Digest Highlights

USDA sets dairy product processing cost webinar

The USDA has released the link for a Feb. 23 webinar to discuss a report on a study updating dairy product processing costs. The webinar is limited to 500 participants but will be recorded and posted online.

Natzke dave
Editor / Progressive Dairy

The webinar is also available via “one tap mobile” at +16692545252,1608010405# or +16468287666,1608010405# or telephone: (669) 254-5252, (646) 828-7666, (669) 216-1590 or (551) 285-1373.

The webinar identification number is 160 801 0405.

Manufacturing costs are one issue cited as discussions over potential Federal Milk Marketing Order (FMMO) reform increase. The study, conducted by Mark Stephenson, director of dairy policy analysis at the University of Wisconsin – Madison, is summarized in the report, Cost of Processing Study for Cheese, Whey, Butter and Nonfat Dry Milk Plants.

Stephenson will review the study’s methodology and results during a webinar hosted by USDA’s Agricultural Marketing Service on Feb. 23, at 11 a.m. Eastern time.

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The study gathered data from dairy processing plants located throughout the country to estimate the average costs of manufacturing a pound of four dairy commodity products (cheddar cheese, butter, dry whey and nonfat dry milk) that are used in FMMO price formulas. The formulas establish manufacturing or “make” allowances, processing credits designed to reflect the average processing costs associated with producing those products.

Combined with yield factors, make allowances are used in calculating minimum milk prices to dairy farmers in FMMO end-product pricing formulas.

Yield factors and make allowances are fixed and can only be changed through an FMMO rule-making proceeding,

Previous cost studies are also available on the Program on Dairy Markets and Policy website.

2021 fluid sales down 4%

With December’s estimates now in, here’s an update on U.S. fluid milk sales data from the USDA Agricultural Marketing Service for 2021.

  • Total sales: December 2021 sales of packaged fluid milk products totaled about 3.91 billion pounds, down about 2.6% from the same month a year earlier. At 44.34 billion pounds, total year 2021 sales of all fluid products were down 4.1%.

  • Conventional products: December sales totaled 3.67 billion pounds, down 2.5% from December 2020. Total year sales of conventional products were down 4.2%, at about 41.54 billion pounds.

  • Organic products: Monthly sales totaled 242 million pounds, down 4.1% from a year earlier. At 2.8 billion pounds, 2021 sales of organic products were down about 2.6%. Organic represented about 6.2% total fluid product sales in December and 6.3% of total fluid product sales in 2021.

The U.S. figures are based on consumption of fluid milk products in FMMO areas, which account for approximately 92% of total U.S. fluid milk sales, and adding the other 8% from outside FMMO-regulated areas. Sales outlets include food stores, convenience stores, warehouse stores/wholesale clubs, nonfood stores, schools, the food service industry and home delivery.

January food, dairy sales impacted by inflation

The combined effect of concerns over COVID-19, inflation and supply chain challenges are keeping food shopper demand in flux, according to a monthly update from the International Dairy Deli Bakery Association (IDDBA). The marketplace disruption is not showing signs of letting up any time soon.

In January, inflation surpassed the COVID-19 pandemic as the primary concern among shoppers, but both kept more food consumers at home. About 82% of all meal occasions were at home during the month, the highest number since February 2021. About 54% of shoppers said they used restaurant takeout during the month, but only 41% dined in a restaurant.

In response to inflationary pressure around the grocery store, 45% of shoppers look for sales specials more often, 31% are cutting back on nonessentials, 19% buy more private brands and 12% now shop at a lower-cost retailer.

Affecting the dairy aisle, demand held strong and weekly sales were consistent on a value basis during January 2022, up 3.6% compared to the same month a year earlier. However, inflation meant shoppers took home less in terms of volume. For example, fluid milk sales were up 4.5% versus January 2021, but volume was down 4.2%. Yogurt sales were up 3.8% in value but down 2.5% in volume. Natural cheese sales were down 1.3% in value and down 2.4% in volume. Butter sales were done 0.6% in value and -7.9% in volume. Creams and creamers were one of the few categories showing growth in both value and volume.

Dairy Defined: Inflation is hot but dairy stays cooler

While rising prices are a growing concern among consumers, the increase in dairy product prices lags the jump in the overall Consumer Price Index (CPI), according to a recent “Dairy Defined” release from the National Milk Producers Federation (NMPF).

January 2022’s overall CPI was up 7.5% from the same month a year earlier, with the fastest retail price increases in costs in 40 years. As a category of the CPI, prices for food and beverages were up about 7%.

The food at home index rose 7.4% over the last 12 months, with largest increases for meats, poultry, fish and eggs, which rose 12.2% over the year. The index for dairy and related products increased 3.1%, the smallest 12-month increase among the groups.

Digging deeper into the dairy aisle, the price of a gallon of whole milk was in line with other foods and beverages and lower than overall inflation, according to NMPF. Cheese costs to consumers were up just 0.2%, with ice cream up 1.1%. Butter was up 3.7% (compared to margarine’s jump of 9.2%).  end mark

Dave Natzke