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Marketing Milk. Processing Dairy Products Unit 1. Introduction. Dairy farmers produce milk to sell it for a profit Management helps reduce costs of production Management decisions are influenced by Price, supply and demand trends for milk and dairy products Markets available for milk - PowerPoint PPT Presentation
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Introduction Dairy farmers produce milk to sell it for a
profit Management helps reduce costs of
production Management decisions are influenced by
Price, supply and demand trends for milk and dairy products
Markets available for milk Pricing structure and regulation of milk
marketing
Price of Milk Long term trends
See fig. 46-1, 46-2, 46-3 p. 834-35 Modern Livestock and Poultry Production
Seasonal Variation Amount of milk produces varies month to month Variation is less now than it used to be National average production is highest in May and
lowest in November Fluid milk consumption is lowest in June
WHY?? Price also varies
Lowest in May, June Highest in Oct, Nov, Dec
Products Made from Milk Four major uses
Fluid, cheese, butter, frozen Use about 96% of the milk processed in the US
Fluid Milk Whole, low-fat, skim milks, coffee cream,
whipping cream, half and half, sour cream Make up about 36% of the milk produced
in the US that is used for fluid milk products
Cheese 30% of milk produced 67% of the cheese made is American-type,
mainly cheddar and Colby Italian type cheese makes up 25% Swiss cheese makes up about 6% Other cheese types make up the rest
Butter About 20% of milk produced Only uses the SNF parts of the milk, the
rest is used to produce non-fat dry milk and condensed skim milk
More butter and nonfat dry milk products are produced when milk production is highest—surplus milk is used to make these products
Other Evaporated and condensed milk and
buttermilk, dry buttermilk, dry whole milk, dry skim milk, dry cream, dry whey, lactose, yogurt
Use about 4% of the milk produced
Trends in the Consumption of Dairy Products Fig. 46-4 Continued research and development of old and
new dairy products Projections of demand for dairy products show an
expected increase in the use of fluid low-fat milk, fresh cream, cheese, ice cream and butter WHY???
Demand is affected by population, price, purchasing power of consumers, promotion
Advertising Dairy Products Prior to 1983
Generic and off-brand product promotion was funded by voluntary contributions from producers through local and state organizations
1983 Congress establishes a mechanism for a dairy check-off
program with the passage of the Dairy and Tobacco Adjustment Act of 1983
This established the National Dairy Promotion and Research Board
They are in charge of developing and administering promotion, research and nutrition programs for the dairy industry
Advertising Dairy Products Dairy farmers approved the continuation
of the Dairy Check Off Program in 1993 1995-Dairy Management Inc (DMI) was
organized to coordinate local and national dairy promotion programs Established the US Dairy Export Council to help
promote and market US Dairy Products in international markets
Check-Off Money Promotion of fluid milk and cheese
receives highest priority Estimated that 200 billion more pounds of
milk has been sold than was projected by USDA since check-off began in 1984
Markets for Milk More than $21 billion worth of milk is
produced each year on dairy farms in the US 86% of this is sold through farmer milk
marketing co-ops Rest is sold to private firms, used on the farm,
sold directly to consumers Looking to the future….
Dairy co-ops are expected to decline However co-ops will become larger and provide more
services
Services Provides by Farmer Cooperatives Provide more services Major services
Checking weights and tests Guaranteeing daily markets for milk Providing marketing and outlook information Providing field services such as assisting with production
problems Collecting and insuring payment from buyers Assisting with inspection problems Providing insurance programs Negotiating hauling rates Selling milking supplies and equipment
Market Wide Services Provided by Cooperatives Maintaining quality control and related lab
services Direct farm-to-market movement of milk Handling milk in excess of Class I use Participating in federal order hearings Paying milk haulers Negotiating Class I prices and service charges Maintain a full supply of milk Balancing milk supplies among processors to
reduce reserve requirements Making out-of-market raw milk sales
Hauling Milk To Market Most is hauled fro the farm to the plant by
bulk trucks Milk is being hauled farther
Due to: fewer dairy farms, larger herds, fewer dairy plants
Costs Increased due to increase in fuel and labor
costs, larger bulk trucks
Milk Grades 1924- US Public Health Service developed
Standards Milk Ordinance These were to help states and local governments
prevent diseases that spread through milk Adoption is voluntary but widely used as the model for
regulating the production and processing of Grade A fluid milk
Ordinance has been revised and is now called Grade “A” Pasteurized Milk Ordinance This is recognized by public health agencies and the milk
industry as the national standard for milk sanitation
Ordinance Standards Cleanliness of facilities Temperature for storing milk Bacterial count Somatic cell count Chemical residues Other factors relating to the production
and processing of milk for human consumption
Grade “A” Raw Milk Must be cooled to 45 degrees F or less within 2 hours of
milking Blend temperature after the first and subsequent milking
cannot exceed 50 degrees F Each farmers milk cannot exceed 100,000 bacterial count
per milliliter before it is mixed with other producers Bacteria count from several producers cannot exceed
300,000 bacterial count/ mL before it is pasteurized Each producers milk cannot exceed 750,000 somatic cells
per milliliter Can be no detectable antibiotics Inspections on the farm are made regularly and the permit
to sell Grade A milk can be suspended if violations are found and not corrected.
Grade B Milk Produced under standards that allow it to
be used for manufacturing of dairy products but not for fluid milk
Standards are not as strict as for Grade A milk
Complete standards may be found atwww.ams.usda.gov/dairy/index.htm Grade B standards address the same
things as Grade A standards
Federal Milk Marketing Order Program Read p. 840-842 in Modern Livestock and
Poultry Production Text
Dairy Imports and Exports Relatively low for a number of years Imports
Generally less than 2% of total production Dried milk, butter, several types of cheese are
protected by import quotas Exports
Below 1% of total production Limited due to higher US prices
Summary Price of milk rose from 1967-
1998 Prices and production vary
seasonally with the highest production and lowest prices in May and June
96% of the milk processed in the US is used for fluid milk, cheese, butter or frozen dairy products
Per capita consumption of cheese, dry whole milk and non-fat dry milk has increased in recent years
Demand for other dairy products had decreased
86% of the milk produced in the US is marketed through Co-ops
Co-ops provide many services to the producers as well as the market
Milks is hauled to market in bulk trucks and the cost of hauling as increased in recent years
Milk is divided into classes for pricing, Class I is the highest priced
Federal milk marketing orders are established in many areas, and the minimum prices for Grade A milk are set there
Actual price paid is often higher than the one set by the order
Dairy imports and exports have been at a low level for many years.