Class III milk prices aren’t as high as they were last year, by a long shot. However, with futures contracts trading at roughly $15, they are higher than global counter parts. What’s driving the strong price? An increased consumer demand for dairy foods in the U.S. is definitely part of the equation.
Many people know Dairy Management Inc. (DMI), the dairy checkoff, as the name behind the famous Got Milk? advertising campaign. Advertising isn’t the only way the group works to drive domestic demand. In fact, in recent years it has taken a back seat to corporate partnerships which DMI’s Neil Hoff says are paying off for farmers.
Watch the full clip about DMI's new partnerships on “AgDay” TV below:
“We were doing a lot of media advertising, doing a lot of TV and lot of radio and the costs were going up each year,” Hoff said. “The pool of money we had to work with was staying stagnant with production.”
The group new they needed to try a new strategy so eight years ago the checkoff turned to partnerships with food chains beginning with Domino's Pizza. Domino's increased the amount of cheese on their pizza and several other chains followed. Over the last 18 months cheese demand has increased an equivalent of 4 billion pounds of milk. Taco Bell told dairy farmers at the Elite Producers Business Conference they are working with DMI food scientists to develop new offerings with more cheese which will undoubtedly raise that number.
Cheese is not the only dairy food getting in on the action. Butter is going to be the next dairy driver in the fast food sector. McDonald’s recently announced it would replace all vegetable oils and margarines with real butter. It’s anticipated other chains will do the same. Hoff says McDonald’s officials anticipate the move to generate 600 million pounds of milk sales but that their suppliers anticipate the number to be much higher than that. Increased milk sales will result in an increase in price on the farm.
“It’s unreal how these partnerships are paying dividends right now,” he said.