Milk is selling better than ever along one highway stretch - but it’s not because we’re drinking more of it

Milk production by sales to milk processing plants, 2007-2017

By Sophie Putka

December 14, 2018

People are drinking less milk. According to USDA data, per capita milk consumption has gone down a whole 33 pounds per person in the last ten years. But in some states, dairy producers are selling more milk than ever.

Milk sales per state show how much milk is sold to dairy processors who either package milk or turn it into other dairy products. USDA “sales” state data takes into account mostly how much dairy farmers produce, because almost all of the milk made ends up being sold, according to Michael Miller of the USDA National Agricultural Statistics Service. It shows significant increases in milk sold to plants from states like Texas, South Dakota, Nebraska and Kansas. But it turns out, the increase in sales and the migration inwards over the last 10 years is more about cheese - which Americans are eating more than ever of - than milk.

Land of Milk and Dairy

What’s behind increased production in these middle states? A few factors are involved: active efforts by developers have attracted dairy production along the “I-29 corridor,” tempting smaller farmers from the coasts to migrate toward dryer climates, looser regulation, and more readily available cow feed.

According to Matt Gould, editor of the Dairy and Food Market Analyst and chief market analysts at Rice Dairy, “State level development folks have tried to increase dairy processing capacity and dairy farms along the I-29,” he said. South Dakota, for example has seen an increase of over 30% in their milk production by sales from 2007-2017. An article by the Argus Leader says that South Dakota has almost doubled their dairy production by increasing the number of cows per herd and attracting dairies to the area along the road closest to processing plants.

According to Andrew M. Novakovic, a professor of agricultural economics at Cornell University and an expert on agricultural and food policy, “A lot of California farmers got tired of all the environmental restrictions and taxes and said, ‘to heck with that’ and moved to New Mexico or moved to Idaho,” he said. “Some of the growth in South Dakota has actually been from farms coming from the East for much the same reasons.”

Historically, it would have been rare for a dairy farmer to pick up and relocate to another state. “The notion of saying, ‘oh gosh, what the hell, let’s go to South Dakota’ isn’t an easy choice, both for the connection to the land as also the connection to the community and family,” Novakovic said. “It’s not like Amazon saying, let’s go open up a headquarters in Queens.”

Small dairy farmers on the coasts have always put down deep roots - passing down dairy operations from generation to generation and building tight-knit communities, according to Novakovic. But in states like Florida and California, where environmental restrictions and dense human populations mean cows are increasingly expensive to house and care for, tax incentives and cheaper land are enough to sway small farmers to move.

Some states have even relied on recruiting farmers from the Netherlands, where, according to an article by the Chicago Tribune, quotas on milk production and expensive land have pushed many small farmers to sell their land over the last decade and purchase larger farms in states along the I-29 corridor. Gould said that the Netherlands have now reached their environmental limits in the small country, and can no longer grow their herds.

Fluid milk gives way to cheese

But even as milk production increases in along this highway, and overall, the US appetite for fluid milk from the store has declined. The US saw combined milk sales to processors increase by 10.5 percent over from 2007-2017, but more and more of what dairy farmers sell ends up being used to make dairy products like cheese, powdered milk and butter. USDA data shows yogurt production has steadily increased of the last decade, with an explosion in greek yogurts like Chobani. A story by Marketplace showed a steady increase in cheese consumption in recent years, with no sign of the trend slowing down.

And meanwhile, he said, we’re seeing cheese inching its way into more meals each day. “Cheese has done a much better job positioning itself to be relevant to America’s consumer than milk,” Gould said. “It used to be you’d only eat cheese on a sandwich or probably on a pizza as well. Now you can eat it for lunch, or snacks, and it’s certainly embedded itself in fast food things like that.”

According to Gould, it takes 10 pounds of milk to make just one pound of cheese. Even so, he says it may not be enough to make up for a lack of demand for milk. Miller said, “they’re trying to find all different kinds of ways to use it, but I don’t know if they’re finding enough other uses for the milk to make up for the drop in fluid sales.