When consumers spend $1 on dairy products, dairy farmers receive 30 cents of that dollar. That’s according to the latest research by USDA’s Economic Research Service.

Since 2000, the number climbed to as high as 38 cents from every $1 in 2014 when farm gate milk prices climbed to record highs. The number dropped to a low of 24 cents in 2009 margins hit rock bottom and milk checks fell to a modern-day low.

What happened to the remainder of the money?

It went toward processing, transportation, retailers, and other venders in the supply chain. Not all dairy products are equal, however, as some products return more or less to those producing milk.

Whole milk: Fluid milk represents the high-end of returns for dairy farmers who received 51 cents every time a consumer spent $1 on fluid milk. Just like all dairy product sales, the previous high this century occurred in 2014 when dairy farmers received 61 cents. The low point in the spectrum occurred in 2009 at 40 cents.

Cheese: This product tends to mirror the larger dairy product basket. This year it outshined the combined dairy product category by 3 cents by returning 33 cents to dairy farmers for every $1 spent. Since 2000, the cheese category ranged from 24 to 37 cents for every $1. As one would expect, 2009 was the low while 2008 and 2014 represented the high at 37 cents.

Ice Cream: This is the lowest return product with only 14 cents from every $1 going to dairy producers last year. The lower farm share of ice cream is linked to the additional nondairy ingredients and further processing of the product. Like all other dairy product categories, 2009 also was the low point for ice cream at 12% with a range of 12% to 22% since 2000.

Overall, dairy farmers’ share of the retail food dollar tends to track higher during high milk prices. Of course, 2014 represented one of the best milk price years in modern dairy history.

To review the actual data sets, click this link.


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(c) Hoard's Dairyman Intel 2021
June 21, 2021
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