Anna-Lisa Laca of Dairy Herd Management details the announcement from Dean Foods that it will stop buying milk from several farmers at the end of May. This decision will affect farmers in the states of Pennsylvania, Indiana, Kentucky, Tennessee, North Carolina and Ohio, where, coincidentally, Wal-Mart is building their own bottling plant.
Dean is not pointing a finger at Walmart. Still, farmers are doing their own math to piece the puzzle together. For decades Dean has had a private label contract with Walmart for their Great Value branded milk. In many parts of the country, they still do. But in the region where these contracts have been lost, Walmart built their own bottling plant. The plant, which is in Ft. Wayne, Ind., is expected to be fully operational and running at capacity by the end of May.
While Dean has made it clear they aren’t blaming this situation on the new Walmart plant they do cite “the introduction of new plants at a time when there is an industry-wide surplus of fluid milk processing capacity” and losing milk volume at “higher levels than anticipated” during a time of increased volume competition as reasons for terminating producer contracts.
This makes it imperative for farmers know and understand what is written in their milk contracts- so they know how long they have if their buyer decides to walk away.
As spring flush arrives and milk continues to flood the market, analysts say this scenario could play out with other processors as well.
This is a scenario that puts dairy farmers in a tough spot. Very simply, people just are not drinking as much milk as they used to. In the U.S., there is a surplus of milk and not enough demand. Why?
Monika Evstatieva and Audie Cornish of NPR examine the trend.
According to the U. S. Department of Agriculture, the average person drinks 18 gallons a year. Back in the 1970s it was more like 30 gallons a year. We once hoisted a glass with dinner, soaked our breakfast cereal or dipped into the occasional milkshake. This habitual milk drinking was no accident.
It started in the 1800s, when Americans moved from farms to cities. “First, you had to have the rise of milk trains that would bring milk from the countryside. That milk was refrigerated with ice,” says Melanie DuPuis, a professor at Pace University and author of Nature’s Perfect Food: How Milk Became America’s Drink.
20th Century nutritionists conducted studies to try and understand the health benefits of milk. As a result of these studies, milk quickly became known for its health benefits through various ad campaigns over the years.
“We are going to make this deal, where we’re going to feed those children and enable them to get enough nutrition through this thing that the nutritionists were calling a protective food,” says DuPuis. “That will enable your farmers and your farm regions to have a vibrant economy.”
By the 1970’s milk’s touted nutritional value started being questioned- and this debate continues today. Marion Nestle, a professor of nutrition, food studies, and public health at New York University says:
“Milk is the perfect food – for calves,” Nestle says. “There is no question about that. But for humans, it may not be. And it may not be necessary, and there is plenty of evidence that it isn’t necessary.”
Another contributing factor to why Americans are drinking less milk is the animal rights movement. Many more people are becoming vegetarian and vegan.
People also became more concerned about how the dairy cows were raised. Growth hormones once used to increase milk production aren’t used much anymore because of consumer concern.
Plant milk consumption is also on the rise. Almond milk sales over the past five years has risen 250 percent.
However, Julia Kadison, the chief executive officer at MilkPep- the Milk Processor Education Program- argues that the biggest reason Americans are drinking less milk is in the marketplace.
“Now there’s so much choice in the marketplace,” Kadison says. “You have all kinds of different waters and sports beverages and energy drinks, so there’s just a lot of choice out there. It’s a culture of choice.”
Kadison points to the fact that sales for dairy in other forms are still doing well – a fact she attributes to simple innovations like changes in packaging. “When you go to the yogurt aisle, you will see, probably, depending on the store, half or 40 percent of that is dedicated to kid’s products,” Kadison explains.
“There are all kinds of flavors, there are all kinds of packages, and I am sorry to say but in the milk category that has not been the case. It’s like carton or jug, basically. “
The dairy industry certainly has a lot of challenges. They need to convince the public that producing milk is healthy for the animals, healthy for people to consume, and healthy for the planet- which sounds like a daunting task.
Top image courtesy of Andrew Unangst/Getty Images and NPR
Bottom image courtesy of Dairy Herd Management