Fat is back, and that should have all of us rethinking how we track performance benchmarks. By reshaping our thought process, we will better match the milk sold off our farm to consumer purchase patterns. This, in turn, could enhance our milk check revenue. With that concept as the foundation, total fat and protein, better known as milk solids, would be a far better metric than tracking pounds of milk.
Consumers are eating milk as cheese and butter versus drinking it from a glass. This can be clearly seen by surveying the U.S. milk supply on a milkfat versus a skim milk basis.
When evaluating the domestic market, Americans consume 98 percent of our country’s milkfat. For those selling milk, that’s a good situation, as America is home to the world’s largest economy and its consumers have the deepest wallets. But that shortchanges the market potential.
Proof that milk solids are the present and the future, U.S. consumers only utilize 83 percent of the national milk supply on a skim milk basis. That means domestic dairy processors skim off the milkfat and protein for cheese and butter to serve the domestic market and sell the remaining 17 percent of the skim milk on the world market. That product is a low-margin endeavor.
What’s the remedy?
Processors would prefer fuller-fat milk coming off our dairy farms and are willing to pay for it. Some analysts have suggested a mix of 4.2 percent butterfat and 3.2 percent protein would be ideal for the national milk pool. After hovering between 3.64 to 3.69 percent butterfat from 1966 to 2010, butterfat levels have climbed to 3.83 percent. That’s a move in the right direction, but there is room for growth.
By reformulating the U.S. milk supply for fat and protein, dairy farmers and processors alike would garner higher returns from exporting U.S. dairy products. On the farm, this could be $1 or more per hundredweight. It’s just not American consumers who want to eat more cheese and butter.
As dairy farmers, we can start tracking butterfat and protein percentages more closely . . . or looking at total milk solids. A rolling herd average of 7 pounds of milk solids sold per cow per day should become the new barometer . . . not shipping 90 or 100 pounds of daily milk or an annual rolling herd average of 30,000 pounds of milk. After all, the water content of milk only matters when selling fluid milk in a container.