
America Is Drowning in Milk Nobody Wants - prostoalex
https://www.bloomberg.com/news/articles/2018-10-17/america-is-drowning-in-milk-nobody-wants
======
danso
Planet Money recently had a great episode about "Big Government Cheese", which
covered the Carter administration's proposal to subsidize milk, which created
a milk surplus so big that it had to create a bureaucracy to grade and store
cheese, and then eventually, to repackage and give it away:

[https://www.npr.org/templates/transcript/transcript.php?stor...](https://www.npr.org/templates/transcript/transcript.php?storyId=643471690)

> _DUFFIN: By the early 1980s, the dairy support program was costing taxpayers
> around $2 billion a year. The government was buying 1 in every 4 pounds of
> the country 's cheddar cheese. They actually had to rent out space in
> multiple caves. At one point, the government was storing two pounds of
> cheese for every single American citizen._

------
ChuckMcM
There have been dairy issues since forever.

It works like this, if you just let the market decide then a few big dairy
producers will drive all of the other dairies out of business and the only
milk products on the market will be of lower quality than they are today. If
you prop up the market with subsidies and minimum prices you force the cost of
milk to rise and natural economics causes people to substitute something else
that is less expensive. But if the subsidies are paid to the farmers, and not
to the consumers, the farmers keep producing milk products even when the
market doesn't want them at the price they are producing them.

Places that would like dairy products outside the US are already protecting
their own dairy farmers and so they are tariffing the heck out of milk (see
the Canadian discussion as part of the USMCA proposal).

Many dairy products are perishable with a short life although a big chunk of
my uncle's dairy output ended up as non-fat dry milk. This makes it harder to
store over periods of lower demand, and cows produce at a fairly constant rate
whether you like it or not. Supply management is tough.

Milk and cheese would be a good candidate for a basic income sort of scheme.
Where everyone would be issued milk and cheese vouchers every month that could
be exchanged for milk and cheese at the local package milk store. People who
didn't want their coupons could give them to people who did. That would create
a 'base layer' of milk production and consumption that would keep dairies
around but take milk and cheese out of the cost of living equation. I'm sure
there are other reasons why this is impractical but the whole problem is
fairly intractable as it is without putting farms out of business.

EDIT: One interesting thing would be to tie the price of sugared drinks to the
price of milk. So it wouldn't be cheaper to give your kids soda than milk.
Again, impractical but it is a challenging problem.

~~~
JumpCrisscross
> _Milk and cheese would be a good candidate for a basic income sort of
> scheme_

Why milk? Vegetables make more sense.

Milk is not a necessary foodstuff. Creating labelling standards for high-
quality milk and letting the market do its job would be the most-reasonable
outcome.

~~~
xyzzyz
Vegetables aren’t necessary either. Historically, humans (at least in Europe)
consumed much more more milk than vegetables, deriving probably an order of
magnitude more calories from dairy than from vegetables, because you could get
more calories from an acre of cattle pasture than from an acre of grains
fiels, and an order of magnitude more than from vegetables. Milk is also more
nutritionally valuable, containing carbs, protein, and fat in very good
proportion compared to vegetables. This is no surprise, since milk literally
is produced by cows to be consumed by calves as their sole food.

I don’t think basic milk vouchers is a good idea, but basic veggies is even
worse.

~~~
Terretta
“Orders of magnitude” sprinkled generously make this sound more factual than
it is.

Even though modern fruit and vegetable farming systems are highly
industrialized, relying on vast monocultures, fertilizers, pesticides, and
tillage practices that require heavy machinery and plenty of fuel, they still
produce more calories per input than beef and pork.

Most views are 2x - 4x people fed per acre from plants versus meats, with milk
and eggs splitting the middle.

That said, even our current ‘lacto ovo vegetarian’ compromise diet is likely
not sustainable.

[https://academic.oup.com/ajcn/article/78/3/660S/4690010](https://academic.oup.com/ajcn/article/78/3/660S/4690010)

~~~
xyzzyz
> they still produce more calories per input than beef and pork.

True, but irrelevant. I never said anything about meat. Since the advent of
agriculture until modernity, most humans ate very little meat, this is
definitely true.

