When consumers spend $1 on dairy products, dairy farmers receive 29 cents of that dollar. That’s according to the latest research by USDA’s Economic Research Service. Overall, that share has held in a rather tight window of 28 to 32 cents from 2015 to 2021. The number did climb to as high as 38 cents from every $1 in 2014 when farm gate milk prices rose to a then record high. The number dropped to a low of 24 cents in 2009 when margins hit rock bottom and milk checks were at a modern-day low.

So, what happened to the remaining 71 cents consumers spent on dairy products?

That money went toward processing, transportation, retailers, and other venders in the supply chain. The transportation sector has been taking a larger and larger portion due to issues induced by the pandemic.

Not all dairy products are equal, as some products return more or less revenue to dairy farmers.

Whole milk: Fluid milk represents the high-end of returns for dairy farmers who received 48 cents every time a consumer spent $1 on fluid milk in 2021. 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 basket, and last year, it matched the dairy category by returning 29 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 16 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 cents with a range of 12 cents to 22 cents since 2000.

To review the actual data sets, click this link.

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(c) Hoard's Dairyman Intel 2022
October 3, 2022
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