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Butterfat and Protein Propel U.S. Dairy’s Growth Amid Shifts in Consumption Trends

USA 22.10.2024
Source: DairyNews.today
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The U.S. dairy industry continues to evolve, with changing consumer habits and rising demand for milk components such as butterfat and protein driving significant growth. While fluid milk sales have receded, dairy product sales, now exceeding $76 billion annually, remain robust, making dairy the largest category in U.S. retail grocery, according to recent data.
Butterfat and Protein Propel U.S. Dairy’s Growth Amid Shifts in Consumption Trends
Corey Geiger, chief dairy economist at CoBank, explains that while U.S. fluid milk sales have fallen to levels not seen since the 1950s—just 42.8 billion pounds in 2023—the dairy sector continues to thrive due to the shift towards products like cheese, whey, butter, yogurt, and ice cream. "Over 80% of U.S. farm-gate milk now goes into manufactured dairy products, making milk solids, not milk volume, the key focus for processors," says Geiger. Consumers today are more inclined to eat rather than drink their dairy, fueling this shift.

Export Opportunities Boost Dairy Sector

U.S. dairy processors are also capitalizing on growing export opportunities. Once virtually nonexistent, U.S. dairy exports now account for 16% to 18% of the total U.S. milk supply annually, creating more demand for products rich in butterfat and protein. This surge in demand, both domestically and internationally, is prompting dairy processors to invest over $7 billion in new processing facilities, with expectations of further growth.

However, despite forecasts for increasing U.S. milk production, Geiger notes that production began stalling in 2022 and has remained relatively flat. Yet, the focus on milk components allows the industry to continue producing more manufactured dairy products, thanks to higher butterfat and protein concentrations in milk. "U.S. dairy farms are producing more with less volume due to these higher concentrations," Geiger explains.

The Diverging Paths of Milk Volume and Components

According to historical data, butterfat levels in U.S. milk held steady between 3.65% and 3.69% from 1966 to 2010. However, since 2011, butterfat and protein levels have outpaced overall milk production, with butterfat rising from 3.7% in 2011 to 4.15% by 2023. USDA data shows that milk component production has consistently grown, except for slight dips in 2014 and 2015.

Looking at broader trends, from 2011 to 2023, protein content in milk increased by 22.9%, while butterfat surged by 28.9%, far outpacing the 16.2% growth in overall milk production during the same period. These trends are crucial in sustaining dairy product output, even as milk production has been down for 14 consecutive months since July 2023.

Looking Ahead: Component-Driven Growth

As U.S. milk production continues to decline, 2024 may mark the first back-to-back years of reduced output since the late 1960s. Yet, as Geiger points out, the industry’s focus on milk components like butterfat and protein ensures continued growth in dairy products. "Milk today contains far more solids than it did decades ago, which translates into more pounds of valuable components for processors," he says.

This shift towards higher butterfat and protein levels in U.S. dairy products signals a growing trend that will likely shape the future of the industry, allowing it to meet both domestic and international demand despite challenges in milk production.

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