> Most views are 2x - 4x people fed per acre from plants versus meats, with
> milk and eggs splitting the middle.

True, but irrelevant as well. Not only I never said anything about meat, but
the discussion here is about milk vs. vegetables. Plants today are better
yields in terms of calories per acre due to fertilizers being abundant,
pesticides being available, and cultivars having been improved for better
yields. However, it is irrelevant for the discussion at hand, because the
plants that are better than milk are corn, soy, etc., not vegetables.

------
mynegation
“Dairy farmers are free-market guys—they don’t want to be told how much to
produce,”

Sounds like a contradiction - if no one else, free-market will tell you how
much to produce. Does not look like farmers are listening.

~~~
pjc50
No, absent collision and when you have fixed costs, in a free market any
individual producer ends up producing as much as possible. The market
regulates production by people going out of business entirely.

This is why the EU built a complex production management system.

~~~
wyattpeak
That might be how the free market is explained to a tenth grader, but it's not
remotely the full picture.

\- Do you spend on production or ramp up marketing instead?

\- Do projections support taking out a loan to expand future production?

\- Do you have other products where your capital would be better directed?

\- Is there a point where marginal cost exceeds sale price?

The list of further considerations is endless. Nobody is just blindly
producing as much as possible.

~~~
hexane360
It's definitely not how it's explained to a tenth grader. In high school
economics classes I was definitely introduced to marginal cost curves for
firms in perfectly competitive markets, like so:
[https://upload.wikimedia.org/wikipedia/commons/4/43/Economic...](https://upload.wikimedia.org/wikipedia/commons/4/43/Economics_Perfect_competition.svg)

------
srgpqt
Excess milk? Make cheese curds and sell poutine. Never understood why it
hasn’t caught on much in the USA.

~~~
alexkavon
I’m actually surprised as well. Totally a match for the American diet.
Meanwhile in Alphabet City, NYC a restaurant sells it for $20 a pop.

It might have more to do with the image of poutine. It’s gravy, cheese, and
fries, it looks messy and unhealthy. I’m not sure about the messy part (forks
maybe), but sprinkle some chives on top (mostly for color) and most people
will be fooled.

~~~
paulgb
<off topic>

> Meanwhile in Alphabet City, NYC a restaurant sells it for $20 a pop.

Brindle Room, right? I've only had their burgers, but Mile End also has
poutine for $9 and I can confirm that it is authentic enough for this
Canadian.

~~~
alexkavon
I was blanking on the name when I was originally writing this, but yes it is
Brindle Room.

------
m_mueller
Switzerland has had the exact same problem due to heavy dairy subsidies.
Besides scaling back on subsidies, Fondue and Raclette was pushed heavily in
marketing, which is probably why these are staples of Swiss food nowadays. I'm
sometimes asking myself whether tabletop style Raclette couldn't be popular in
the US. How strong is America's distaste for cooking food at the table (I'm
just going by Lost in Translation here)?

[1]
[https://en.wikipedia.org/wiki/Raclette](https://en.wikipedia.org/wiki/Raclette)

~~~
stephengillie
Is this why Costco stores have so much cheap Jarlsberg Swiss?

~~~
dagw
_Jarlsberg Swiss_

??? Jarlsberg is a region in Norway not Switzerland?

------
gerbilly
This must be why the US wants to force Canada to get rid of it's milk supply
management system.

[https://www.cbc.ca/player/play/1254398531823](https://www.cbc.ca/player/play/1254398531823)

------
plg
I switched to fortified vanilla soy milk about 2 weeks ago, (from 1% milk),
and holy moly what a difference. I have a big bowl of breakfast cereal and
milk for breakfast, and also milk in a morning latte and a mid-day latte.
Switching to soy milk:

\- in 2 weeks I have lost about 5 lbs (all other food, and exercise routines,
stayed the same) \- I feel less bloated after breakfast and after coffee

Maybe I was dealing with a slight lactose intolerance, I dunno (is there such
a things as a "slight" lactose intolerance??). Anyway, I'm not switching back.

~~~
pentae
I've always avoided Soy as I read a long time ago that it contains plant based
estrogen and can be a problem for men like gynecomastia. Of course, I have no
idea if that's true or not but I'd rather not worry about it and just pick up
Almond milk instead.

