ERS Charts of Note

Thursday, May 24, 2018

USDA’s newly released commodity forecasts for 2019 indicate expected growth in U.S. production of beef, pork, broilers (young chickens), turkey, eggs, and milk. Generally, production growth in meat and animal products is supported by relatively low feed costs, the long term trend of increasing animal weights for meat, and higher yields per animal for milk and eggs. However, veal production is expected to decrease, while no growth is expected for lamb. In 2019, growth of beef and turkey production is projected to exceed the respective 2014–18 averages of 1.2 percent and 0.4 percent. Growth of pork, broilers, and egg production is expected to be relatively consistent with the respective 2014–18 average growth rates of 3 percent, 2.3 percent, and 1.9 percent. The forecast growth rate for milk production is down compared to the 2014–18 average of 1.7 percent. In 2014–18, veal production contracted sizably, averaging annual decreases of 7.9 percent, but contraction has slowed in 2014–18. Similarly, in 2019, lamb, which saw average annual declines of 1.3 percent in 2014–18, is expected to maintain production levels consistent with 2018. This chart appears in the ERS Livestock, Dairy, and Poultry Outlook released in May 2018.

Tuesday, March 20, 2018

U.S. dairy product exports grew from $1.4 billion in 2000 to $7.0 billion in 2014 (valued in 2017 U.S. dollars), about a sevenfold increase. Income growth in East Asia, Southeast Asia, Latin America, and other regions has led to increased dairy consumption and demand. Additionally, China’s market-based reforms opened one of the world’s largest markets for dairy product imports, and the country is now the third largest market for U.S. dairy exports. Further, a reduction in domestic support and export subsidies for dairy products by the European Union (EU) and the United States has brought greater openness to world markets and has expanded overall global dairy trade. However, the value of U.S. dairy exports fell in 2015 and 2016 due to weaker growth in global demand for dairy products (especially from China), a Russian ban on dairy imports from several countries, a strong U.S. dollar, and the discontinuation of milk supply quotas in the EU. Global demand for dairy products rose significantly in 2017, and the value of U.S. dairy exports increased to $5.2 billion, a 14-percent increase compared with 2016. This chart is updated through 2017 and is drawn from the report, Growth of U.S. Dairy Exports, released in November 2016.

Monday, October 2, 2017

Through the 1980s whole milk sales quantities fell at a rapid pace, as reduced fat milk sales grew. Whole milk sales continued to fall through 2013, although at a lesser rate than the 1980s. Since 2013, however, whole milk sales grew, while reduced fat and low fat milk sales declined. The growth in whole milk sales in recent years has been attributed to changing consumer perceptions about the health effects of consuming milk fats. This period has coincided with increases in butter consumption, indicating that consumer concerns over dairy fat have declined. While whole milk sales increased, the overall trend for fluid milk sales remains negative, as losses to the lower fat categories exceed gains made for full fat milk. This downward trend in fluid milk consumption has been occurring for many years. Possible reasons include the declining proportion of young children in the U.S. population, the availability of alternatives, and changing consumer preferences. This chart is drawn from the ERS Livestock, Dairy, and Poultry Outlook newsletter released in September 2017.

Monday, June 19, 2017

India is the world’s largest producer and consumer of milk and has the world’s largest dairy herd. The country’s milk production has been expanding at about 4.2 percent annually since 2000, matching growth in demand as higher incomes spur more fluid milk and dairy product consumption. About half of India’s milk production is from water buffalo, and the other half is from cattle, which includes indigenous breeds and crossbred animals. Crossbred cattle are mixes of indigenous and imported exotic dairy breeds, such as Holstein-Friesen, Jersey, and Brown Swiss. The indigenous component of the cattle milking herd has relatively low milk production, or yield, per animal and is shrinking, while the higher yielding crossbred component is now the fastest growing portion of the total herd. The water buffalo herd, with per animal milk yields in between those of the indigenous and crossbred herds, continues to expand, although recent data suggest that the pace may be slowing. This chart appears in the ERS Amber Waves article, "Changes in Herd Composition a Key to Indian Dairy Production," released in June 2017.

