Wisconsin Dairy Industry – Part I of Series

WISCONSN AGRICULTURE – PART I OF DAIRY

 Wisconsin Dairy – The Statistics

Wisconsin is the second largest dairy producer in the United States, behind California, but ahead of New York, Idaho and Pennsylvania.

Most Wisconsin milk is made into cheese, and not used for fluid milk consumption (drinking). Approximately 90% of Wisconsin milk is used for cheese, and approximately 90% of that cheese is sold outside Wisconsin’s borders. According to the Wisconsin Cheese Makers Association, in 2017 Wisconsin exported cheese and curd to 46 different countries.  Wisconsin exported about $16 million worth of cheese and curd in 1996, and $133 million in 2017.

The top 2017 exports markets for Wisconsin dairy include:

  • Milk and Cream – Canada, El Salvador, Bermuda, Panama, and Bahamas
  • Buttermilk, Yogurt, Kefir, etc – Mexico, Canada, Burma (Myanmar), Nigeria, and Malaysia
  • Cheese and Curd – Mexico, Canada, Japan, Republic of Korea, and Australia
  • Butter and Other Fats – Canada, Saudi Arabia, Republic of Korea, Australia, and Colombia
  • Whey and Milk Products – China, Canada, Singapore, Philippines, and Japan.

Wisconsin Dairy by County

Overall, Wisconsin had 1,278,000 cows in 2017, and produced 30,320,000 pounds of milk. According to the USDA Milk Production survey, Fond du Lac County had the largest production in 2017, with Clark in second place and Manitowoc County in third.  However, the same report shows that Clark had the most cows, with Marathon in second, and Fond du Lac in third.  Manitowoc and Brown Counties are tied for most production per cow, with Outagamie and Dane Counties tied for third and fourth.

Trends in Wisconsin

Over the past 30 years Wisconsin has seen an increase in milk production, a decrease in the number of cows, but an increase the amount of milk each cow is producing.

How Milk is Priced

Milk pricing is based on the end products to be produced by the milk, and the Federal Milk Marketing Order (FMMO), sets the minimum prices for milk.  There are four different types of milk classifications, based on the end-product of the milk:

  • Class I Milk – Drinking
  • Class II Milk – ‘Soft’ products like sour cream, cottage cheese, yogurt, and ice cream
  • Class III Milk – Hard Cheeses
  • Class IV Milk – Butter and Dry Products (including non-fat dry milk (NFDM))

The Federal Milk Marketing Order started pricing milk using a multiple component pricing (MCP) formula in 2000. The idea behind MCP is the price of milk is based on the products which are made from that milk.  The MCP uses three major inputs:

  • Yield (how much product can be made from the milk),
  • Manufacturing Cost (how much it costs to turn the milk into the product)
  • End-Product Price (the value of the final product).

The formula is: (Product Price – Manufacturing Cost) x Yield Per Pound of Component.

Yield and Manufacturing costs are determined by the USDA rulemaking. The Manufacturing Cost includes all costs necessary to convert milk to a finished product, including in-plant costs, administrative overhead, costs associated with marketing the finished product, and value for return on investment. The Yield factors represent the volume of finished product from processing one pound of component. Since cheese is dependent on both the protein and butterfat in milk, there are two Yield factors in the cheese product price formula.

During the month of September the Wheeler Report series will focus on different aspects of the dairy industry in Wisconsin.