over 15,000 pounds among operations with less than 50 cows, while operations with 1,000 or more head averaged more than 23,000 pounds per cow. Higher milk yields on larger farms stem from factors such as better breeding, nutrition, and health management, as well as the ability to access competitively priced supplies of high quality feed inputs.? This chart is based on data found in Milk Cost of Production Estimates.
Thursday, September 1, 2016
Above a temperature threshold, an animal may experience heat stress, which results in changes in its respiration, blood chemistry, hormones, metabolism, and feed intake. Depending on the species, high temperatures can reduce meat and milk production and lower animal reproduction rates. Dairy cattle are particularly sensitive to heat stress; experiments have shown that high temperatures lower milk output and reduce the percentages of fat, solids, lactose, and protein in milk. A 2010 USDA survey of dairy farmers shows how climate influences milk production in practice.? For small, medium and large dairies, milk output per cow was lower in areas with high heat stress compared to areas with low or medium heat stress.? In much of the United States, climate change is likely to result in higher average temperatures, hotter daily maximum temperatures, and more frequent heat waves. Such changes could increase heat stress and lower milk production, unless new technologies are developed and adopted that counteract the effects of a warner climate. This chart is based on data found in the ERS report, Climate Change, Heat Stress, and Dairy Production, ERR-175, September 2014.
Tuesday, April 19, 2016
While some small U.S. dairy farms earn profits and some large farms incur losses, financial performance in the dairy sector, on average, is linked to herd size. Data from 2010 (the latest available for dairy farms by herd size) show that a majority of dairy farms with milking herds of at least 1,000 cows generate gross returns that exceed total costs, while most small and mid-size dairy farms do not earn enough to cover total costs. Total costs include annualized capital recovery as well as the cost of unpaid family labor (measured as what the farm family could earn off the farm), in addition to cash operating expenses. Many more small and mid-sized farms are able to cover total costs, except for costs associated with capital recovery. Farms can operate in this way for years, covering operating expenses and providing a reasonable income for a farm family, until the expense of maintaining aging equipment and structures begins to erode the incomes that a family can earn from the farm. At that point, many families may decide to close the farm. Some—particularly those where a younger generation intends to continue the business—may seek financing to expand the dairy herd and realize lower costs through scale economies. This chart is found in the ERS report,
Friday, April 15, 2016
The number of milk cows in the United States was up slightly in 2015, reaching 9.3 million, about equal to the number in 2008. The size of the U.S. dairy herd reached an historic low of just over 9 million cows in 2004, following a long-term decline of more than 2 million head since 1983. Over the past decade, the herd size has grown slightly, by an average of 0.3 percent per year. Improving technology and genetics have allowed milk output per cow to rise steadily, increasing by 88 percent since 1980 and reaching a record-high annual average of 22,393 pounds of milk per cow in 2015. The result has been strong growth in U.S. milk production over the period, which corresponds to growing domestic and international markets for dairy products—particularly for cheese and various dairy-based food ingredients. This chart is based on the ERS Dairy Data product.
Friday, March 11, 2016
Two decades ago, most milk came from farms with fewer than 150 cows, on which a farm family handled milking, herd management, and crop production for feed. Today, while the United States still has many herds of 50 to 100 cows, most cows and milk production have moved to much larger farms, which are usually still owned and operated by families, but rely on hired labor for most farm tasks. Farms with milking herds of at least 1,000 cows accounted for nearly half of all cows in 2012, up from 10 percent of all cows in 1992. Producers continued to increase herd size in that period; there were 17 farms with herds of 4,000 or more cows in 1992, compared to 95 farms in 2002 and 234 in 2012. Costs are an important reason behind the shift, as production costs appear to be substantially lower, on average, on larger farms. The data underlying this chart are available in the ERS report, Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry, March 2016.
Friday, October 23, 2015
Total U.S. livestock output grew 130 percent from 1948 to 2011, with the poultry and eggs subcategory growing much faster than meat animals (including cattle, hogs, and lamb) and dairy products. In 2011, the real value of total poultry and egg production was more than seven times its level in 1948, with an average annual growth rate exceeding 3 percent. The rapid growth of poultry production is due largely to changes in technology—advances in genetics, feed formulations, housing, and practices—and increased consumer demand. Retail prices of poultry fell in the late 1970’s and 1980’s, relative to beef and pork prices, leading to expanded poultry consumption in that period. Increased domestic consumption and exports were also driven by consumer response to an expanding range of new poultry products, as the industry moved away from a reliance on whole birds and production shifted to cut-up parts and processed products such as boneless chicken, breaded nuggets/tenders, and chicken sausages. This chart is found in the ERS report, Agricultural Productivity Growth in the United States: Measurement, Trends, and Drivers, July 2015.
