Fluid Milk Product Sales Continue To Fall

US - The US Department of Agriculture has estimated that the total US fluid milk product sales declined 1.4 per cent in 2010, the largest annual decline since the Agricultural Marketing Service began publishing monthly fluid product sales data in January 2000.
calendar icon 1 August 2011
clock icon 2 minute read

Unfortunately, that trend has continued into 2011, with US fluid milk product sales down 1.6 per cent year-to-date through May.

In fact, beginning with December 2009, fluid milk sales have declined compared to a year-earlier in 17 of the last 18 months by an average of 2.1 million pounds each month. That is over 240 thousand gallons less fluid milk sold each and every day for the past year and a half.

As seen in Figure 1 below, there has never been such an extended period of declining fluid milk product sales since the start of this data series.

While the average retail fluid milk price, as reported by the Bureau of Labor Statistics, has been higher during most of this period than the same month a year earlier, we have had periods of such higher prices before without such serious demand erosion as this.

It appears that consumers are increasingly looking to other beverages than milk, so the last thing the US dairy industry needs is a change to the Federal Milk Marketing Order pricing system that would result in higher Class I (fluid milk product) prices in the future.

However, that is exactly what Representative Collin Peterson of Minnesota proposed earlier this month in a discussion draft of legislation to reform federal dairy policies.

This draft is based on the Foundation for the Future dairy policy reform package supported by the National Milk Producers Federation (NMPF). NMPF's own analysis estimates that the minimum Class I milk price would have averaged 51 cents higher in recent years under the proposed federal order changes in the draft legislation.

Everyone in the US dairy industry should be wary of any dairy policy reforms that will hurt dairy product demand. That especially applies to a reform that will increase the cost of fluid milk products, which have already seen demand decline during the past 18 months.

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