Thursday, May 25, 2017

On average, larger dairy farms earn higher profits than smaller farms, spurring a steady shift of cows and production to larger operations. Between 2011 and 2015, farms with at least 1,000 milk cows earned the highest average rates of return on equity (ROE), a measure of profitability that captures the return to the capital that farmers have invested in the business. According to the 2012 Census of Agriculture (the latest data), these farms accounted for nearly half of all cows. By comparison, farms with less than 100 cows generally had negative average ROE between 2011 and 2015, but accounted for only 17 percent of all cows in 2012. Average ROE data can mask variation at the farm level: some farms are profitable and others are not. Low and negative ROE indicate that dairy farmers could earn more by investing their money elsewhere. Dairy farming carries financial risks for farms in all herd size classes. For example, ROE rose in 2014 as the prices that farmers receive for their milk rose to well over $20 per hundredweight of milk, but then fell sharply the following year as monthly milk prices declined by about 30 percent. This chart updates data from the ERS report Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry, released March 2016.

Wednesday, March 29, 2017

Errata:On April 21, 2017, the axis and text of this Chart of Note were revised so that the production units were correctly listed as million tons.

Errata: On March 29, 2017, the title of this Chart of Note was revised so that it correctly references India as the world’s largest dairy producer.

India is the largest milk-producing country in the world. The country is trailed by the United States, which is the second largest producer, in milk production by a large margin. India is unique among the major milk producers because more than half of its production comes from water buffalo, rather than cattle. Its dairy herd, also the largest in the world, has the biggest herds of both dairy cattle and water buffalo. Since 1980, production has grown consistently at an average of 4.5 percent per year. The rate of growth between water buffalo and cow’s milk has also been quite similar at 4.6 and 4.5 percent, respectively. In 2016, total production reached 154 million tons compared with 96 million produced in the United States. India surpassed the United States as the largest dairy producer in 1997, when both countries produced roughly 70 million tons, each. This chart appears in the March 2017 ERS Report “India’s Dairy Sector: Structure, Performance, and Prospects.”

Thursday, March 23, 2017

Mexico has consistently been the leading export destination for U.S. dairy products, with the combination of nonfat dry milk (NDM) and skim milk powder (SMP) as the top export product. (NDM and SMP are two very similar products grouped together in export data.) In 2016, 54 percent of NDM/SMP produced in the United States was exported, and 43 percent of these exports went to Mexico. However, there is a great deal of uncertainty concerning the future of exports to Mexico due to a strong dollar and possible changes in trade policy. The United States accounted for 94 percent of Mexico’s imports of NDM/SMP in 2016. Other sources included New Zealand, Spain, Canada, and Germany. If Mexico were to reduce imports from the United States, those countries would be in a better position to increase their share of trade. This chart appears in the ERS Livestock, Dairy, and Poultry Outlook report released in March 2017.

Friday, January 27, 2017

Over the past decade, the farm share for a basket of 16 fresh vegetables—the ratio of prices received by growers (farm value) to grocery store prices (retail value)—has averaged about 25 percent. In 2015, the basket’s annual farm value rose by 11 percent to $62.12, while its annual retail value rose by 1.6 percent to $225.80, causing farm share for the basket of fresh vegetables to increase from 25 to 28 percent. Farm-level prices rose in 2015 as drought reduced shipment volumes from California, the Nation’s leading State for fresh vegetable production. However, lower oil prices and a strong U.S. dollar mitigated retail price increases. According to ERS forecasts, while U.S. production of fresh-market vegetables was expected to recover somewhat in 2016, it was also expected to remain below 2014 values, putting continued upwards pressure on farm prices. This chart is based on the Price Spreads from Farm to Consumer data product on the ERS website, updated December 13, 2016.

