Higher cow numbers coupled with increased milk per cow has reversed the loss in milk production that occurred in 2009, when production fell to 189.32 billion pounds, 0.3 percent below 2008 levels. Production for 2010 is estimated at 192.7 billion pounds, an increase of 1.8 percent. Western states led the increase in cow numbers, milk per cow and total milk production in 2010 as their producers saw improved returns over feed costs. States like Arizona, California, Idaho and Washington had fewer cows, less milk per cow and less milk production in 2009. This all reversed in 2010, as cow numbers stabilized in California and increased in Arizona, Idaho and Washington. Higher milk yields further pushed up milk production. For example, November 2010 production was up over November 2009 by 8.7 percent for Arizona, 4.5 percent for California, 7.2 percent for Idaho and 6 percent for Washington.
While November production for Wisconsin was up just 0.5 percent, production for the year will show a stronger increase. For 2010, Wisconsin average dairy cow numbers averaged about 1.262 million head (up 0.4 percent) average milk per cow was about 20,630 pounds (up 2.7 percent) and total milk production was more than 26 billion pounds (up 3.2 percent). This continues a mid-decade turnaround inproduction and cow numbers. The downward trend in Wisconsin’s milk production starting in 1989 reversed in 2005 and the decline in cow numbers reversed in 2006. Since 2004 production has increased almost 4 billion pounds, or 18 percent. Cow numbers have increased 26,000 head, or 2 percent, since 2005.
Dairy Product Demand
The great recession, which began in the United States in December 2007, was global in nature and had a major impact on the U.S. dairy industry. As U.S. unemployment rose, the number of meals eaten away from home diminished significantly, and as a result, sales of manufactured dairy products used heavily in restaurants fell off. There were a few bright spots. Fluid milk consumption increased in 2009, which analysts attribute to families rediscovering their dining room table—they were eating at home more, so they stuck an extra gallon of milk in their shopping carts. But low fluid milk prices also helped. In 2010, higher prices seem to have reduced fluid consumption back to pre-2009 levels. Total fluid milk sales from January through September were down 1.5 percent.
The restaurant Performance index (RPI) tells us something about dairy product consumption and may also be a leading indicator of the health of the general economy. The RPI is based on reports from several thousand restaurants ranging from fine dining to fast food. An index value above 100 indicates expansion of the restaurant industry, while a number less than 100 suggests contraction. the RPI began to slide in 2007, long before the general population was aware of a looming recession. People were eating out less as incomes were becoming stretched. Currently, the RPI has been increasing and has had a few months above the 100 level, indicating some expansion. This is good news for cheese and butter sales, as the restaurant trade is a major outlet for these products. Butter sales were up more than 5 percent in 2010. While American cheese sales were up less than 1 percent other cheeses, mainly Italian varieties were up 4.6 percent. USDA estimates that 2010 domestic sales of milk and dairy products to be up just 0.6 percent on a fat equivalent basis and 0.9 percent lower on a skim-solids equivalent basis.