WCMA Notes: The Downside of High Whey Protein Values

The most exciting story in dairy today is whey protein – record wholesale prices for whey protein isolate and concentrates reflect strong consumer interest in maximizing protein intake.  

Ordinary dried whey – unconcentrated – is along for the ride. Dried whey is finding market interest and is also rising in value based on scarcity: dairy processors are reducing dried whey production and pushing the manufacture of high-end whey concentrates to meet insatiable market demand and to capture great prices. It’s capitalism at its finest. 

And then there’s federal milk marketing orders. 

Milk price formulas in federal orders – the formulas that determine the minimum price dairy farmers must be paid – anchor their complicated math in real wholesale dairy product prices. One key value is the price of dried whey, a data point used to value milk solids in Class 3 milk for cheesemaking. 

By the end of 2025, dried whey will see an average wholesale price close to $0.60 per pound, likely just below the 10-year-record price set in 2022. It’s great news for dairy farms but not great for all cheese manufacturers. For smaller makers that do not produce dried whey, this portion of their milk cost is a sea of red ink. 

It’s a point Wisconsin Cheese Makers Association (WCMA) has hammered on for decades, and an issue ignored in the recent two-year effort to update federal milk price formulas. Every cheesemaker paying farmers the Class 3 milk price is paying those farms today’s strong value for dried whey. But most cheesemakers don’t make dried whey. 

This year, medium and small cheese manufacturers selling unprocessed, liquid whey at prices ranging from 5 cents to 15 cents per pound of whey solids will pay out about $3.00/cwt more to dairy farms than they take in for their wet whey.  

And here’s the kicker – this loss happens every year. The $3.00/cwt net loss in 2025 is particularly high, but every year in the past ten years (and longer), smaller cheesemakers have paid farmers more for the value of dried whey than they are getting from the marketplace. It’s a constant loss baked into federal milk pricing. 

A marketplace solution for this issue is challenging. Individual smaller cheesemakers lack the volume of product and market power to demand a higher price for their liquid whey.  And the cost to build a whey drier – a multi-million-dollar investment – doesn’t pencil out for low-volume cheese companies. 

A better place to start is revisiting federal milk price formulas that force cheesemakers to pay a milk price based on a product they don’t make. Generally speaking, federal milk price formulas try to avoid this issue.  The other dairy product prices used in federal milk price formulas – the price of cheddar cheese, butter and nonfat dry milk – are as close to “base” prices as possible. These federal milk prices are intended to be minimum prices, leaving room for dairy manufacturers to pay premiums (bonuses) to dairy farms to attract milk. 

Dried whey is the oddball.  It’s not a “basic” dairy product.  It’s a value-added dairy product requiring high whey volumes and very high capital investment to produce. A true base price – the solution to this red-ink problem – would be to place the value of liquid, unprocessed whey in the Class 3 milk price formula. That’s the real minimum price for cheesemilk. 

In some federal milk marketing orders, dairy manufacturers can opt in or out of the milk pricing pool each month. When smaller cheesemakers anticipate red ink caused by rising whey values or butterfat values, these cheesemakers “depool” their milk. In the Upper Midwest federal order, cheesemakers operate in a constant dance of reducing their presence in the federal order pool, rebuilding their participation in the pool, and then reducing it again. Chaos and red ink are baked into federal milk pricing. 

This fall, at the request of WCMA, Center for Dairy Research and Mike Brown (courtesy of T.C. Jacoby & Company) showed Wisconsin cheese manufacturers the grim cost data behind this chaotic dance. Small cheesemakers survive losses on whey (and often butterfat) because they make great cheese that commands extra value in the marketplace.  In other words, these cheesemakers drain potential profits to pay for dried whey they don’t make. 

A WCMA goal: assist cheesemakers looking to climb the whey processing ladder to make more pennies per pound.  Dried whey is out of their reach, but smaller cheesemakers can cool and concentrate their liquid, unprocessed whey. Each concentration step requires more investment, so each manufacturer must find their sweet-whey spot to reduce red ink.