Ten years from now, what will our U.S. dairy industry look like? It’s a fascinating question when you think about it. On one hand, 10 years doesn’t seem like that much time for change. That is, until you look at the many changes we’ve seen as an industry since 2006.
Things we use every day like activity monitors, genomics and robotics were merely ideas or new technologies a decade ago.
In my role as an innovation leader, trying to predict what will matter to consumers, producers and other dairy stakeholders over the next five to 10 years is a question I seek to answer every day.
I’m a trained economist, not a fortune teller, so my discovery work includes conversations up and down the dairy value chain. Based on those conversations, these are the focus areas I believe will impact our industry in the next 10 years.
- Differentiated dairy products
- Sustainability (clearly defined initiatives rather than concept)
Each of these focus areas are not independent of each other but rather concepts that will interconnect into our industry. Let’s take a look at each more closely.
Milk is not just milk
Our U.S. dairy industry is in the midst of a shift away from producing a commodity product to an evolving global supplier of the dairy ingredients consumers crave and demand. This evolution, though painful at times, has food companies racing to innovate and design products with cleaner labels or beneficial claims.
Several examples of differentiation can be found in your yogurt dairy case where brands are looking to optimize protein content and quality. Fairlife, the high-protein, low-sugar premium milk introduced by Coke and Select Milk Producers, is another example.
These innovations, both on the processing side, are just scratching the surface of the potential milk ideas to be further developed and explored.
In the next 10 years, there will be equally great opportunities for differentiation cowside. More producers will specialize their milk components through genetics, nutrition and environment to meet the unique needs of these “new” dairy products.
This will require more alignment between dairy producers and processing brands to realize the full value potential, but the opportunity will be there.
We will always have commodity milk because it is a crucial element of nourishing the world in the years to come. However, the rise of differentiation will create opportunities to think differently about what milk is and how consumers value it. Differentiated milk is here to stay.
Taking control of transparency
The driver of the “new consumer” that will be most interested in differentiated milk is rapidly being defined by the millennial generation. One of the key attributes of this new consumer is a desire for more transparency into their product supply chains.
The story behind who produces food and how it was produced is becoming a major driver as to what is purchased. Dairy is no exception.
As an industry, we need to take control of our story and not let others define it. Some of those stories are often not popular within our general dairy community. “Simplistic” dairy, including non-GMO feeds, no antibiotics, organic or a host of other marketing programs, will be a story consumers want to buy.
We will need to be proactive as an industry and align with dairy food brands looking for this milk supply rather than fighting it. Consumers will vote with their dollar that these products are in demand.
There will be opportunities and financial rewards for producers who choose to manage these types of supply chains. That’s a better result than fighting them and risking a ban on modern production practices.
This higher level of transparency may be uncomfortable and different than we’re used to, but it comes with incentive. The winners will be those who take advantage of the opportunity to create trust. They will be rewarded with greater value for their milk.
Each decision offers a measurable risk or reward depending on how they are handled. From an innovation standpoint, it is exciting for our industry to have available choices like this.
What exactly is sustainability?
Sustainability is a buzzword that elicits any number of reactions depending on how many times you’ve heard it, but it is taking a much more defined shape within dairy. Concepts that are measurable and truly show how we can produce more with less are allowing our industry to make sustainability real.
From an innovation standpoint, this can be exciting. It highlights many of the advancements we’ve already made over the last five decades and challenges us to think differently about solving problems in the next 50 years.
Dairy will be as steeped in precision agriculture as many other parts of farming are today. Getting there will be driven in large part by sustainability initiatives and new tools that allow you to make more informed and faster decisions.
A significant first step is setting a baseline of where we are today, just as you would do before changing something in a feed ration. Having a starting point allows continuous improvement from that point because you can measure it.
For sustainability, this is highly dependent on actual sound data. We are not short on technology to gather data today; most dairies only use a fraction of the data their operation generates in a meaningful way.
As we develop better tools and take more holistic approaches to data management, we will make large leaps forward. This will allow you to spend more time with cows, with people, with your family and to manage your business and livelihood in ways we never thought possible. When it comes to sustainability (like anything else), if you can’t measure it, it didn’t happen.
New and better technology
Technology encompasses a lot of ideas, capabilities and is rapidly changing, so it is easy to make a claim about how important it will be over the next 10-plus years. As an economist by training, these are my kind of terms. We will have better and more efficient ways to feed, milk, breed and do the host of other things we need to do with our cows each day to run a dairy.
Technology will give us the opportunity to choose where we want to dairy. There will no longer be a “golden place” to dairy. Technology will enable producers to dairy most anywhere. That choice will determine what they have to manage around forages, weather, air, water and so forth.
The bigger game with technology, however, is that it will enable differentiation. Technology will allow supply chains to be more transparent for that new consumer. It is technology that will enable actual data to be verified for sustainability.
Technology will give us a common language that makes sense to all participants along the value chain. And it is technology that will enable us to tell our story that will ultimately win the hearts, minds and bellies of our new consumer.
We have an awesome opportunity before us as an industry. We have a product that is made up of protein, fats, vitamins and a host of incredibly valuable nutrition pieces that our consumers want and need.
We can create cleaner labels and more functional products, all while doing more with less from the environment. We can tell a wonderful story and connect with our consumers in ways we have long talked about but rarely embraced.
But we must be open to new ideas and be willing to differentiate ourselves and our product. If we do that, the U.S. dairy industry will be the most diverse and dominant industry in the world. And it might not take 10 years to get there. PD
- U.S. Dairy Innovation Leader
- Cargill Animal Nutrition
- Email Ryan Sirolli