Extension > Agriculture > Dairy Extension > Marketing > A positive outlook for marketing the dairy industry in the 21st century
A positive outlook for marketing the dairy industry in the 21st century
Published in Dairy Star May 06, 2006
Amidst the ever present challenges of dairying today from consumer scrutiny, market price fluctuations, costs of production, special interest agendas and environmental issues, an overall positive perspective was portrayed at the recent Professional Dairy Heifer Growers Association 10th annual conference held in Visalia, California, March 22-24. Richard Cotta, Senior Vice President of California Dairies, Inc., Los Banos, gave the keynote address on Marketing the Dairy Industry in the 21st Century. To set the stage, a review of some past dairy history was shown (Table 1).
| Table 1. 55 years of dairying (adapted from Cotta, 2006) | ||
|---|---|---|
| 1949 | 2004 | |
| Total farms | 23 million | 800,000 |
| Total dairies | 3.65 million | 67,000 |
| Dairy cows (mil.) | 23 | 9 |
| Cows/farm | 6 | 110 |
| Milk/cow (lb.) | 5,000 | 19,000+ |
| U.S. total milk (bil. lb.) | 118 | 171 |
| Farm milk price (cwt) | $3.50 | $15.45 |
| Price support (cwt) | $3.00 | $9.90 |
| Replacement price | $184 | $1,581 |
| Labor/cow/year (hr.) | 120 | 40–45 |
| Retail price/gal. | $0.78 | $3.16 |
| Minutes work to buy 1 gal. milk | 12 | 10 |
The demographics of milk production are well known and the economics of scale have been applied in many regions of the country. The question was posed on how we can attain consumer trust and confidence when marketing the dairy industry? Four major areas of concern were recognized as challenges which are again familiar but the emphasis was to acknowledge these in a proactive way for the industry's benefit:
- Environmental pressures (competition for land, water availability, air quality, groundwater contamination, waste disposal and storage, ammonia production, animal rights, food security and safety). Cotta observed that "the cow is already one of nature's great recyclers" through pasture-based operations or consuming millions of tons of waste co-products in Total Mixed Rations.
- Technological Challenges (biotechnology methods - GMO's, reproduction advances such as sexing semen, frozen embryos, cloning, genomics, ovarian stimulus, etc.).
- Innovation (milk importance for wellness, calcium importance, improved nutrition education, individualized diets, cultured products, whey component utilization, new preservation processes, new processing technology).
- World Markets, International Demand (population increases, higher income from stronger economies, urbanization, more consumption away from home, shift towards a western diet, favorable local exchange rates, reduced global tariffs and technical barriers, price, quality, innovation and taste). Cotta noted that world per capita consumption of dairy products is about 165 lb/year. Per capita consumption in U.S. and Europe is close to 600 lb/year. China per capita consumption is 29 lb/year. China and Southeast Asia continue to expand domestic milk supply but can they keep up with consumption demand? The prediction is that this region will be a major marketing opportunity for the U.S. dairy industry as demand will exceed supply.
| Table 2. World demographics, 2004 (adapted from Cotta, 2006) | |||
|---|---|---|---|
| Million/people | % population | % milk production | |
| North America | 328 | 5.0 | 14 |
| South America | 518 | 7.9 | 11 |
| Europe | 729 | 11.1 | 32 |
| Asia | 2,910 | 44.4 | 6.2 |
| Japan | 127 | ||
| China | 1,306 1,508 |
||
| Korea | 70 | ||
| India | 1,080 | 16.5 | 18.0 |
| Africa | 887 | 13.5 | .5 |
| USSR | 143 | 2.1 | 11 |
| Oceania | 33 | .5 | 5.0 |
In Cotta's published proceedings, he states, “Overall I see a great deal of opportunity for the dairy industry in the twenty-first century. Issues and solutions to those problems will pose some enormous challenges for the industry, but the opportunities are limitless. The sky is the limit when it comes to technological changes, innovation and marketing possibilities.”
The question is: how can we best address the four major areas outlined above here in the Midwest to help attain the trust and confidence of our consumers?
To request a copy of Richard Cotta's complete paper, contact Hugh Chester-Jones via e-mail (chest001@umn.edu) or phone (507-837-5618).