~~~
Nasrudith
Humans don't digest soy in the same way as animal models - studies found no
hormonal impact on a heavy soy diet. If hormone absorption was that readily
influenced digestively one should only eat meat of the same sex and athletes
should be eating rocky mountain oysters and spotted hyena meat frequently as a
loophole for steroids as it is just food that happens to have testerone and
not drugs.

------
Symbiote
The first graph, "New York's Shrinking Dairy Herd Starts To Grow Again", has a
Y-axis starting at 610,000 and a maximum of about 627,000. I expect Bloomberg
to represent a 2.5% change more honestly.

~~~
tmoertel
It's common in financial publications, and in other publications with
numerically literate audiences, to focus statistical graphics on the region of
interest (except in bar charts, in which bars are expected to sit on a
baseline of zero). For example, stock charts, one of the most common plots in
financial publications, follow this practice:

[http://google.com/search?q=GOOG](http://google.com/search?q=GOOG)

------
dmritard96
Surprised there was no mention of non dairy milk. Almond, soy and others have
all taken over much of the aisles, has to leave a mark I would imagi ne.

~~~
lozenge
Keep in mind it often has a much longer shelf life so the shelf space is not a
good measure.* Also, my local store has milk cart shelves on wheels that can
be restocked much faster than fixed shelves.

Tip: the same non dairy milk can be found a smidgen cheaper non refrigerated

~~~
rsynnott
I’ve never seen it on sale refrigerated, really. It’s generally shelf stable;
why would you bother?

~~~
calvano915
At Costco, they sell box type non-dairy milk as room temp and shelf stable,
while other almond and coconut milks are in half gallon form and refrigerated.
Not sure whether the latter actually require refrigeration before opening.

------
mratzloff
I'm sure with falling prices the market will correct itself.

I was going to make a snarky comment about US dairy subsidies, but aside from
a billion dollar giveaway in 2009, those are almost nothing today. $370,000 in
2017.

~~~
lprubin
It sounds like these dairy subsidies fluctuate greatly.

 _In 2016, the dairy industry asked the U.S. Department of Agriculture (USDA)
for a staggering $150 million to buy their excess cheese. A spokesperson for
the National Farmers Union said they were disappointed to receive “only” $20
million._ [0]

And according to this 600 page Canadian report, indirect subsidies are also a
huge factor and contribute to 73 percent of producer returns coming from
subsidies. [1]

 _The American government contributed around $22.2 billion in direct and
indirect subsidies to the dairy sector in 2015._

[0] [https://thehill.com/opinion/energy-
environment/377406-dairy-...](https://thehill.com/opinion/energy-
environment/377406-dairy-industry-doesnt-deserve-american-taxpayer-bailout)

[1] [https://www.realagriculture.com/2018/02/u-s-dairy-
subsidies-...](https://www.realagriculture.com/2018/02/u-s-dairy-subsidies-
equal-73-percent-of-producer-returns-says-new-report/)

~~~
kylek
If you're interested in this you can dig deeper at
[https://farm.ewg.org](https://farm.ewg.org)

------
andy_ppp
This made me think of this incredible piece of art by Mishka Henner that I saw
in Edinburgh at the Scottish National Gallery:
[https://mishkahenner.com/Feedlots](https://mishkahenner.com/Feedlots)

~~~
jacobush
what _is_ that?

~~~
saganus
Massive cattle farms according to the text below the pictures.

~~~
jacobush
It looked so disconcerting I clicked it away immediately. I was so sure it was
a tiled wall of some kind in a slaughter house - and a nightmarish rendition
of a cross section of a heart or an animal or a clogged vein.

It was all of these things

~~~
saganus
Yes. The pictures look strange indeed.

------
wgerard
I'm curious how much of this is because of demographic trends in America--
Lactose intolerance for adults is relatively common among everyone except
northern europeans.

