Background

Farm Milk Production

Major trends in U.S. milk production include (1) a fairly steady increase in milk production and (2) a consistent decline in the number of dairy operations matched by a continual rise in the number of cows per operation. Most major milk-producing States are in the western and northern areas of the country. The top 5 milk production States in 2018 were California, Wisconsin, Idaho, New York, and Texas. These States collectively produced more than 50 percent of U.S. milk supply.  Generally, milk cows perform best in areas with dry, cool weather. Most U.S. dairy cows are Holsteins, a breed that tends to produce more milk per cow than other breeds. However, Jerseys and crossbreeds have gained popularity in recent years, as milk from these breeds tends to contain relatively high proportions of milk fat and other milk solids.

In the United States, the decision to produce milk largely rests in the hands of individuals or families. Many of these farmers belong to producer-owned cooperatives. The cooperatives assemble members' milk and move it to processors and manufacturers. Some cooperatives operate their own processing and manufacturing plants. Initially local, many of today's dairy cooperatives are national, with members across the country.

From Raw Milk to Dairy Products

In 2018, U.S. farm milk contained approximately 87.21 percent water, 3.87 percent milk fat, and 8.92 percent skim solids on average. Milk is usually separated through various processes into components and processed into fluid beverage milk or manufactured dairy products.

Fluid milk processors face a unique supply-demand situation not shared by most other food products. Farm milk production varies by day, week, and season because, in part, of weather and feed conditions. Similarly, fluid milk sales vary greatly by day and season because of consumer shopping patterns. Because these patterns cannot be precisely predicted, a system must be maintained to get milk where it is needed when it is needed. Shipping milk among locations and storing it for a day or two solves some of the problem, but a pool of "on call" raw milk is ultimately needed. The portion of this reserve not used in fluid milk products is manufactured into other dairy products.

Coordinating supply and demand for the fluid market is called balancing. Individual plants may do the balancing, but it is more efficient for a few entities, or even a single entity, to provide the services for a market. In most cases, dairy cooperatives have taken on this important function.

Most of the milk supply is used to produce manufactured dairy products. Cheese makes up the largest proportion of milk allocated for manufacturing purposes. When cheese is produced, a watery substance called whey is produced as a byproduct. Whey is often further processed into products such as dry whey, whey protein concentrate, and lactose. Other uses of milk include production of frozen products, butter, nonfat dry milk, yogurt, and a host of other types of dairy products.

The plants that process and manufacture milk into fluid and other dairy products may be proprietary (held by private or publicly traded companies) or cooperatively owned. Cooperatives generally produce cheese, whey products, butter, nonfat dry milk, and similar manufactured products, but some cooperatives process fluid milk.

Consumption

In recent decades, U.S. consumption of total dairy products has risen faster than the growth in population. However, use of individual products has shown great variation. Total U.S. per capita consumption of fluid milk has declined because of competition from other beverages and a declining share of children in the population.

Growing cheese demand has been one of the most important forces shaping the U.S. dairy industry. Rising cheese consumption has been aided by ready availability of a wider variety of cheeses, more away-from-home eating, and greater popularity of ethnic cuisines that employ cheese as a major ingredient. Mozzarella has been the most popular variety in recent years, followed by Cheddar. Consumption of most varieties has grown steadily for many years, as cheese has become a very significant part of the American diet.

Per capita use of butter has increased significantly in recent years. Another notable trend is a substantial increase in yogurt use in the 2000s and early 2010s, with the popularity of Greek yogurt as a contributing factor. Since 2013, per capita yogurt use has decreased, but it has remained at levels substantially higher than the early 2000s.

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