That will impact how milk is valued, and chasing that value could have implications for the genetic makeup of the U.S. dairy herd, according to Ben Laine, senior dairy analyst for Terrain, a new team of economists and analysts established by American Ag Credit, Farm Credit Service of America and Frontier Farm Credit.
It’s a little tricky to predict the specific dairy products consumers of the future will demand, but converting foods reported in dietary surveys into equivalent amounts of milk fat and skim solids reveals a trend, he said.
Butterfat demand shifted nationwide in 2014 with a Time magazine article debunking the long-held scientific opinion that saturated fat is unhealthy and changing perceptions, he said.
“Older consumers have increased their milk fat consumption dramatically in recent years,” he said.
His analysis from 2010 to 2020 shows milk fat consumption increased 25% for consumers ages 70 to 79 and 20% for those age 80 and older. Milk fat consumption also increased by up to 15% in other age groups.
He expects that trend to continue but not at the pace seen in the last decade.
His analysis also shows consumption of skim solids declined in most age groups, although consumption was up about 4% in consumers age 70 and older.
Almost all dairy products include milk fat and skim solids, and cheese has a substantial amount of both. Cheese is the main driver of milk fat consumption in the U.S. Fluid milk accounts for the largest portion of skim solids use, but that has been declining over time.
“While skim solids demand has benefitted from growing exports of products like whey and nonfat dry milk as well as cheese, its growth has been muted somewhat by declining fluid milk demand,” he said.
U.S. producers continue to increase milk production, thus increasing production of milk fat and skim solids. But consumer demand for milk fat has grown more than demand for milk solids in the U.S.
In his report, “Dairy Consumer of the Future: Changing Focus to Components,” Laine includes several scenarios that could affect the consumption of milk fats and skim solids. But the increase in milk fat consumption is a positive story for milk fat values in milk pricing, he said.
Farm milk makeup in the U.S. varies by region and season, but it has evolved over time to match consumer demand, he said.
The fat content of farm milk rose from 3.65% in 2010 to 4.01% in 2021, and it continued its upward trajectory into 2022 as butter prices soared to record highs.
The skim solids content of farm milk has climbed more gradually from 8.7% in 1995 to 9% in 2021.
“The projections suggest that continued elevated fat values, relative to skim values, will incentivize milk fat production over skim solids,” he said.
Producers will be looking for opportunity, generally, where they can increase milk fat production without bringing skim solids production with it. In the short term, they can fine tune feed and management. In the long term, it will be genetics, he said.
The other piece of that is producers will be looking to align themselves with buyers of milk “that are thinking about consumers of the future and what demand is going to look like rather than focusing on the past,” he said.