Tuesday, January 10, 2017

California leads the Nation in dairy production, manufacturing roughly 20 percent of the Nation’s milk. The State is also the leading producer of butter and nonfat dry milk and is second to Wisconsin in cheese production. The ongoing drought in California has had an impact on the State’s dairy output, contributing to negative year-over-year growth since the end of 2014 until October 2016. In addition to drought conditions, prices received by California dairy farmers were down 30 percent in 2015 and dipped even further in 2016, before recovering in June 2016. The upward trend in prices received in late 2016 may help explain the movement back toward positive growth in California’s dairy production. This chart is drawn from data discussed in the ERS Livestock, Dairy, and Poultry Outlook report released in December 2016.

Tuesday, December 13, 2016

Dairy manufacturers separate and reassemble milk components to produce a variety of products. To analyze aggregate domestic and foreign demand for U.S. milk products, the products are often converted to a common milk equivalent. Two common measures are milk-fat basis and skim-solids basis. Depending on the product, the two measures may diverge significantly. Butter is very high in milk-fat and low in skim-solids, for example, while non-fat dry milk is the opposite. From 1995 to 2003, dairy product exports averaged 2.2 billion pounds per year on a milk-fat basis and 1.4 percent of total milk production. Since 2003, milk-fat basis exports have grown, reaching 12.4 billion pounds (6.0 percent of milk production) in 2014, but then falling to 8.8 billion pounds (4.2 percent) in 2015. Skim-solids basis exports have grown more, increasing from 5.2 billion pounds (3.4 percent of milk production) in 1995 to 39.0 billion pounds (18.9 percent) in 2014, before falling to 37.3 billion pounds (17.9 percent) in 2015. While both metrics have grown significantly, the larger increase in skim-solids basis exports indicates that products like non-fat dry milk, whey, and lactose have been especially popular on the export market. This chart appears in the ERS Growth of U.S. Dairy Exports report published in November 2016.

Thursday, December 1, 2016

According to ERS’s loss-adjusted food availability data, Americans consumed just under 1.5 cup-equivalents of dairy products per person per day in 1974 and in 2014—half the recommended amount for a 2,000-calorie diet. While Americans are consuming the same number of cup-equivalents of dairy products, the mix has changed. Consumption of cheese has more than doubled during this time from 0.29 cup-equivalents per person in 1974 to 0.64 cup-equivalents per person in 2014, while yogurt consumption grew almost ten-fold to 0.05 cup-equivalents per person. Fluid milk consumption stood at 0.55 cup-equivalents per person in 2014, down from 0.90 cup-equivalents per person in 1974. Several factors have contributed to this decline, including competition from soft drinks, fruit juices, bottled water, and other beverages; generational differences in the frequency of milk drinking; and a more ethnically diverse population, some of whose diets do not normally include fluid milk. This chart is from ERS’s Ag and Food Statistics: Charting the Essentials, updated October 11, 2016.

Friday, November 4, 2016

As the grocery store dairy case illustrates, yogurt’s popularity in the United States is on the rise. According to ERS’s loss-adjusted availability data (proxies for consumption), supplies of yogurt available for U.S. consumers to eat grew from 3.6 pounds per person in 1994 to 10.3 pounds per person in 2014. Linking ERS’s loss-adjusted food availability data with intake surveys from 1994-2008 allows a look at estimated consumption by demographic groups and reveals that yogurt is especially popular with American women. In each survey year, women’s per person estimated consumption was higher than men’s, boys’, and girls’. Men consumed more yogurt per person than boys and girls in 1994-98 and 1999-2000, but by 2001-02, children’s consumption of yogurt was higher than men’s. In 2007-08, U.S. women consumed an estimated 10.9 pounds of yogurt per person, followed by girls at 7.0 pounds per person, boys at 6.3 pounds per person, and men’s at 6.1 pounds per person. Over 1994-2008, consumption of yogurt grew for both lower and higher income groups; for adults with less than a high school education, high school graduates, and college graduates; and across all racial/ethnicity groups. The data for this chart and similar information on 62 other food commodities can be found in the ERS report, U.S. Food Commodity Consumption Broken Down by Demographics, 1994-2008, March 2016.

