Since its first release in 1924, USDA’s milk production reports have been the gold standard for tracking milk available for processing. However, changes in milk during the past couple of decades means the report today is incomplete, a new report suggests.

The composition of milk produced in the U.S. has evolved to include more butterfat and protein, and the industry needs a more comprehensive report that includes data on milk components, according to the report by CoBank analysts.

“From 2011 to 2023, milk volume grew just over 16%. But for the components, the story took a dramatic turn. Protein jumped almost 23% and butterfat catapulted nearly 29%,” Corey Geiger, CoBank’s lead dairy economist, said in a podcast on Monday.

These component trends have continued to pick up momentum despite the fact that farmgate milk production has stalled in the past two years.

“Total U.S. milk production has been down for the past 14 consecutive months. Decades ago that would have been alarming. However, milk component production has grown nearly every month,” he said.

More solids

Milk moving from farm to processor today contains far more solids than in the past. That’s why U.S. dairy product output continues to grow.

“The growing butterfat and protein percentages found in farmgate milk means more pounds of components, which means more ingredients for cheese and other dairy foods, which means higher returns in milk checks,” he said.

Cheese is a prime example of a product that had benefited from milk’s growing component yields. In 2010, 100 pounds of milk from the typical U.S. dairy farm yielded a bit more than 10 pounds of cheese. By 2023, higher butterfat and protein content boosted that yield by almost 11% from the same 100 pounds of farmgate milk, he said.

More than 80% of U.S. milk production now goes into manufactured dairy products, such as cheese, butter and nonfat dry milk, as opposed to beverage milk. Those products depend heavily on milk components.

“These shifting tides mean that milk solids, not milk volume, matter more to dairy processors as consumers are more likely to eat than drink their dairy,” the analysts said in the report.

Multiple drivers

The growth in milk components has several drivers. Chief among them are milk component pricing provisions that establish values for 92% of the nation’s milk.

The major milk pricing reforms in 2000 in federal milk marketing orders that introduced end-product pricing formulas accelerated milk component pricing throughout most of the country.

Another factor that led to more components was base excess plans established by processors that limited the amount of milk volume a farm could ship. Dairy producers began shifting strategies to ship more components to improve milk checks.

The most important driver was consumer demand. Cheese now accounts for nearly 43% of the U.S. milk supply on a milk solids basis, up from 37.7% in 2000. Farmgate milk has yielded more cheese from every hundredweight of milk, with cheese yield growing from 10.14 pounds in 2010 to 11.24 pounds in 2023.

Milk from the nation’s dairy farms now yields more dairy products annually due to higher concentrations of protein and butterfat.

“Given this trend, the industry needs more reliable data to account for farmgate milk. It’s also critically important for processors’ planning,” the analysts said.