A “challenging” year in the dairy industry led to a drop in net sales for the largest dairy cooperative in the U.S.
During Dairy Farmers of America’s (DFA) annual meeting in Kansas City, Mo., the cooperative reported that net sales fell by $1.1 billion, a decrease of 7.5% from 2017. For 2018, net sales were totaled at $13.6 billion. The previous year net sales equaled $14.7 billion.
According to DFA, the decrease is largely attributed to lower milk prices. The all U.S. milk price was 8.2% lower than the previous year averaging $16.20/cwt paid in 2018 compared with $17.65/cwt in 2017. Milk prices for 2018 were also $0.10/cwt lower compared to 2016 when it averaged $16.30/cwt.
Net income for the cooperative was reported at $108.5 million for 2018. The cooperative saw net income drop $18.9 million from 2017 when income was reported at $127.4 million.
“While this past year has been challenging for many in our dairy farmer community, DFA remains focused on bringing value to our members,” says Rick Smith, DFA president and chief executive officer. “From marketing our members’ milk and offering valuable farm services, to expanding our global presence and making strategic investments to strengthen our commercial portfolio, we’re committed to ensuring a strong, sustainable cooperative for our members today and for future generations.”
DFA marketed approximately 30% of the nation’s total milk production last year after selling 64.5 billion pounds of milk for both members and others via the cooperative’s consolidated businesses.
Cash distribution to cooperative members dropped by $4 million for 2018. This past year, DFA distributed $56 million to members and in 2017 there was $60 million distributed. For 2018, $32 million was distributed in equity retirements and $24 million representing the cash portion of the allocated patronage dividends.
Despite the challenges in domestic demand for dairy products, DFA has continued to invest in the future. During 2018, DFA broke ground on a new cheese and whey facility in St. Johns, Mich. The project will address Michigan’s growing milk supply and a growing demand globally for dairy products. The Michigan plant is a joint venture partnership with Glanbia Nutritionals and Select Milk Producers Inc.
A satellite office was opened by DFA in Singapore during 2018 to continue growing export opportunities and global business.
To capitalize on consumer trends to buy local food, DFA opened a retail store located midway between Salt Lake City and Las Vegas in Beaver, Utah, offering a farm-to-table experience for travelers along Interstate 15. The Creamery offers a full kitchen to serve dairy products from local DFA farms in a tasting room and showcases cheese from the adjacent DFA Beaver plant.
DFA invested in a number of brands during 2018. Mexican-flavored cheese brand, La Vaquita, entered Sam’s Club in Houston, Texas, with bulk sizes of Queso Fresco and shredded Queso Quesadilla. A Hispanic line of cheeses was launched by Borden Cheese offering Quesadilla and Oaxaca Shreds and Slices as well as Queso Fresco. Oakhurst Dairy, located in Portland, Maine, introduced Wild Blueberry whole milk, to capitalize on one of the state’s top produce items with the seasonal flavor.