Wednesday, July 8, 2015
Above a temperature threshold, an animal may experience heat stress resulting in changes in its respiration, blood chemistry, hormones, metabolism, and feed intake. Dairy cattle are particularly sensitive to heat stress; high temperatures lower milk output and reduce the percentages of fat, solids, lactose, and protein in milk. In the United States, dairy production is largely concentrated in climates that expose animals to less heat stress. The Temperature Humidity Index (THI) load provides a measure of the amount of heat stress an animal is under. The annual THI load is similar to “cooling degree days,” a concept often used to convey the amount of energy needed to cool a building in the summer. The map shows concentrations of dairy cows in regions with relatively low levels of heat stress: California’s Central Valley, Idaho, Wisconsin, New York, and Pennsylvania. Relatively few dairies are located in the very warm Gulf Coast region (which includes southern Texas, Louisiana, Mississippi, Alabama, and Florida). This map is drawn from Climate Change, Heat Stress, and Dairy Production, ERR-175, September 2014.
Thursday, April 30, 2015
Exports of U.S. dairy products have been strong over the past decade, growing from 1.95 billion pounds in 2005 to nearly 5 billion pounds in 2014. However, over the past 9 months, exports have softened considerably, falling from 464 million pounds in May 2014 to below 340 million pounds in February 2015. Much of the reduction in export volume can be attributed to lower demand by China. Chinese imports of milk powders surged in late 2013 and early 2014, reflecting tight domestic supplies due to herd reductions, stricter regulations on dairy/infant formula production, and strong consumer demand. China turned to the United States and the European Union to supply growing volumes of skim milk powder, while New Zealand increased output of whole milk powder. By mid-2014, China scaled back purchases of milk powders due to growing inventory, slowing economic growth, and an upsurge in China’s domestic milk production. In addition, U.S. dairy exports have been hampered by the strong exchange rate value of the dollar and flagging international demand for milk powders in general. This chart is based on Livestock, Dairy and Poultry Outlook, LDPM-250, April 2015.
Monday, March 30, 2015
U.S. milk cow numbers are projected to rise through 2018 as high milk prices and lower feed costs provide favorable returns to producers. Lower returns due in part to higher feed costs are expected to lead to year-to-year declines in cow numbers from 2020-24. At the same time, U.S. milk output per cow is projected to increase through the projection period, reflecting continued technological and genetic developments. Domestic commercial use of dairy products is expected to increase faster than the growth in U.S. population over the next decade. The demand for cheese is expected to rise due to greater consumption of prepared foods and increased away‑from-home eating, while the long-term decline in per capita consumption of fluid milk products is likely to continue. The United States is expected to expand exports of dairy products; commercial U.S. dairy exports are projected to increase steadily over the next decade, reaching record levels on both a fat and a skim-solids basis. Production increases in other major dairy exporting countries are expected to lag growth in global import demand, supporting a favorable outlook for U.S. dairy exports. This chart is based on the report, USDA Agricultural Projections to 2024.
Tuesday, January 6, 2015
Over the last two decades, a major transformation of the dairy sector reduced the number of dairy farms by nearly 60 percent, even as total milk production increased by one-third. The accompanying shift to larger dairy farms is driven largely by farm profitability. Average costs of production per hundredweight of milk produced fall as herd size increases even among the largest farms (e.g., average costs are lower for farms with 2000+ cows compared to 1000-1999 cows). Production costs include the estimated cost of the farm family’s labor as well as capital costs and cash expenses. While some small farms earn profits and some large farms incur losses, most of the largest dairy farms generate gross returns that exceed full costs, while most small and mid-size dairy farms do not earn enough to cover full costs. The cost differences reflect differences in input use; on average, larger farms use less labor, capital, and feed per hundredweight of milk produced. These financial returns provide an impetus for the shift to larger dairy farms. This chart is drawn from the December 2014 Amber Waves data feature, "Milk Production Continues Shifting to Large-Scale Farms."
