Dairy Industry overview
The United States Dairy industry is comprised of different players; milk producers, diary cooperatives, proprietary processors and manufacturers, and the firms that market milk and dairy products. The largest dairy processors being Land O Lakes, Kraft Foods Inc, Dean Foods Co., Schreiber Foods Inc., Te Kroger Co., and Dairy Farmers of America, Inc. These five processors will produce fluid milk along with other dairy products. The top milk producers are Dean Foods Co., Kroger Co., HP Hood LLC, Safeway Dairy Group, and Publix Super Markets. The majority of the milk that is marketed and sold to consumers is marketed by private labels creating an importance for dairy producers to partner with local processors
The industry is shaped through the milk production and marketing characteristics through their pricing which acts to coordinate the producers, processors, and manufacturers, marketers, and consumers.
Some of the key features that affect milk production are its location, quantity, the size and distribution of herds, farm numbers and ownership, producers’ financial conditions, and the ability of producers to respond to changes in economic factors (NASS, 2010).
Since 2001 the number of dairy operations has declined in numbers however, this does not correlate to a reduction in milk production. The milk production has increased over that same time frame. This can be attributed to the combination of operations through merger and acquisition. Graph 1 illustrates the trend of diary of operations. There is no data listed for 2006 – 2007 due to a census efforts conducted (NASS, 2010).
National Agricultural Statistics Service (NASS), September 22, 2010. Dairy Operations 500+ Head – United States
As the milk production increases there has been some centralization of producers in the upper Midwest and western states with the largest producers located in California followed by Wisconsin. The trend in these areas is moving towards...