Would especially explain the decline in liquid milk consumption (and also part
of the popularity of greek yogurt, which is pretty low in lactose content).

~~~
burfog
everyone except

1\. northwestern Europeans, centered around Belgium

2\. The Maasai tribe, of Kenya and Tanzania

------
lucidguppy
Stop breeding milk cows...

~~~
stephengillie
A supply side solution to a weakening demand? That's just logical enough to
work.

------
rootsudo
The funny part is, in Asia, Dairy is a premium. Look at Philippines for
example, stagnant production since 1995-

[http://www.nda.da.gov.ph/images/2017/data/Phil%20%20DAiry%20...](http://www.nda.da.gov.ph/images/2017/data/Phil%20%20DAiry%20Update%202017.pdf)

I'm not Filipino, but, hell I would love to manufacture milk products.

The thing that fuels it is A: local population isn't used to dairy. B: Yogurt
and such are considered high premium -- a half kilo of yogurt at the store
costs $5-7$, a kilo about $10, from Australia.

~~~
rootsudo
[https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Dairy...](https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Dairy%20and%20Products%20Annual_Manila_Philippines_10-3-2017.pdf)
Better article.

------
Waterluvian
I had a thought the other day. Did we convince people that fat was bad, and
then used that to water down milk so that from one harvest we could sell more
watery milk and other dairy fat products?

~~~
newnewpdro
They skimmed the fat so it could be sold as cheese and other dairy products,
yes. Americans basically didn't even reduce their dairy fat intake, they just
increased how much $$ they were spending on it across more dairy products.

------
stephengillie
Chobani is mentioned so many times that this must be paid for by that company.
The article is a dress that barely covers an advertisement's bare bottom.

------
Invictus0
Do farmers ever learn? Bandwagoning onto the latest food fad is the failure
story that just repeats itself over and over again. Farms are firms in a
perfectly competitive market: why invest oodles of capital to chase what is
basically noise in the market? Why is anyone surprised when the market
contracts?

------
ksec
They could have export more milk, UHT, Cream Cheese, Butter etc.

Instead they won't interested. They won't interested in completing against EU,
AUS, New Zealand's dairy products. I doubt they will lose any money if they
were priced competitively against it, they are just likely to have less profit
margins.

Actually that is not a totally fair assessment, since a few of them did
complete on price, but their quality won't as good. And they blame it on their
international sales staff, which has since changed hands multiple times.

P.S Those companies do not include any Multinational like Nestle USA, Danone,
and Kraft Heinz.

------
novaRom
I found accidentally many of my digestive problems gone just after I stopped
consuming milk-based products for a week. I wonder now how and why our diet
has evolved in that way.

~~~
stevenwoo
The ability to digest milk's lactose in adults is only retained in some
Northern European and African (notably cattle raising cultures like the
Maasai) descendants who traditionally drank milk as adults. It's genetic
AFAIK.

------
jacob019
China is a massive consumer of dried milk powder. I wonder if the trump
tariffs have anything to do with the changing demand for US milk.

~~~
Taniwha
Bound to be, but also some competitors on the international market like New
Zealand (which has no government price supports or subsidies), have free trade
agreements with China.

If you become insular and erect tariff walls people play where there are none
and they make more money.

The real problem is govt price supports, often brought in to tide people over
for a year, once people start to depend on them they really stop working, you
get stuck with inefficient industries when people should be growing something
else, or simply be in another business. When NZ cut all farm subsidies back in
the 80s farmers formed farmer cooperatives, in the dairy industry they now own
most of the back end milk processing infrastructure, they're big enough that
they are big players on the world markets, and the profits go back to their
owners

------
hugh4life
If I were the milk industry, I'd heavily promote meal replacements that use
milk as a base. Especially in places where milk is cheap. I love Milk
Fuel(formerly Schmilk) and I think it would be a good breakfast replacement
for the masses.

[http://superbodyfuel.com/shop/milk-fuel/](http://superbodyfuel.com/shop/milk-
fuel/)

------
douglaswlance
We just opened up the Canadian market.

~~~
1over137
(Not sure who 'we' is but,) in the recent renegotiation of NAFTA, Canada did
surrender some additional access to their domestic dairy market. The USA was
demanding 100% access, but got only a couple of % more. But CETA, CPTPP, and
USMCA combined get only 10% total of the total Canadian market.

Basically, Canada prefers to have its supply management system, and the USA
prefers have its massive subsidies.

