got milk?
Recent dairy-related news, from Lily and the CBC, got me thinking about milk. The CBC story concluded that "despite decades of being largely exempt from free market forces, farmers have not been protected by governments from the global financial crisis that caused demand to crash" while Lily noted that "dairy farmers are experiencing a tough time. Of the price paid by us consumers for a litre of milk, 37% goes to the processor, 42% goes to the supermarket and a miserable 21% goes to the farmer" in Ireland.
The times are changing or perhaps, as the information above suggests, they have already changed. Is what was once considered a staple of the North American and European diet becoming less ubiquitous? Are dairy farms becoming less viable?
If the trend in my own consumption of milk is any indication, it would seem that the answer is yes. Over the past five years, my personal consumption of milk has decreased substantially. Growing up, a glass of milk with dinner was the norm and through CEGEP and my undergrad a bowl of Cheerios with milk was my typical breakfast. Now, I will occasionally have a glass of milk - usually to accompany chocolate, cake, or cookies. The reasoning behind the decline in my milk consumption is rooted in a few factors, the largest probably being my relationship and cohabitation with an Asian man. As his consumption of meat has dropped since we started living together, so has my intake of milk.
Obviously, I'm not prepared to defend the claim that my dietary fluctuations are in any way representative so I did some research. A few findings, based on USDA data:
Consumption of milk is dropping
Consumption of sweet dairy products is on the rise
Consumption of savory dairy products is also increasing
Consumption of sweet dairy products is on the rise
Consumption of savory dairy products is also increasing
The USDA Farm Service Agency's (FSA) MILC Program supports the dairy industry by providing direct counter-cyclical style payments to milk producers on a monthly basis when the Boston Federal Milk Marketing Order Class I price for fluid milk falls below the benchmark of $16.94 per hundredweight (cwt.) Source
Prices (The first graph is 2008 data)
I'm sure I've only just scratched the surface in the depth and breadth of my research, but the preliminary results seem interesting nonetheless.
The data I dug up and presented here shows the trend away from the consumption of unadulterated milk, which seems to coincide with the obsolescence of milkmen. As an aside, there are little wooden boxes with doors that have been nailed shut embedded in the walls beside each door in my building. I can only guess that they were for the daily milk delivery because they're about the same size as a milk bottle (which I'm lucky enough to still be able to purchase my milk in, thanks to Avalon).
Consumption of value-added dairy products is one the rise (although demand for eggnog seems stable), but farmers get a smaller cut of the revenues on the sale of these products as compared to milk. As a result, the overall share of the value transmitted to the farmer is going down.
The interesting thing here, and it is alluded to in the CBC article, is that demand for milk used to be considered inelastic. Milk was a staple - everyone got it delivered to their door on a daily basis and changes in price or income would have very minor impacts on demand. However, an increasing percentage of dairy is being consumed as ice cream and cheese and other value-added products. Demand for these is probably more elastic - as prices rise or incomes drop, people are likely to omit these items from their grocery list. As such, with the recession, it is not surprising that farmers are feeling the pinch and that subsidies are on the rise.
