As rising fuel prices tighten household budgets, the dairy industry is witnessing a significant shift in consumer behavior. While traditional “staples” like delivery pizza are seeing a decline, high-protein dairy products are reaching record-breaking heights, according to Ever.Ag.
Mike North, a dairy analyst with Ever.Ag, joins Mid-West Farm Report to discuss how an estimated $100 monthly increase in fuel costs is forcing families to rethink their spending. This “extra $25 a week” is directly impacting the food service sector, particularly major pizza chains that have long been the backbone of cheese demand.
“That sector which we’ve leaned on so hard for cheese demand over the course of the last couple of decades has become really, really soft,” North notes, pointing to poor quarterly earnings and potential store closures within the industry.
However, the outlook is not entirely bleak. While families may be skipping the extra pizza topping, they are doubling down on protein-rich snacks at the grocery store. Consumption of cottage cheese has surged 12 percent year-over-year, leading several processing plants to retool their operations to keep up with the trend.
On the production side, the industry remains in an expansion phase despite the economic headwinds. North highlighted that over 20 new dairy plants are under construction across the U.S. this year, with a similar number slated for next year.
“Demand for protein doesn’t seem to be satiated at this point,” North says. “Dairy is in a really good spot that way just because of how quickly we can move protein into the supply chain.”
Looking ahead, analysts are keeping a close eye on drought conditions in the Plains and Southwest. If dry weather persists, it could further impact beef prices and milk production, potentially tightening a market that is currently bolstered by record-level nonfat dry milk prices.
Leave a Reply