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WCMA Notes: A Strategic Plan for U.S. Dairy

A Column Offered by John Umhoefer, WCMA Executive Director

It was no ordinary spring in Wisconsin.  Impressive growth by state dairy farmers, matched by strong gains in surrounding states, found milk production maxing out processing capacity.  And when Canadian buyers of concentrated skim milk abruptly ended purchases from one large state processor, some Wisconsin farm families were asked to find new buyers in a state saturated with fresh milk.

News of displaced farms stunned a state used to growth. By May 1, a coordinated effort between industry processors and government officials successfully found new homes for nearly all the milk, and a wet summer in Wisconsin has tempered milk growth.

Imbalance in milk production and processing capacity certainly isn’t unique to Wisconsin, but it begs the question: Does the dairy industry have a plan?

In June, the University of Wisconsin executed a Dairy Summit designed to bring together dairy industry leaders and university researchers to identify priorities to move Wisconsin’s dairy industry forward. In other words – to get a plan.

At the summit, Wisconsin Cheese Makers Association presented ten priorities to guide growth for the U.S. dairy industry.  Of course, some of these priorities are being worked on, quite successfully, by leading dairy organizations. Knit these activities into a single strategic plan, and dairy can achieve a vision of continuous growth.

Here’s ten priorities to grow the U.S. dairy industry:

  1. Expand Research & Development

Dairy needs new products and new ingredients built with consumers and end users in mind. While the largest dairy processors invest in R&D, dairy formulation also needs flourish at mid-sized and regional dairy processors. Any processor of size should have one or more food scientists on staff.

State budgets should directly support regional dairy centers at universities across the nation to supplement dairy farmer investments and federal grant dollars at these sites. These R&D centers are job builders as research into product functionality, quality and safety will grow state dairy industries.

  1. Grow Sales & Marketing

Dairy needs a fundamental shift in mentality from making dairy products to seeking and delivering foods and ingredients that delight consumers and end users. All around us, rival food and beverage companies are discovering and acting on consumer perceptions of nutrition, wholesomeness and sustainability. Dairy must match this piercing gaze on what consumers want, not on what we’ve always made.

Processors should invest in sales and marketing staff with the same emphasis now given to finding quality production people. Market research reports should swamp plant production data. Budgets for sales and marketing training should exceed budgets for production training. New products, new flavors, new packaging must overwhelm discussion of new pumps and tanks.

Dairy’s emphasis on finding consumers and end users outside our borders, led by U.S. Dairy Export Council, has been excellent, with room for more growth.  Let’s target 20 percent of U.S. milk sold to global markets.

  1. End Federal Pricing

Rigid old milk product classes and complex federal formulas for pricing dairy products reflect a dairy industry focused on yesterday’s limited dairy offerings. Today, an aged gouda tailored for a South American dairy buyer must answer to USDA’s cheddar-based Class 3 milk price and a dairy energy snack marketed to Asian consumers must pay Class 2’s ‘spoonable’ dairy product price, or maybe Class 4’s nonfat dry milk price (who knows?) There’s no link between the thousands of products dairy processors may invent, and the handful of volatile dairy commodities that underlie mandatory monthly milk prices.

While milk marketing orders may, for a time, have a role to play in pooling dollars and balancing supplies, federal milk classes and pricing formulas can be dismantled, and the true, marketplace value of milk can be discovered and shared.

  1. Unite Production & Processing

The dairy industry expends far too much energy and capital on procurement, pricing and production. Rather than a united focus on how we can, together, make dairy the preferred beverage and food in every consumer refrigerator, processors and producers haggle over prices and premiums, fight about make allowances and supply management and demand the right to use the land and care for animals as they see fit. The coconut water market spends little time on these issues.

Consumers don’t have to eat dairy products.  They don’t have to like modern dairy farms.  Together we need to create wholesome products from sites that align with consumer and end user desires and values. Together, we have to teach consumers about food nutrition, about running a modern dairy farm, about managing land sustainably and about what makes cows comfortable.

  1. Embrace All Species

Dairy cows and milking sheep and goats are not rival industries – not in the eyes of our consumers.  These natural milks, particularly in the cheese category, are woven into a single tapestry of value-added, specialty products.  In the retail store cheese island, these products complement each other, build the perception of choice – and sell each other. Dairy should take advantage these milks, and other rising stars among lactating animals, as high-value line extensions that offer more exciting choices to consumers and chefs.

  1. Build Branding Expertise

The dairy industry is evolving from the days of cheese chunks in clear vacuum bags and milk in heavy jugs – but are we moving fast enough? Many processors make what that can, and what they have – but are they actively researching the market for consumer desires? Are they engineering new foods and appealing packaging with their food scientists and extensive marketing team? Are they selling these uniquely-named products backed by their company’s brand with a humble and rich story on Facebook? Are processors sending their sales team into markets and regions they never imagined?

  1. Solve Manure

Dairy’s “Moon Shot” is manure. Take half the effort that has been poured into dairy genetics in the past 30 years and apply it to an all-out, coordinated national university research effort to turn this nutrient-rich, smelly end-product into an asset, rather than a liability.  Yes, manure is an effective, sustainable fertilizer for crop production. And no, consumers are not convinced that manure handling is a solved problem. Solve the problem.

  1. Own Sustainability

Processors and farms should reconsider every aspect of production through the lens of ecological sustainability. Excellent work is underway with farm groups and at the Innovation Center for U.S. Dairy. But consumers question the sustainability of modern dairy farms. This is a battle for values that the dairy industry can win, because dairy farms can be beautifully, proudly sustainable.  Industry efforts in sustainability must be matched with intense communications tactics that reach a new generation of consumers.

  1. Be Transparent

Dairy processors and producers should be able to tell their story with nothing to hide.  Dairy products are natural, locally-produced and sustainable, with clean, simple ingredient statements and an abundance of nutrients.  Dairy processors should tout the jobs they produce in their communities, and the businesses they support when they grow. Dairy farms should be as open to tours and visitors as they can, respecting food safety and the comfort of their cows. Farmers need to be patient and honest with community concerns and with detractors that don’t want dairy.  Dairy farming can be a wholesome use for productive land – a truth we must calmly tell every day.

  1. Make the Best

In a competitive global marketplace, the goal of U.S. dairy should be nothing short of producing the finest, tastiest and most functional dairy foods and ingredients in the world. Every consumer, from the mom buying milk and butter to the international food processor purchasing totes of whey protein concentrate, should believe that because they are buying U.S. dairy products, they are getting the very best.

An outwardly focused strategic plan for dairy, consumed with giving our customers products they will love, will drive dairy growth into the future.

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