Background
Related Reports
- Feed Outlook: December 2012
- Livestock, Dairy, and Poultry Outlook: November 2012
- Feed Outlook: November 2012
- Livestock, Dairy, and Poultry Outlook: October 2012
- Feed Outlook: October 2012
- Livestock, Dairy, and Poultry Outlook: September 2012
- Livestock, Dairy, and Poultry Outlook: August 2012
- Livestock, Dairy, and Poultry Outlook: July 2012
- Livestock, Dairy, and Poultry Outlook: June 2012
- A Quarterly Econometric Model for Short-Term Forecasting of the U.S. Dairy Industry
- Livestock, Dairy, and Poultry Outlook: December 2011
- Livestock, Dairy, and Poultry Outlook: November 2011
- Livestock, Dairy, and Poultry Outlook: October 2011
- Estimating the Substitution of Distillers’ Grains for Corn and Soybean Meal in the U.S. Feed Complex
- Food Safety Audits, Plant Characteristics, and Food Safety Technology Use in Meat and Poultry Plants
- Livestock, Dairy, and Poultry Outlook: September 2011
- Selected Trade Agreements and Implications for U.S. Agriculture
- NAFTA at 17: Full Implementation Leads to Increased Trade and Integration
- Carbon Prices and the Adoption of Methane Digesters on Dairy and Hog Farms
- Climate Change Policy and the Adoption of Methane Digesters on Livestock Operations
- Consumer-Level Food Loss Estimates and Their Use in the ERS Loss-Adjusted Food Availability Data
- An Analysis of U.S. Household Dairy Demand
- Cow-Calf Beef Production in Mexico
- Long-Term Growth in U.S. Cheese Consumption May Slow
- USDA Agricultural Projections to 2019
- Characteristics, Costs, and Issues for Organic Dairy Farming
- Marketing U.S. Organic Foods: Recent Trends From Farms to Consumers
- U.S. Food Import Patterns, 1998-2007
- The Interplay of Regulation and Marketing Incentives in Providing Food Safety
- Manure Use for Fertilizer and for Energy: Report to Congress
- Emerging Issues in the U.S. Organic Industry
- Feed Outlook: April 2009
- NAFTA at 15: Building on Free Trade
- Dietary Assessment of Major Trends in U.S. Food Consumption, 1970-2005
- The 2002 Farm Bill: Provisions and Economic Implications
- Profits, Costs, and the Changing Structure of Dairy Farming
- U.S. Agricultural Trade Update—State Exports
- Retail and Consumer Aspects of the Organic Milk Market
- Ethanol Expansion in the United States: How Will the Agricultural Sector Adjust?
- NAFTA at 13: Implementation Nears Completion
- USDA Agricultural Projections to 2016
- Possible Implications for U.S. Agriculture From Adoption of Select Dietary Guidelines
- Dairy Policies in Japan
- The Changing Landscape of U.S. Milk Production
- Characteristics and Production Costs of U.S. Dairy Operations
- Milk Pricing in the United States
- Structure, Management, and Performance Characteristics of Specialized Dairy Farm Businesses in the United States
- Structure of Dairy Markets: Past, Present, Future
- Provisions of the Food Security Act of 1985
Farm Milk Production
Major trends in U.S. milk production include 1) a fairly steady
slow increase in production as gains in milk production per cow
outweigh declines in the number of cows, and 2) a consistent
decline in the number of dairy operations, matched by a continual
rise in the number of cows per operation.
Since 1970, milk production has risen by almost half, even
though milk cow numbers have declined by about a fourth (from about
12 million in 1970 to roughly 9 million in 2007, see map 
). Milk production per cow
has nearly doubled, from 9,700 pounds in 1970 to nearly 19,000
pounds in 2007. Similarly, the number of dairy operations declined
from about 650,000 in 1970 to roughly 90,000 in the early 2000s,
while over the same period, the average herd size increased
fivefold from about 20 cows to 100 cows.
All 50 States produce milk. The top 10 producing States in 2011
were:
- California
- Wisconsin
- Idaho
- New York
- Pennsylvania
- Texas
- Minnesota
- Michigan
- New Mexico
- Washington
As this list indicates, the major milk-producing States are in
the West and North. The relative importance of the western regions
has grown, while other regions have declined or remained steady.
Western areas have had lower average costs of milk production for a
variety of organizational and climatic reasons.
Most U.S. dairy cows are Holsteins, a breed that tends to
produce more milk per cow than other breeds. Holstein milk
comprises approximately 87.7 percent water, 3.7 percent milkfat,
and 8.6 percent skim 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
Nearly all U.S.-produced milk meets fluid grade milk standards
(Grade A in most States). However, only about one-third of the milk
is actually processed into fluid milk and cream 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 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 actually 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.
Nearly two-thirds of the milk supply--what is not used for fluid
milk and cream products--goes into a wide array of manufactured
dairy products. Almost half of the milk supply is used to turn out
about 9 billion pounds of cheese each year. Mozzarella has recently
surpassed Cheddar as the most popular variety. Production of most
varieties has grown steadily for many years, as cheese has become a
staple in the American diet.
Production of ice cream and other frozen dairy products totals
about 1.5 billion gallons, about two-thirds of which is regular ice
cream. Frozen dairy products are commonly made by fluid milk
processors, although specialized plants are well established.
Butter and nonfat dry milk traditionally were joint products.
The cream from milk was churned for butter, and the remaining skim
milk was dried for nonfat dry milk. About a tenth of the milk
supply is still used this way, although more than half of the
butter produced now comes from cream not needed when milk is used
for fluid milk products or cheese. Production of these products has
been roughly constant for many years, although their relative share
of dairy product output has declined.
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. An example of a
proprietary company is Leprino, the largest global producer of
Mozzarella cheese. Cooperatives generally produce cheese, butter,
nonfat dry milk, and similar manufactured products, but some
cooperatives, such as Prairie Farms, Inc., process fluid milk.
There is a relatively significant presence of foreign-owned
companies in parts of the U.S. dairy industry.
Consumption
In recent decades, consumption of total dairy products has risen
just barely faster than the growth in population. However, use of
individual products has shown great, and apparently unrelated,
variation. Consumer decisions about individual products appear to
be fairly independent of each other.
Total per capita consumption of fluid milk has declined slowly
because of competition from other beverages and a declining share
of children in the population. Since the late 1980s, however,
changes in per capita sales of individual types of beverage milk
have varied. Per person use of most cream and cultured products has
risen steadily for a quarter-century.
Growing cheese demand has been one of the most important forces
shaping the U.S. dairy industry. Per capita cheese use is twice
what is was 25 years ago and shows no signs of leveling. 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.
Per person use of butter has been fairly steady since the early
1970s. However, use of most dry and condensed milks have declined
as in-home food preparation has diminished and fresh milk has
become cheaper and achieved a longer shelf-life. In commercial food
preparation, whey products have replaced some of the former uses of
dry and condensed milk products. (Whey is the watery part of milk
that separates from curds in the process of making cheese.)
For More Information, See...
- ERS, Livestock, Dairy, and
Poultry Outlook: Tables
- ERS, Monthly Milk Cost of
Production
- USDA, National Agricultural Statistics Service, Milk Production
- USDA, National Agricultural Statistics Service, Dairy Products
- USDA, Rural Development, Cooperative Programs