December 18, 2018

Demand for American dairy has curdled, and now farmers are crying over spilt milk

American cheese stockpiles are starting to stink due to diminished demand, and dairy farmers must diversify or die.

When trade turmoil spoiled global demand for American dairy, cheesemakers stockpiled 1.39B pounds of cheese in hopes that demand for cheddar would soon get better. 

But markets remained lactose intolerant — and now, American farmers are putting their dairies out to pasture: In Wisconsin alone, 600 farms have closed this year. 

How American cheese became Frankenstein’s Muenster

Times weren’t always scary for American dairy. In 2014, demand was so grate that many dairy farmers invested in extra dairy cows. 

But dual dairy disasters soon proved farmers were too bullish on cash cows. First, domestic demand for processed, ‘American-style’ cheeses dropped as consumers favored foreign cheeses. Then, tariffs reduced American exports (Chinese exports fell 63% this year; Mexican, 10%). 

As a result, US milk prices have soured 40% and cheddar prices have spoiled 25% since 2014.

Where there’s a will, there’s a whey

Americans are eating more cheese than ever (a record 37 pounds per capita last year). Buuuut… it’s not American cheese. 

Instead, they’re choosing gouda, havarti, and fontina. It’s good news for foreign cheesemakers: Planning to double US revenue in 3 years, a Dutch gouda giant recently bought a NJ-based importer. 

For American dairy, it’s a come to cheese-us moment. To avoid udder destruction, farmers are diversifying dairy portfolios: Sargento recently added gouda and havarti, and Schuman Cheese added parmesan, asiago, fontina, and alpine (hey, ricotta do what ricotta do).

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