Wednesday, July 10, 2013
When purchasing food, households make many choices, including what to buy and where to shop. ERS researchers looked at how changes in income affect U.S. consumers’ milk purchasing decisions, including the type of store to patronize. They found that 72 percent of milk purchases took place in supermarkets, followed by 15 percent in supercenters and mass merchandisers. Club warehouse stores and drug stores accounted for 5 and 3 percent of milk purchases, even though these two store types had lower average milk prices than supermarkets, supercenters, or mass merchandisers. The analysis revealed that most households are unlikely to change where they buy their milk, even after large changes in income. Interestingly, a household was 6 percent more likely to buy its milk in a convenience store after its annual income dropped from $60,000 to $40,000, despite the higher price of milk in these stores. Other factors, such as the availability of a car and time to drive to a supermarket, can correlate with income and affect purchase decisions. The data for this chart are from “Changes in Income Have Small Effect on Where a Household Shops for Milk” in ERS’s July 2013 Amber Waves magazine.
Wednesday, June 12, 2013
U.S. fluid milk consumption has fallen over the last 40 years from an average of 0.96 cups per person per day in 1970 to 0.61 cups in 2010. A recent ERS study found that changes in the frequency of drinking milk since the 1970s, not in portion sizes, contributed to the trend. Between 1977-78 and 2007-08, the share of children age 2-12 that did not drink fluid milk on a given day rose from 12 percent to 24 percent, while the share that drank milk three or more times per day dropped from 31 to 18 percent. The share of teenagers and adults who did not drink fluid milk on a given day rose from 41 to 54 percent, and the share that drank milk three or more times fell from 13 to 4 percent. This chart appears in the ERS report, Why Are Americans Consuming Less Fluid Milk? A Look at Generational Differences in Intake Frequency, ERR-149, released May 29, 2013.
Wednesday, May 8, 2013
Consumers can buy fluid milk in a variety of forms and at a variety of prices. A recent ERS report looked at purchases of milk products that contained three different fat contents, came in two container sizes, and were produced by either conventional or organic methods. In 2007-08, conventionally produced, low-fat milk in a gallon container was the most frequently bought fluid milk product (28 percent of all milk purchases), while organic milk in all fat contents and container sizes accounted for 3 percent of milk purchases. The researchers analyzed how changes in milk prices and household income affect purchase frequency among fluid milk products. They found that an increase in income or overall milk prices raises the probability that the household will purchase low fat milk. An increase in household income also raises the probability of purchasing organic milk. In general, the demand for organic milk is more sensitive to swings in income and price than is the demand for conventional milk. This chart is based on data in the ERS report, Households’ Choices Among Fluid Milk Products: What Happens When Income and Prices Change?, released April 16, 2013.
Tuesday, February 19, 2013
In the final three months of 2012, higher field corn prices resulting from the Midwest drought began to show up on supermarket shelves. From October to December, while the all-items CPI fell 0.8 percent and overall food-at-home prices increased only 0.2 percent, prices rose for most foods that rely heavily on corn-based animal feed—beef, pork, poultry, other meats, eggs, and dairy products. Milk prices rose nearly 3 percent while egg prices increased 1.7 percent. Prices for beef, poultry, and other meats all rose by about 0.5 percent. The only animal-based category defying this trend is pork, where rising inventories and falling exports have caused retail prices to drop from historically high levels in early 2012. ERS forecasts prices for all meat and animal-based products to increase steadily through the first half of 2013. More information on food price changes and forecasts can be found in the Food Price Outlook data product, updated January 2013.
Thursday, December 13, 2012
Americans seem to be heeding the advice of nutritionists to seek out lower fat foods—at least when it comes to fluid milk. In 2010, the per capita supply of whole milk available for consumption fell to 5.6 gallons from 6 gallons in 2009, according to ERS’s food availability data, continuing its long-term decline from a peak at 40.5 gallons per capita in 1943. Per capita availability of lower fat milk, which includes milks with milk fat levels ranging from 2 percent to skim milk and buttermilk, began rising in 1967, and in 1987, at 13.1 gallons per capita overtook whole milk. Per capita supplies of lower fat milk have remained fairly stable since leveling off in 1989 at around 14 to 15 gallons. Total beverage milk consumption continues to drop as other beverages compete to quench America’s thirst. The data for this chart come from ERS's Food Availability (Per Capita) Data System.