Editor, Cheese Reporter
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Misleading Statistics Distort Dairy Market Realities
Back on August 22nd, USDA’s National Ag Statistics Service, in its monthly “Cold Storage” report, noted that total natural cheese stocks in refrigerated warehouses on July 31, 2016, were a record high for the month of July (at 1.276 billion pounds), “since the data was first recorded in 1917.”
The agency made the same reference to 1917 in the “Cold Storage” reports it released in July, June and May.
Frankly, we find it a bit shocking, and somewhat amusing, that NASS would actually offer any sort of comparison between current cheese stocks and the level of cheese stocks 99 years ago.
There are at least two problems with using the 1917 comparison for cheese stocks. First, US cheese production back then didn’t even amount to half a billion pounds, let alone the almost 1.3 billion pounds currently being stored.
That’s our guess, anyway, since the NASS statistical database for cheese production begins in 1919, when US output was around 479 million pounds. And it wasn’t until 1925 that US cheese production even cracked the 500-million-pound barrier.
Further, it wasn’t until 1942 that cheese production first topped 1 billion pounds, and it wasn’t until 1947 that total annual cheese output, at 1.283 billion pounds, actually topped the amount of cheese in refrigerated warehouses at the end of July, 2016.
It would have been pretty much impossible for there to have been all that much cheese being stored back in 1917, simply because there wasn’t all that much cheese being produced (or consumed).
For what it’s worth, cheese stocks at the end of August 1917 (end-of-July stocks aren’t reported on the NASS website) totaled about 95 million pounds, or roughly 20 percent of annual cheese production.
At 1.276 billion pounds, the quantity of cheese in refrigerated warehouses at the end of July 2016 amounted to around 11 percent of annual cheese production. In that historical comparison, cheese stocks seem a bit low right now.
Not only has cheese production increased steadily if not spectacularly over the past century, the types of cheese being produced in the US have changed tremendously. For example, NASS statistics for US Parmesan production date back to 1961; that year, US Parmesan production totaled all of 19.4 million pounds.
Last year, US Parmesan production was a record 339 million pounds, all of which has to be stored for anywhere from several months to almost two years before being sold.
Indeed, we can’t help but notice that US Parm production grew by more than 100 million pounds just since 2010 (when output was just under 234 million pounds). Meanwhile, stocks of “other” natural cheese (other than American and Swiss) rose from 402.9 million pounds as of July 31, 2010 to 480.7 million pounds as of July 31, 2016.
Seems like a lot of the increase in total cheese stocks over the last six years can be explained by the increase in Parmesan production.
Another way of looking at the amount of cheese being held in warehouses is described in an article in the April 2011 Northeast federal order market administrator’s bulletin.
The article noted that total cheese stocks exceeded 1 billion pounds in March 2010 and had remained above that level through March 2011. Yet the NASS (now AMS) block Cheddar cheese price still spent five weeks over $1.88 per pound from late February through March 2011 and remained over $1.60 per pound through April 2011.
“Though current total cheese stocks over a billion pounds sounds like a very big number historically, it has to be viewed in context with current historically strong cheese production and commercial disappearance numbers,” the article pointed out.
When cheese stocks were last above a billion pounds, in 1983-84, government stocks of American cheese accounted for roughly 60 percent of total cheese stocks. There was indeed a “glut of cheese” in storage, relative to the size of the cheese market at that time. Stocks were 314 percent higher than total monthly production.
From 1988 on, total cheese stocks averaged 96 percent of total monthly cheese production, ranging mostly between 80 and 116 percent, the article continued. Stocks averaged 104 percent since 2000.
“These data imply that stocks have grown mostly in proportion with production,” the article explained. In relative terms, 1984’s billion pounds of cheese in cold storage is not the same as today’s billion pounds.
US cheese production back in 1984 totaled around 4.7 billion pounds, or an average of about 392 pounds per month. By 2011, when the Northeast market administrator’s bulletin ran its article about cheese stocks, cheese production had risen to around 10.6 billion pounds, or an average of about 883 million per month.
And, as noted, stocks were over a billion pounds. This year, cheese production is on pace to top 12 billion pounds for the first time ever, which works out to an average of around a billion pounds of cheese every month.
In that context, the current US cheese inventory of almost 1.3 billion pounds doesn’t really seem all that out of line. If anything, what’s out of line is any sort of reference to 1917, or any historical reference that doesn’t reflect the growth and changes in cheese production.
Rising inventories, looked at in the manner described in the Northeast market administrator’s article more than five years ago, indicate a growing market. If anything, rather than getting bent out of shape when inventories top 1.2 billion pounds, folks should worry when they drop below that level.
Cheese Reporter welcomes letters to the editor. Comments should be sent to: Dick Groves by Fax at (608) 246-8431; or e-mail your comments to dgroves @cheesereporter.com.
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