Demand is up, and so are prices

The USDA estimates that milk production will be up slightly to 183 billion pounds in 2007, but that is less than a 1 percent increase over 2006. Tighter supplies, coupled with strong demand and rising feed prices, are going to push up wholesale prices for most dairy products this year.

Over the past couple of years, the top dairy-producing states (Wisconsin, California, New York, Idaho and Pennsylvania) have been getting more milk from fewer cows. However, the gradual slowing in the rate of herd expansion since 2005 is going to affect stocks this year. Jerry Dryer, president of Dairy & Food Market Analyst in Delray, Florida, blames high energy costs and last summer's unruly weather conditions for potential price increases. "Alfalfa hay is in short supply as a result, and that's mainly what the cows eat," he says.

Roger Hoskin, an agricultural economist with the USDA who specializes in the dairy industry, cites the impact of demand factors as well. "Fluid milk consumption was on a steady decline but recently, it has started going up," he says. "And cheese, the largest single component for milk use, has seen a relentless climb. The country is on a cheese-eating binge."

Trade issues are going to confuse economic predictions for the next few years, Hoskin adds. Exports are driving the industry more than ever before, and imports of authentic European cheeses and niche dairy products are in demand by certain foodservice customers. However, imported cheeses account for only 5 percent of the market, a figure that hasn't changed in ten years, notes Dryer. "Plus, the EU is not subsidizing cheese exports and the dollar is weak against the Euro, so the United States is where the cheese action is," he adds.

That's especially true in the specialty cheese arena, which is expanding at a faster rate. Nevertheless, the price of milk has less of an impact on this sector. "Specialty cheeses are much more value-added and already on the expensive side. They don't have the same flexibility to go up and down with the price of milk," Dryer explains.

More From FoodService Director

Managing Your Business
dancing fruit happy

When editor Jill Failla and I sat down to discuss ideas for this month’s cover story, data from FoodService Director’s sister company Technomic was the spark that lit the flame of conversation. She told me the most recent Healthy Eating Consumer Trend Report had found that consumers are more willing to order and pay more for items they think are both healthy and tasteful. My questions: OK, what does that look like in practice? How does it factor into operators’ decision-making processes? And what the heck do we call that phenomenon?

After tossing around some ideas, we had it: the...

Menu Development
chili spaghetti

Iconic local dishes like Cincinnati chili may not be entirely healthy, but they are incredibly popular. Across the country, K-12 operators are finding ways to add these foods to their lunch menus while still meeting their nutritional requirements. How are they adapting popular recipes and bringing them to schools—and is it worth it?

Cincinnati chili has been a staple of Mason City Schools lunches for as long as anyone can remember. Located just outside of Cincinnati, the school system serves its chili in two traditional ways: covering a pile of spaghetti, or atop a cheese Coney dog...

Ideas and Innovation
torch flame

There’s more than one way to open a wine bottle. When a corkscrew is nowhere to be found, David Brue—chef de cuisine and production manager for The Ohio State University Wexner Medical Center’s central production kitchen in Columbus, Ohio—reaches for his butane torch.

“I can never find a corkscrew anywhere, but for some reason, I always have a torch,” Brue says. “Heat the neck of the bottle carefully, and the cork pops right out.”

Managing Your Business
uconn gluten free bakery

When Amarillo Independent School District opened a central bakery , the foodservice team faced years of challenges: getting a handle on equipment, refining recipes and planning for shrinkage, says Michael Brungo, residential district manager of dining services for Chartwells at the Amarillo, Texas, district. Through trial and error, the right solutions at the bakery—which provides sliced bread and sandwich buns for the district’s 55 schools—rose to the top.

Though kitchens in general can be a minefield of issues, bakeries present some unique challenges thanks in part to the finicky...

FSD Resources