Dairy Policy & Economics
August 27, 2010
Market Update: Overall Dairy Demand Strong, but Fluid Milk Sales Sag
By Bob Yonkers, Ph.D., IDFA Chief Economist
While overall dairy demand is stronger so far in 2010 than last year, mainly thanks to greater exports, there is at least one dark cloud hovering overhead. According to estimates from the U.S. Department of Agriculture's Agricultural Marketing Service (AMS), total U.S. fluid dairy product sales through June this year are 1.3 percent lower than the same period last year.
However, this decline is mostly driven by a few conventional fluid milk products and a few regions of the country. January-through-June sales of whole white milk are down a whopping 5.9 percent, and sales of flavored whole milk are 5.0 percent lower. Even fat-free milk is selling less, down 3.7 percent in June alone and 1.0 percent lower so far this year. Among milks by fat level, low-fat (1%) milk was the star in the most recent month, up 1.2 percent in June and up 3.4 percent for the year.
Overall, USDA reports conventional fluid milk sales were 3.8 percent lower in June compared to last year, and sales for the year to date are down 1.6%. Meanwhile, organic fluid milk sales have regained the growth trend they lost last year. For June, all organic fluid milk sales increased 9.9 percent, and results for the year to date are 6.5 percent higher.
Regionally, USDA reports data on packaged fluid milk sales by handlers regulated in the 10 Federal Milk Marketing Order areas, as well as for California. Packaged fluid milk sales so far this year are higher in only three of the 11 reported areas: Appalachian up 1.2 percent, Pacific-Northwest up 0.9 percent and Southwest up 0.2 percent. The remaining reported areas have all experienced lower fluid sales this year, with California seeing by far the largest decline at minus 3.7 percent.
Should this trend continue for the rest of 2010, it would be the largest year-to-year decline since AMS began reporting estimated total U.S. fluid milk sales in 2000. The previous largest year-to-year decline occurred in 2004 when average daily fluid sales for the year declined 1.0 percent. In fact, 2009 was the only year since AMS began reporting data that average daily fluid milk sales were higher than they were in 2000. Unless sales turn around the remainder of this year, 2010 sales will fall back below those seen in 2000.
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