~~~
BareNakedCoder
Canadian here. Although my personal politics tends to be CENTRE-right (note
the capitalization) and favouring market forces, I do see some merit in supply
management to avoid the extreme pain being experienced by the American dairy
farmers mentioned in the article. Yes, we mostly do prefer supply management,
paid for by dairy consumers, than massive subsidies, paid for by all taxpayers
and leading to wasted output.

For details, read Wikipedia [0]. Some quotes:

\- High (tariffs) are only placed on imports above the quota, not on all the
dairy products sold to Canada.

\- Canada's milk quota system is butterfat-based so the highest TRQ is on
butter at 298.5%.

\- By 2018 the United States's quantitative (tariff) threshold for the import
of milk products is 3% and Canada's is 10%.

\- designed to prevent shortages and surpluses, to ensure farmers a fair rate
of return and Canadian consumer access to a high-quality, stable, and secure
supply of these sensitive products.

Mr T, in his incendiary speeches to his tribe, was selective with his facts.
The 300% tariff does not apply to all dairy; only butter and only when
exceeding USA's quota (Canadian farmers who exceed their quota cannot sell at
all). The threats and beatings delivered by Mr T's negotiators did "open up"
the Canadian dairy market a little, but supply management is still intact and
"diversification" is now on the minds of many Canadians.

[0]
[https://en.wikipedia.org/wiki/Supply_management_(Canada)](https://en.wikipedia.org/wiki/Supply_management_\(Canada\))

~~~
pcc
As a sidebar, the US has its own 'supply management'-style policies in place
for markets like sugar, where Canada's access was limited to 0.1% of the
market, pre-USMCA. [0]

I wonder what will end having greater economic impact in the long run: the
relatively minor 'tweaks' USMCA makes in these markets, or the extent to which
Mr T has shaken the foundations of Canadians' relationship with the US.

[0]
[https://business.financialpost.com/commodities/agriculture/f...](https://business.financialpost.com/commodities/agriculture/forget-
canadas-dairy-producers-the-u-s-sugar-cartel-has-an-even-sweeter-deal-from-
its-government)

------
mrfusion
What about turning milk into a biofuel? Can yeast grow in milk and produce
alcohol?

~~~
orev
Seems like that would be awfully inefficient. We use oil (fertilizer) to grow
corn and soybeans, which we then feed to cows, which then convert it to milk.
Each step in the process reduces the efficiency. Why not just use the oil for
fuel? Or convert the corn the ethanol if that type of oil is not useful as
fuel? The efficiency of ethanol is already in question due to the use of corn.

~~~
Something1234
It could be a way to use the excess or that milk which is about to spoil.
There's a large amount of fat left over from the production of skim milk. This
fat usually gets turned into cheese, that's why pizzas are more cheesy than in
the past.

------
travisgriggs
Didn’t read the article. Just saw the “Bloomberg” in parentheses and thought
“ah some reporter at Bloomberg is trying to get his yearly bonus by moving the
dairy market.”

Which is irrational and silly. But it’s amazing the way something like the
controversy around “The Big Hack” brews suspicion.

~~~
coldtea
> _Which is irrational and silly._

Not really irrational. Half of what's published is PR in one form or another.

------
homonculus1
I wouldn't expect Bloomberg to represent anything honestly.

~~~
dragontamer
I wouldn't read Washington Post for technology: I read it for politics. I
don't read Bloomberg for technology news, I read it for investment news.

Well, there's certainly a problem with Bloomberg's technology / cyber-attack
division. But Bloomberg as a whole is one of the better investment newspapers.
IMO, Bloomberg probably should just stop writing about cyber-attacks. They're
clearly incompetent at that and its causing people to lose trust in the
greater newspaper.

But I won't go to Ars Technica to read about insider Washington politics. Its
a matter of recognizing what these papers are "good" in.

