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Farm Milk Production

Major trends in U.S. milk production include (1) a fairly steady increase in milk production, and (2) a consistent decline in the number of dairy operations matched by a continual rise in the number of cows per operation. Most major milk-producing States are in the West and North. The relative importance of the western regions has grown, while other regions have declined or remained steady. Most U.S. dairy cows are Holsteins, a breed that tends to produce more milk per cow than other breeds.

In the United States, the decision to produce milk largely rests in the hands of individuals or families. Many of these farmers belong to producer-owned cooperatives. The cooperatives assemble members' milk and move it to processors and manufacturers. Some cooperatives operate their own processing and manufacturing plants. Initially local, many of today's dairy cooperatives are national, with members across the country.

From Raw Milk to Dairy Products

On average, U.S. farm milk comprises approximately 87.3 percent water, 3.8 percent milk fat, and 8.9 percent skim solids. Milk is usually separated through various processes into components and processed into fluid beverage milk or manufactured dairy products.

Fluid beverage milk accounts for about 12 percent of the milk fat and 25 percent of skim solids from U.S. farm milk. Fluid milk processors face a unique supply-demand situation not shared by most other food products. Farm milk production varies by day, week, and season because, in part, of weather and feed conditions. Similarly, fluid milk sales vary greatly by day and season because of consumer shopping patterns. Because these patterns cannot be precisely predicted, a system must be maintained to get milk where it is needed when it is needed. Shipping milk among locations and storing it for a day or two solves some of the problem, but a pool of "on call" raw milk is ultimately needed. The portion of this reserve not actually used in fluid milk products is manufactured into other dairy products.

Coordinating supply and demand for the fluid market is called balancing. Individual plants may do the balancing, but it is more efficient for a few entities, or even a single entity, to provide the services for a market. In most cases, dairy cooperatives have taken on this important function.

The remainder of the milk supply -- what is not used for fluid milk and cream products--goes into a wide array of manufactured dairy products. Cheese accounts for about 40 percent of the milk fat and 15 percent of skim solids from farm milk. Mozzarella is the most popular variety, followed by Cheddar. Production of most varieties has grown steadily for many years, as cheese has become a staple in the American diet.

Ice cream accounts for about 8 percent of the milk fat and 2 percent of the skim solids from farm milk. Frozen dairy products are commonly made by fluid milk processors, although specialized plants are well established.

Butter and nonfat dry milk traditionally were joint products. The cream from milk was churned for butter, and the remaining skim milk was dried for nonfat dry milk. Nowadays, more than half of the butter produced comes from cream not needed when milk is used for fluid milk products or cheese.

The plants that process and manufacture milk into fluid and other dairy products may be proprietary (held by private or publicly traded companies) or cooperatively owned. Cooperatives generally produce cheese, butter, nonfat dry milk, and similar manufactured products, but some cooperatives process fluid milk.

Consumption

In recent decades, consumption of total dairy products has risen faster than the growth in population. However, use of individual products has shown great variation. Total per capita consumption of fluid milk has declined because of competition from other beverages and a declining share of children in the population.

Growing cheese demand has been one of the most important forces shaping the U.S. dairy industry. Rising cheese consumption has been aided by ready availability of a wider variety of cheeses, more away-from-home eating, and greater popularity of ethnic cuisines that employ cheese as a major ingredient.

Per-person use of butter has increased in recent years. However, use of most dry and condensed milks have declined as in-home food preparation has diminished and fresh milk has become cheaper and achieved a longer shelf life. In commercial food preparation, whey products have replaced some of the former uses of dry and condensed milk products. (Whey is the watery part of milk that separates from curds in the process of making cheese.)

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Last updated: Friday, April 01, 2016

For more information contact: Roger Hoskin and Jerry Cessna

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