Tuesday, October 11, 2016

Per capita consumption of cow’s milk cheese rose in 2015, adding to strong growth from 2014. On average, Americans consumed roughly 35 pounds of cheese in 2015. The two most common cheeses, cheddar and mozzarella, accounted for 61 percent of consumption. Consumption of cheddar, which totaled about 10 pounds per person in 2015, increased just over 3 percent. By comparison, mozzarella consumption grew at about 1 percent. Other cheeses—such as cream cheeses, Swiss, and Hispanic cheeses—collectively grew the fastest at nearly 4 percent. Taken together, the growth in U.S. per capita consumption was the highest since 1999, at almost 3 percent. Relatively strong economic growth in the United States helped increase its domestic cheese consumption. Amidst the recession, by comparison, per capita consumption shrank in 2008 and grew minimally in 2009. Relatively low prices likely also encouraged cheese consumption. According to data from the U.S. Bureau of Labor Statistics, retail cheese prices fell by 0.2 percent in 2015. The data for this chart comes from the ERS Dairy Data product, updated in September 2016.

Wednesday, October 5, 2016

Over the past decade, the farm share for a basket of 14 dairy products—the ratio of grocery store prices (retail value) to prices received by dairy farmers (farm value)—has fluctuated between 24 and 38 percent. In 2015, the annual retail value of the basket fell by 1.2 percent to $435 while the farm value of the same products fell by 26.6 percent to $124. A decrease in the all-milk price received by farmers was responsible for the basket’s lower farm value. In 2014, the all-milk price peaked at $23.98 per 100 pounds on a monthly-average basis. The following year, however, the all-milk price fell to $17.08 per 100 pounds as a result of rising domestic milk production, falling U.S. cheese and dry whey exports, and growing imports of butter and cheese. The basket’s lower 2015 farm value, in turn, caused the farm share to fall from 38 to 29 percent that year. This chart is based on the Price Spreads from Farm to Consumer data product on the ERS website, updated July 2016.

Friday, September 16, 2016

Over the past decade, farm-level prices for milk have been variable. In September 2014, the all-milk price (the average price received by dairy farmers) peaked at $25.70 per 100 pounds, or cwt (1 cwt is just under 12 gallons). A year later, dairy farmers were receiving $17.50 per cwt. By April 2016, the all-milk price was down to $15.00 per cwt. As of June 2016, USDA forecasts indicate that the all-milk price will average between $14.95 and $15.35 per cwt for 2016. Relatively low feed prices in 2015-16 have mitigated the impact of low milk prices on dairy farmers’ incomes. In October 2014, the dairy producer’s margin, or the difference between the all-milk price and ERS’s estimate of average feed costs per cwt of milk was $12.85. As the all-milk price started to fall, the estimated margin hit a low point of $4.14 in July 2015. It thereafter increased slightly to a value of $6.46 in December 2015. By contrast, during the previous downturn in milk prices in 2009-10, the margin reached a low of negative $0.15 in June 2009. This chart is from the ERS Amber Waves article, Processing and Marketing Blunt the Impact of Volatile Farm Prices on Retail Dairy Prices released on August 1, 2016.

Wednesday, July 6, 2016

The Margin Protection Program-Dairy (MPP-Dairy) is a risk management program introduced in the 2014 Farm Act. MPP-Dairy is designed to protect agricultural producers against adverse movements in the difference between milk and feed prices (the margin). Enrollees receive catastrophic coverage, for an annual $100 enrollment fee, that provides payments when a national-average margin falls below $4 (the average monthly margin was $8.30 in 2004-13). Farmers can purchase additional “buy-up” coverage, for margin thresholds ranging from $4 to $8 in 50-cent increments. Almost 25,000 farms—55 percent of licensed U.S. dairy operations, accounting for 80 percent of 2014 U.S. milk production—enrolled in the program for 2015 coverage. Forty-four percent of enrollees—with more than three-quarters of production covered by MPP—chose catastrophic coverage. Farms may change coverage annually, and many did so in 2016, as the shares of farms and production under catastrophic coverage rose, moving away from all levels of buy-up coverage. This chart is based on data found in the ERS report, Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry, March 2016.