~~~
lostmsu
Haven't you seen that idea, that you might know some media sucks in tech, but
think is ok in other stuff, because you are an expert in tech, but not in that
other stuff? E.g. Bloomberg might suck in everything, but you'd only see a
problem with tech.

~~~
dragontamer
I'm not an expert in finance / investing. But I think I'm good enough to see
that Bloomberg has great economic analysis and breakdowns into company
financials.

Here are some key quotes from the article in question that demonstrate
Bloomberg's research ability into financial / investment matters.

> From April 2017 to April 2018, sales of Chobani products grew only 1 percent
> while sales by all companies in the segment slipped 2.2 percent.

> The key ratio of income-to-feed costs reveals that dairy farmers have very
> little margin left these days, said Bill Brooks, an economist at INTL
> FCStone. Feed such as alfalfa and hay are more expensive than last year, as
> are labor and energy expenses.

> The amount of milk dumped by farmers in the U.S. Northeast reached almost
> 145 million pounds through July—the most in at least a decade—including 23.6
> million pounds that month alone.

\-------

These are specific statistics. And sure, they may be available from publicly
available research sources, but they contribute to the article's primary
thesis. Knowing what statistics seem relevant for a particular article is what
Bloomberg is good at.

Besides, these individual statistics are relatively easy to check. The main
benefit of Bloomberg is their ability to collate various information sources
together into a singular article.

------
ccvannorman
I found this article unreadable as Bloomberg's relentless assault (of ads) on
my eyes nearly gave me a seizure. Note to self: Don't read Bloomberg.

------
Animats
The US dairy industry and the USDA have a large operation to promote cheese.
With everything. Over half of Dunkin' Donuts offerings now include cheese, and
they are rebranding to "Dunkin". Cheese filled tacos are now a thing.

I recently chewed out a restaurant manager of a "natural" and "green"
restaurant when they started putting cheese on a piece of plain salmon on top
of fresh greens. That's a chef problem - they have to add something to justify
being paid more than McDonalds.

~~~
gurumeditations
You yelled at a restaurant manager for putting cheese on your salmon? Wow.

------
thaumasiotes
> For decades, yogurt was runny and high in sugar. “Then Chobani comes onto
> the scene and changes the idea of what yogurt can be.”

Um...

Plain yogurt from Chobani: serving size 150g, of which 15g sugar. (
[https://www.chobani.com/products/greek/plain/non-fat-
plain/](https://www.chobani.com/products/greek/plain/non-fat-plain/) )

Cookies-and-cream flavored yogurt from Yoplait: serving size 170g, of which
19g sugar. (All yogurt in the same product line has the same amount of sugar,
but it's more fun to quote it for cookies-and-cream.
[https://www.yoplait.com/product/regular-original-cookies-
cre...](https://www.yoplait.com/product/regular-original-cookies-cream) )

Chobani didn't change the idea that yogurt is high in sugar. What was that
comment about?

~~~
credit_guy
There's a chance that is lactose, which, per the FDA [1] counts as sugar for
nutrition labelling purposes.

[1]
[https://www.accessdata.fda.gov/scripts/interactivenutritionf...](https://www.accessdata.fda.gov/scripts/interactivenutritionfactslabel/factsheets/sugars.pdf)

[2][https://www.everydayhealth.com/columns/johannah-sakimura-
nut...](https://www.everydayhealth.com/columns/johannah-sakimura-nutrition-
sleuth/dont-sweat-over-sugar-in-plain-dairy/)

~~~
masklinn
> There's a chance that is lactose, which, per the FDA [1] counts as sugar for
> nutrition labelling purposes.

I'd expect most sugar in yogurt to _not_ be lactose: part of the point and
advantage of yogurt and other fermented dairy (and they're commonly consumed
in places with low to no lactase persistence) is the cultures break down much
of the milk's lactose into simpler sugars. In fact, the chobani nutrition
section quotes 6g carbs, 4g sugars, less than 5% lactose.

More to the point, unsweetened yogurt should contain about the same sugar
ratio as milk (4~6% by weight on average), >10% (the yoplait one) is way above
the upper end and indicates added sugars. GP misread the chobani's nutrition
label though, they quote 6g carbs (4g sugars) per 5.3oz (150g) not 15g.

