This summer, the Michigan AgroExpo showcased critical discussions regarding the political and economic trends affecting the dairy industry. Industry experts highlighted the resilience and strength of U.S. dairy production amidst challenges including avian influenza, ongoing Federal Order reform, and a lackluster export outlook.
The discussion emphasised robust consumer demand for dairy products. According to CoBank, the refrigerated and frozen dairy market has evolved to become the largest retail category, reaching $76 billion in sales. Innovations targeted at healthy snacking have opened new avenues for growth, with dairy consumption experiencing an overall upward trend yearly. Notably, fresh milk sales marked a rare positive shift, growing for the first time in 15 years, largely due to the increased popularity of lactose-free and value-added milk products, alongside private-label whole and 2% reduced-fat options. Furthermore, despite inflation affecting most food and beverage sectors, dairy products continue to be perceived as affordable and nutritious by shoppers and foodservice customers.
Significant investments are being made to bolster this steady demand. The dairy industry is collectively investing more than $8 billion across over two dozen states to modernise operations and enhance capacity. This commitment aligns with growing U.S. manufacturing in a challenging labour market, where the lessons learned from the pandemic have begun to influence plant design optimally. Processors are increasingly integrating advanced technologies, including automation, machine learning, and artificial intelligence, aimed at boosting safety, quality, and efficiency within production facilities.
Supply chain improvements are also fostering greater operational efficiency. Investments are shifting geographically as the industry adapts to new realities. Certain regions are poised to attract investment due to promising renewable energy sources and abundant water access. In contrast, other areas face high costs and reliability issues concerning electricity, water, and labour.
U.S. milk production has remained steadfast despite various adversities, including adverse weather conditions, supply chain disruptions, a global pandemic, market volatility, and emerging animal diseases. The rising value of milk components is leading to new opportunities for dairy ingredients, catering to increasing global consumer demands for health and wellness. Additionally, anticipated changes in Federal Order pricing are expected to address manufacturing cost increases, while the expanding market for extended shelf-life (ESL) milk may further enhance the potential of the dairy supply chain.
As the dairy sector evolves, the International Dairy Foods Association (IDFA) is dedicated to advocating for policies that eliminate obstacles, harness innovation, and promote growth opportunities for its members. With a change in leadership anticipated in the White House by January 2025, the organisation stresses the importance of engaging with new political figures and sharing data that underscores dairy’s vital contributions to public health, local communities, and the national economy.
Moreover, relationship-building with lawmakers and collaboration with regulators are crucial for furthering advocacy efforts. The IDFA encourages the dairy community to participate in grassroots advocacy, reinforcing the collective power of thousands of advocates working to facilitate impactful changes for businesses in the sector.
Looking ahead, the forthcoming year is poised to be dynamic for the U.S. dairy industry, with the IDFA committed to fostering market growth, supporting innovation along the supply chain, advocating for policies conducive to growth, and connecting consumers with the benefits of dairy products.
Source: Noah Wire Services