Thursday, June 16, 2016

Milk production in the United States continues to grow, with year-over-year output increasing each month over the past few years. U.S. average daily milk production in April was 1.2 percent higher than the same period last year, following year-over-year gains of 1.8 percent in March, 1.0 percent in February and 0.2 percent in January. The increases reflect a combination of herd expansion and increasing production per cow. Despite relatively low farm milk prices in recent months, low feed prices and favorable weather conditions have contributed to growth in milk production. At the same time, as dairy farms have grown larger, many have developed economies of scale that enable them to maintain profitability and in some cases even expand production in the face of lower margins. This chart is from the Livestock, Dairy, and Poultry Outlook: May 2016.

Friday, June 10, 2016

Most labor on small U.S. dairy farms is provided by the operator and the operator’s family, whereas large dairy farms, while usually still family-owned and operated, rely extensively on hired labor. Labor productivity—output of milk per hour of labor—is much higher on larger dairy farms, with the largest (farms with milking herds of at least 2,000 cows) realizing 10 hundredweight (cwt) per hour of labor, compared to 2-4 cwt per hour on farms with herds of 50-500 head. Large farms operate differently than small dairy farms, as their size allows them to apply practices and technologies that result in higher milk yields and labor productivity. For example, farms with at least 500 cows are much more likely to milk three times a day, while smaller farms typically milk twice a day. Thrice-daily milking raises per-cow milk yields, allows farms to offer more work and higher pay to their hired labor, and creates more intensive use of milking equipment. Greater labor productivity is one source of the cost advantages accruing to larger dairy operations. This chart is based on data found in the ERS report, Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry, March 2016.

Friday, June 3, 2016

The volume of natural cheese held in cold storage in the United States has grown to 1.214 billion pounds as of the end of April 2016, the highest level since March 1984. However, unlike 1984, inventories today are almost exclusively privately held and reflect the needs of a growing market instead of the consequence of government policy. In the 1980s, the Milk Price Support Program was very active in purchasing large quantities of cheese to support dairy prices. The U.S. Government owned about 60 percent of cheese stocks, which it often distributed through food donation programs in the United States and abroad. In recent years, government purchases of dairy products fell to zero as market prices exceeded support prices, and the Milk Price Support Program was repealed by the 2014 Farm Act. At the same time, commercial cheese stocks have grown to help meet the growing demand for cheese. Total commercial use of cheese (which does not include government donations) grew from 4.6 billion pounds in 1984 to 11.9 billion pounds in 2015, due to population growth as well as increasing consumption per capita and higher exports. Commercial cheese stocks have been growing particularly fast in recent months, reflecting an increasing milk supply, relatively low export demand, and anticipation of further growth in the domestic market. This chart is based on the May 2016 Livestock, Dairy and Poultry Outlook, report and the ERS Dairy Data product.

Tuesday, April 19, 2016

While some small U.S. dairy farms earn profits and some large farms incur losses, financial performance in the dairy sector, on average, is linked to herd size. Data from 2010 (the latest available for dairy farms by herd size) show that a majority of dairy farms with milking herds of at least 1,000 cows generate gross returns that exceed total costs, while most small and mid-size dairy farms do not earn enough to cover total costs. Total costs include annualized capital recovery as well as the cost of unpaid family labor (measured as what the farm family could earn off the farm), in addition to cash operating expenses. Many more small and mid-sized farms are able to cover total costs, except for costs associated with capital recovery. Farms can operate in this way for years, covering operating expenses and providing a reasonable income for a farm family, until the expense of maintaining aging equipment and structures begins to erode the incomes that a family can earn from the farm. At that point, many families may decide to close the farm. Some—particularly those where a younger generation intends to continue the business—may seek financing to expand the dairy herd and realize lower costs through scale economies. This chart is found in the ERS report, Changing Structure, Financial Risks, and Government Policy for the U.S. Dairy Industry, March 2016.