Long-Term Vision Pays Off for Milkfat – and Dairy Farmers

Tom Gallagher Chief Executive Officer, Dairy Management Inc.

Tom Gallagher
Tom Gallagher is Chief Executive Officer of Dairy Management Inc.™

Greater milkfat use in 2016 alone brought about $2 billion in value to America’s dairy farmers. Your dairy checkoff had a big hand in making that happen, and continues to do so today.

This increased value and “new look” at milkfat means thought leaders and the average shopper are asking a question that farmers have asked for years: “Why does everything have to be low-fat?” The good news is, every type of dairy can fit into meals and provide solutions people are looking for.

The farmer-funded and farmer-directed checkoff works at short- and long-term strategies to promote and protect dairy sales on behalf of all U.S. dairy farm families. Our responsibly-produced, nutrient-rich story helps solve nutrition problems that people everywhere are facing today. Here’s where it all comes together.

Long-term strategies take patience. Take nutrition research. It means years of funding and supporting research by the farmer-founded National Dairy Council (NDC) and others, getting input from other scientists and putting theories into practice. Next, we work with the science and health/wellness communities and the entire dairy community to help inform and therefore shift conventional thinking to consistently reflect the current science. The farmer board members of the checkoff demonstrated wisdom and patience in bringing the research about the potential benefits of milkfat to mainstream commercial use.

Patience – and Urgency – Bring Results

Meanwhile, your state, regional and national dairy council staff has been building solid relationships with health professional organizations. These highly-revered professionals respect that research and the body of research on dairy by all scientists. Their third-party voices help inform decisions that guide nutrition and health recommendations and buying decisions – things that the checkoff cannot do, by federal statute.

So, over the long term, we’re making big strides for dairy farmers by helping transition the public’s mindset around milkfat. But, what about short-term strategies and successes?

Short-term strategies focus on shorter-term results, while producing long-term benefits. These strategies are based on building partnerships to stimulate sales growth, new product development that inspires others to do the same, and significant marketing investments by partners.

We are, to borrow a phrase, the straw that stirs the drink.

Take pizza cheese. In 2009, pizza sales were in a five-year slide; at the same time, dairy farmers were hurting as well. With pizza cheese representing 25 percent of U.S. cheese use, your dairy checkoff reached out to Domino’s to put more cheese on pizzas to spur sales. Domino’s made a heavy investment to create and market a better product and sales took off – and they haven’t slowed since. Other pizza chains quickly followed suit.

Since then, domestic cheese has carried the day. This is especially important when exports suffer a downturn, such as they did from April 2016 through March 2017.

Likewise, with fluid milk. Farmers recognized the need for dramatic change within the fluid milk category to neutralize and turn around decades-long declines. That’s why the checkoff led an approach to revitalize the fluid category that has helped moderate this decline.

Our innovation work with national brands has stimulated other fluid handlers to follow. In fact, according to the National Milk Producers Federation (NMPF), in the past few months, the “downs” in incremental milk use are milder than they’ve been in nearly seven years. That tells me we’re turning an important corner.

The Intersection of Vision and Action

This is precisely where the checkoff’s long- and short-term strategies intersect and make good things happen for dairy farmers. Years of research by NDC and others have shown the potential benefits of milkfat, while our relationships with respected health and nutrition professional organizations have led to an acceptance of this research.

 

The next thing you know, in 2014, Time magazine’s cover declared “Eat Butter.” Shortly after, your checkoff was working with McDonald’s, which was eager to drop margarine and switch to butter in its 14,000-plus stores. This change alone represented hundreds of millions of pounds in additional milk annually. Predictably, other chains aren’t far behind.

NMPF estimates that the overall increased use of milkfat – in large part the result of the work of your checkoff – is worth at least $2 billion in one year for America’s dairy farmers.

To quote Peter Vitaliano, Vice President, Economic Policy & Market Research for NMPF:

“Whole milk sales had eroded substantially during most of the period … but then made an abrupt turnaround beginning in 2014. This change is just one of many that has taken place in dairy product markets as consumers adjust to the changing view of the role of fat in a healthy diet.

 “The recent upturn in whole milk consumption is large enough that it is causing an increase in the estimated volume of milkfat used in the entire fluid milk category and is even beginning to reverse the long decline in the share of total U.S. milkfat used to produce fluid milk products …”

 

Things are changing for the better and, once again, dairy farmers are leading that change.

Questions? Comments? Contact us at [email protected].

Tom Gallagher is Chief Executive Officer of Dairy Management Inc.™, the domestic and international planning and management organization that works to increase sales of and demand for dairy products and ingredients on behalf of America’s dairy farmers and dairy importers. He is also chief executive officer of the Innovation Center for U.S. Dairy®, which was established by dairy farmer checkoff leaders to bring together the dairy industry to work together pre-competitively to address barriers and opportunities to foster innovation and increase sales. For more information on the dairy checkoff, visit www.dairy.org.