Trends that will affect you

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We attend a number of industry events and listen to many speakers. Sometimes the speakers make an impression, sometimes not.

One recent speaker who did make a positive impression was Jerry Kozak, chief executive officer of the National Milk Producers Federation, who outlined four major factors that will shape the U.S. dairy industry in the next century. Kozak made his comments at the Holstein Association's annual meeting held recently in Boise, Idaho.

Here's a brief synopsis of what Kozak had to say, along with this magazine's own impressions of what each of the trends means for producers.

1. Evolved role of government

Kozak sees Uncle Sam's presence in the dairy industry evolving - and to a certain extent, diminishing - with time. It's political reality. The 1996 Farm Bill passed by Congress calls for Federal Order reform and an end to the dairy price support program. NMPF still believes that the government has a role to play in stabilizing the market environment, however.

Our take: Less government involvement is a good thing. Price supports - especially the type of price supports we had in the 1980s - simply keep inefficient producers in business at the expense of efficient ones. But, government can still play a vital role as referee, making sure that the Federal Order system works properly.

2. Increased pressure for efficiency

"This is not a business with rapidly-appreciating prices," Kozak says. "So, if you can't count on huge profits from the sale of a high-margin product, you have to make your money through high volume and cost-control."

Our take: You're probably tired of hearing "efficiency" preached to you over and over. But, think about it for a moment: The efficiency trend hasn't abated and, in fact, seems to have heated up. It's not a question of someone cramming it down your throat; it's a question of whether you are going to keep up with your neighbors.

3. Influence of world market

Basically, Kozak is saying that we need to look for more opportunities to sell our products abroad. Ninety-six percent of the world's population lives outside of the U.S., he adds.

Our take: Until the trade groups, such as U.S. Dairy Export Council, can do a better job communicating the bottom-line economic impact of exports, producers aren't going to get too excited.

4. Changing consumer tastes

If we don't give consumers what they want, someone else will, Kozak says. "We have to slug it out in the trenches along with every other drink," he adds. Some beverages, like orange juice, are now advertising that they contain calcium - one of milk's traditional attributes. Also factor in the changing lifestyles of consumers. Today, many consumers eat their meals on the run. Fewer and fewer of them are eating traditional sit-down breakfasts with milk and cereal.

Our take: More money should go into cheese promotion - and less to fluid milk advertising - because cheese has been showing some really large increases in per capita consumption during the past several years. Per capita fluid milk sales have been declining. We also need to get away from the mentality that because we have a great product, the consumer will come to us. We have to go to the consumer.



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