CENTRAL VALLEY – Americans are changing their diets to drinking less milk, but that isn’t stopping them from maintaining a healthy portion of dairy.
Demand has already dropped for other food and drinks including wine, beer, bread and high carb foods, many snacks and calorie-dense foods, such as potatoes. About one in every eight U.S. adults is currently taking a GLP-1 drug, such as Ozempic or Zepbound, according to the KFF Health Tracking Poll.
Food industry surveys find a negative impact on consumption of fried chicken, bacon, sausage, pizza, sugary foods, soda, candy, pastries and desserts. All together, this is a huge portion of the U.S. food industry.
On the plus side, demand for high-protein foods, such as milk powder, is now increasingly popular as a base for nutritional beverages, ultrafiltered milk and milk protein concentrate. Nonfat dairy milk powder (NDFM) is already popular in countries with little refrigeration, such as Mexico, where about one-third of U.S.-made milk powders are sold.
Here in the San Joaquin Valley, the transition to the trend is sending mixed messages to local dairy farmers and shifting the dairy landscape. More processing plants are opening in the Midwest and Texas while there are fewer buyers for milk production here at home.
Kings County dairyman Joaquin Contente says when Leprino closed their Lemoore East plant “farmers lost 80 loads of milk,” meaning dairies couldn’t process some of their production. That is happening even as California milk production is up 2.3% and farmers continue to add cows here and nationwide.
The Daily Dairy Report says co-ops are trying to tap down the volume this spring when production typically ramps up. The April 17 report stated that “in California, milk is abundant, and dryers are running as hard as possible. As the spring flush overwhelms processing capacity, a major California cooperative is incentivizing producers to rein in milk output with steep discounts on any milk shipped above their monthly base volume.”
The report noted that last year’s avian influenza outbreak drastically reduced California milk output. National NFDM (nonfat dry milk or nonfat milk powder) and skim milk powder (SMP) production was its lowest in 12 years. Yet, California still accounted for 44% of the U.S. NFDM output.
“Now that California’s cows are healthy and happy again, production is up,” the report stated. “U.S. milk powder output topped 2024 and 2025 volumes in January and February.”
Contente says he believes all the milk co-ops are exercising production controls, helping to keep prices profitable and penalizing overproduction.
Protein packed pricing
The co-ops appear to be succeeding. The NFDM price has run up in the past month to the highest price ever, $2.25 per pound as of press time. That’s more than a dollar higher than average on the cash market for the Chicago Mercantile Exchange (CME), the central marketplace where dairy commodities are traded. The last time milk powder traded above $2 dollars per pound was in July of 2022.
The run-up in price can be seen from the first of the year, when the price was more typical at $1.17 per pound. The doubling of the price is highly unusual.
The high prices are benefiting California Dairies Inc. (CDI), one of the biggest players in NDFM sales in the U.S. With its headquarters and huge processing plant in Visalia, CDI is the largest member-owned milk marketing and processing cooperative in California. They make some 900 million pounds of milk powder annually. The cooperative is co-owned by more than 300 dairy families.
California Dairies markets milk powder both domestically and globally. Established in 1995, their DairyAmerica brand commands approximately 50% of all milk powder produced in the U.S. and is exported to 50 countries.
Processing milk powder requires high heat to remove the water content. CDI generates solar thermal heat for the dryers from a thousand solar collectors on the roof of their Visalia plant. The solar technology was installed in 2022 to reduce the facility’s carbon footprint.
Beefed up by social media
Demand for protein seems to have a similar benefit for milk producers for formerly sleepy products like cottage cheese, also now enjoying a boom. One report says “cottage cheese is experiencing a massive, social-media-driven resurgence (a 65% sales increase since 2021), transforming from a dated diet food into a trendy, high-protein staple. Driven by Gen Z on TikTok, it is celebrated for its versatility, high protein (with 12g per serving) and creamy texture when blended.”
Also boosting dairy farmers profits is the generics-led Beef-on-Dairy trend that led to more animals on the farm. The Daily Dairy Report notes, “It is remarkable that producers continued to add cows during the challenging margin period at the turn of the year and this dynamic suggests that other sources of income, such as beef sales, had a fundamental impact on producer decision making.”
Demand for beef and high prices has propelled dairymen to convert some of their herd to beef, sending their young male calves to area calf ranches that do a big business with both beef bovines and young milk cows.
An industry report comments, “By 2026, the dairy barn has effectively become the factory floor for the beef industry. Because a dairy cow calves every day of the year, the integrator (the dairy producer) can provide a steady, predictable stream of high-quality protein to the packer every week. There is no calf crop season. There is only a continuous, scheduled flow.”
The trend is nationwide, says the American Farm Bureau. “Beef-on-dairy crossbreeding is the latest step in the evolution of dairy genetics and is now a key driver of the U.S. supply of both beef and dairy cattle. Some 72% of dairy farms are now incorporating beef genetics into their breeding programs, enhancing the marketability of dairy-origin calves by improving carcass quality and feed efficiency — traits highly valued by feedlots and packers. Crossbreeding, along with the widespread use of sexed semen, is helping stabilize beef supply while creating a reliable revenue stream for dairy producers.”
Beef-on-dairy crossbreeding uses beef semen like Angus on dairy cows to produce higher value calves.
