USA: New Processing Plants Clash with Declining Milk Supply
Source: The DairyNews
New Processing Plants Clash with Declining Milk Supply, according to insights from Betty Berning, an analyst at the Daily Dairy Report.
"Persistent shortages in heifer supplies and the lengthy process of raising calves into productive milk cows present enduring obstacles to rapid expansion in U.S. milk output," Berning explained. "Simultaneously, regions witnessing substantial investments in processing capacity are grappling with diminishing milk supplies."
As of January, the U.S. milk herd hit its lowest point in over four years, with heifer inventories reaching their lowest level since 2004. Particularly, the Southwest faces tight milk supplies. For instance, New Mexico has witnessed a significant decline in its milk cow herd, dropping by 97,000 head between January 2021 and January 2024, as per USDA data. Similarly, Texas, once experiencing exponential growth, has seen its milk cow numbers plateau since June 2023, signaling challenges ahead.
"While some Texas producers have increased cow numbers to support new cheese facilities, others have exited the state due to expensive feed and inadequate milk revenue," Berning remarked.
In the previous year, several processing plants were inaugurated across the nation, with more scheduled to commence operations in 2025 and 2026. Notably, major projects have centered around cheese production, predominantly in the central and southwestern United States. Initiatives such as the Texas Panhandle's new cheese plant, which began production around a year ago, underscore this trend.
"Additional cheese capacity is set to launch in southwest Kansas this year, though the uptick in cow numbers last year may not suffice to meet the state's newfound capacity," Berning noted.
Beyond cheese, investments are also earmarked for ice cream, cheese, and value-added fluid milk projects in the Northeast. These ventures, ranging fr om expansions of existing facilities to entirely new constructions, hint at a broader industry shift. Moreover, smaller cheese-related endeavors are in progress in the Upper Midwest.
"Given the heightened demand, cheese plants in the Southwest are receiving priority, leading to operational strains on dryers in the region due to the draw from a shrinking milk supply," Berning observed. "Consequently, surplus milk that used to flow from the Southwest to the milk-deficient Southeast will remain within the region, prompting Southeastern plants to seek sources from other areas, potentially the Mideast or Northeast."
Amidst these challenges, there are bright spots, such as New York, wh ere processing expansions coincide with a rise in cow numbers. Similar trends are observed in neighboring states like Indiana and Ohio, indicating a potential boon for Northeastern expansions.
"Positive shifts in cow numbers could provide a supportive backdrop for new expansions in the Northeast," Berning concluded.
As of January, the U.S. milk herd hit its lowest point in over four years, with heifer inventories reaching their lowest level since 2004. Particularly, the Southwest faces tight milk supplies. For instance, New Mexico has witnessed a significant decline in its milk cow herd, dropping by 97,000 head between January 2021 and January 2024, as per USDA data. Similarly, Texas, once experiencing exponential growth, has seen its milk cow numbers plateau since June 2023, signaling challenges ahead.
"While some Texas producers have increased cow numbers to support new cheese facilities, others have exited the state due to expensive feed and inadequate milk revenue," Berning remarked.
In the previous year, several processing plants were inaugurated across the nation, with more scheduled to commence operations in 2025 and 2026. Notably, major projects have centered around cheese production, predominantly in the central and southwestern United States. Initiatives such as the Texas Panhandle's new cheese plant, which began production around a year ago, underscore this trend.
"Additional cheese capacity is set to launch in southwest Kansas this year, though the uptick in cow numbers last year may not suffice to meet the state's newfound capacity," Berning noted.
Beyond cheese, investments are also earmarked for ice cream, cheese, and value-added fluid milk projects in the Northeast. These ventures, ranging fr om expansions of existing facilities to entirely new constructions, hint at a broader industry shift. Moreover, smaller cheese-related endeavors are in progress in the Upper Midwest.
"Given the heightened demand, cheese plants in the Southwest are receiving priority, leading to operational strains on dryers in the region due to the draw from a shrinking milk supply," Berning observed. "Consequently, surplus milk that used to flow from the Southwest to the milk-deficient Southeast will remain within the region, prompting Southeastern plants to seek sources from other areas, potentially the Mideast or Northeast."
Amidst these challenges, there are bright spots, such as New York, wh ere processing expansions coincide with a rise in cow numbers. Similar trends are observed in neighboring states like Indiana and Ohio, indicating a potential boon for Northeastern expansions.
"Positive shifts in cow numbers could provide a supportive backdrop for new expansions in the Northeast," Berning concluded.
