An Industry Brimming With Optimism

The month of April included two dairy industry gatherings that attracted well over 800 attendees, and after attending both of these events, we’ve concluded that, at this point in time, the US dairy industry is brimming with optimism and facing a very bright future.

The two events (not that these were the only two dairy-related meetings in April; they were just, to the best of our knowledge, the most well-attended) were the Wisconsin Cheese Industry Conference, co-hosted by the Wisconsin Cheese Makers Association and the Wisconsin Center for Dairy Research and held April 17-18 in La Crosse, WI; and the joint annual meeting of the American Dairy Products Institute and the American Butter Institute, held this week in Chicago.

The first indication of the industry’s current level of optimism can be seen in attendance figures: both gatherings set new records, with the WCIC drawing more than 1,500 people to La Crosse and the ADPI/ABI meeting attracting over 800 people to Chicago.

To put the WCIC attendance in perspective, a couple of related points are worth mentioning. First, the conference was so well-attended that at least a couple of attendees had to stay in Winona, MN, about 30 miles away. All the La Crosse hotels were booked.

Second, it was way back in 1980 that the WCMA held its first Biennial Trade Show at the brand new La Crosse Center Exhibition Hall, which had been completed just weeks before the WCMA convention.

Today, the WCIC’s one-day tabletop show has outgrown the La Crosse Center.

There are a couple of other points that can help put the record crowd at the WCIC in some perspective. One of the many events that took place at the conference was the awards banquet, at which the winners in the United States Championship Cheese Contest, which itself attracted a record 1,702 entries, were honored.

Second, USDA’s National Ag Statistics Service reported Monday, in its “Dairy Products 2012 Summary” publication, that US cheese production last year reached a record high of 10.89 billion pounds, up 2.8 percent from 2011.

To tie this in with the WCIC in La Crosse, back in 1980, when the WCMA held its first Biennial Trade Show in that city’s new convention center, US cheese production totaled 3.98 billion pounds.

This week’s ADPI/ABI meeting drew people from around the world representing the butter, milk powder and whey products industries, among others. Each of these industries appears to be thriving.

Butter has faced its share of difficulties over the years. As evidence of that point, as recently as 1998, US butter production was under 1.2 billion pounds, and as recently as 1997, per capita butter consumption had dropped to just 4.1 pounds.

Last year, US butter production totaled 1.86 billion pounds, up 2.8 percent from 2011 and the second-highest level ever, trailing only 1941’s output of 1.87 billion pounds.

And per capita butter consumption in 2011 (the latest year for which statistics are available) reached 5.4 pounds, the third time in four years that per capita consumption was 5.0 pounds or higher. Prior to 2011, the last time per capita butter consumption was 5.4 pounds was way back in 1969.

What about milk powder and whey protein products? What do prospects look like there?

Based on several speakers at this week’s ADPI/ABI meeting, it would appear that the sky’s the limit when it comes to any dairy product that contains an appreciable amount of protein. This includes nonfat dry milk, whole milk powder, whey protein concentrate and isolate, and milk protein concentrate and isolate.

Reasons for the tremendous potential of these products are well-known by now. In the US, dairy proteins appeal to a wide variety of consumers, ranging from hard-core athletes to aging baby boomers. In the developing world, rising incomes are fueling an increasing interest in animal proteins, including dairy proteins in various forms.

The US dairy industry has, at this point, various levels of “expertise” on these dairy proteins. And by “expertise,” we mean production and exports.

For example, last year the US produced 1.76 billion pounds of nonfat dry milk, 381 million pounds of skim milk powder, 946 million pounds of dry whey (human), and 441 million pounds of whey protein concentrate. The US in 2012 exported about 981 million pounds of nonfat dry milk, 478.7 million pounds of dried whey and 267 million pounds of whey protein concentrate.

On the other hand, the US last year produced just 58 million pounds of dry whole milk and 102.3 million pounds of milk protein concentrate (a product that wasn’t produced domestically at the turn of the century).
But our expectation is that US production, and exports, of both of these products will increase in the years ahead.

About the only sour note sounded at the April dairy meetings concerned fluid milk. Simply put, there aren’t too many positives in the fluid milk business these days. Sales declined again last year, per capita consumption might have fallen under 200 pounds (it was 261 pounds back in 1975), and there aren’t too many industry observers who have great optimism about future fluid milk consumption and sales growth.

But for pretty much every other sector of the US dairy industry, meetings held in the last month have led us to conclude that the US dairy industry is brimming with optimism right now and looking ahead to a very bright future. DG

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