Current Progressive Dairy digital edition
Advertisement

Weekly Digest: Home-centric meals support October retail dairy sales

Progressive Dairy Editor Dave Natzke Published on 22 November 2021

Digest Highlights

Home-centric meals support October retail dairy sales

Rapidly rising inflation and heightened concern over the COVID-19 delta variant continued into October, with more emphasis on home-prepared meals affecting retail dairy product purchases, according to a monthly update from the International Dairy Deli Bakery Association (IDDBA). While retail inflation is the highest in many decades, the cost of eating out rose even more, said Jonna Parker, with Information Resources Inc. (IRI).

advertisement

advertisement

The good news for retail sales is that dairy fits in all meal occasions, from snacks to dinner. “That means a more home-centric meal outlook benefits dairy sales across all meal occasions instead of just one or two,” said Eric Richard, industry relations coordinator with IDDBA.

In October, retail dairy sales (value basis) exceeded year-ago levels by 0.5%. Underneath the strong dairy sales performance is a more mixed performance at the category level. The largest seller, milk, moved into positive territory in October based on value, up 0.6%. Yogurt, cream and creamers, and whipped toppings were also up. The value of other dairy product categories, including natural cheese, butter, process cheese and cream cheese were slightly lower than October 2020.

As noted, inflation is at work, and October 2021 unit and volume sales trended below 2020 levels for most dairy categories, with the exception of yogurt and desserts. Milk was down 3.5% on a unit basis and -5.5% on a total volume basis. Natural cheese unit and volume sales were down 2.5% and 1.8%, respectively. Butter unit and volume sales were down 7.6% and 8.2%, respectively.

Deli cheese sales (combined fixed and random weight) have moved from being far behind year-ago levels in March to coming out even in the third quarter of 2021 and ahead in October 2021, according to the report. While volume is still slightly behind 2020 levels, the renewed growth is a direct reflection of meal occasions and gatherings moving back to the home.

With food service business picking up earlier in the year, 2021 year-to-date retail dairy sales trails the record levels during the first 10 months of 2020 by just 2.8%, said Richard. Compared to January-October 2019, 2021 sales are up 11.2%.

advertisement

What’s ahead? With Thanksgiving approaching, the IRI survey of primary shoppers found a higher likelihood of returning to pre-COVID-19 larger celebrations, including inviting more non-family members. More shoppers planned on making holiday meal purchases early.

December 2021 Class I base price moves above $19

The Federal Milk Marketing Order (FMMO) advanced Class I base price moved to a 12-month high for December. At $19.17 per hundredweight (cwt), it’s up $1.19 from November 2021 but 70 cents less than December 2020.

With the addition of December, the 2021 Class I base price averaged $16.83 per cwt, down 8 cents from 2020 ($16.91 per cwt) and 16 cents less than 2019 ($16.99 per cwt).

A Class I differential for each order's principle pricing point is added to the base price to determine the Class I price.

The difference between the advanced Class III skim milk pricing factor ($11.40 per cwt) and the advanced Class IV skim milk pricing factor ($11.52 per cwt) is 12 cents, yielding a net benefit under the “average-of plus 74 cents” formula used to calculate the Class I mover. A $1.48 per cwt difference in advanced Class III-IV skim prices, regardless of which is higher, would have provided a net benefit to dairy farmers using the “higher-of” formula.

Based on Progressive Dairy calculations, the Class I mover calculated under the average-of plus 74 cents formula is $19.17 per cwt, 66 cents more than the $18.52 per cwt using the higher-of formula.

advertisement

September 2021 fluid sales: Same story

Here’s an update on U.S. fluid milk sales data from the USDA Agricultural Marketing Service for September 2021. The long-standing trend continues.

  • Total sales: September 2021 sales of packaged fluid milk products totaled 3.67 billion pounds, down about 1.3% from the same month a year earlier. At 32.9 billion pounds, year-to-date (January-September 2021) sales of all fluid products were down 4.5%.

  • Conventional products: September sales totaled 3.44 billion pounds, down 1.1% from September 2020. Reduced-fat (2%) flavored milk was the only major category to post an increase from a year earlier. Year-to-date sales of conventional products were down 4.6% at 30.77 billion pounds.

  • Organic products: Monthly sales totaled 227 million pounds, down 4.1% from a year earlier. Albeit a small category, sales of organic flavored whole milk increased nearly 250% to 14 million pounds. At 2.11 billion pounds, 2021 year-to-date sales of organic products were down about 2.3%. Organic represented almost 6.4% of total fluid product sales in January-September 2021.

The U.S. figures are based on consumption of fluid milk products in FMMO areas, which account for approximately 92% of total U.S. fluid milk sales, and adding the other 8% from outside FMMO-regulated areas. Sales outlets include food stores, convenience stores, warehouse stores/wholesale clubs, nonfood stores, schools, the food service industry and home delivery.

USDA buys string cheese, seeks 19 million pounds of cheese

The USDA’s Agricultural Marketing Service announced details regarding dairy product purchases for domestic feeding programs. In latest announcements, the USDA:

  • Awarded a contract to Miceli Dairy Products deliver 189,000 pounds of mozzarella part skim string cheese for distribution during January-February 2022

  • Opened the bidding process seeking nearly 5.9 million pounds of Swiss cheese (blocks and slices) and more than 13.3 million pounds of yellow cheddar cheese (shreds and 1- and 2-pound chunks) for delivery between Feb. 1-July 31, 2022 – bids close Dec. 2.

EPA unveils revised definition of ‘Waters of the U.S.’

On Nov. 18, the EPA and Army Corps of Engineers unveiled a proposed rule reinstating pre-2015 federal regulations defining wetlands and waterways are subject to federal protection under the Clean Water Act (CWA).

The scope of federal regulatory authority through the CWA has been controversial for many years and the subject of multiple lawsuits. The Obama administration expanded the federal government’s reach by issuing the Waters of the U.S. (WOTUS) rules. Waters of the U.S. was revised through the Navigable Waters Protection Rule, implemented in 2020 by the Trump administration.

Earlier this year, the EPA announced a two-step plan that would (1) restore Waters of the U.S. to pre-2015 conditions with modifications relevant to Supreme Court decisions and (2) create additional regulations.

The release of the newly proposed rule came before completing regional roundtable discussions; the nomination period for those roundtables has been extended until Dec. 1, 2021.

Not yet published in the Federal Register (docket number EPA-HQ-OW-2021-0602) at Progressive Dairy's deadline, a pre-publication version of the proposal is available.

In addition to a 60-day public comment period, the agencies will host virtual public hearings on the proposed rule, Jan. 12, Jan. 13 and Jan. 18. Hearing registration is required for each hearing (for links, click on the date). Testimony is limited to three minutes per person. Further details can be found here.

Dairy invests in projects to reduce GHG emissions

Public and private investments continue to target reductions in greenhouse gas emissions (GHG) from dairy. Among them:

  • The Nature Conservancy, the Innovation Center for U.S. Dairy and the Institute for Feed Education and Research are launching a three-year, $800,000 project to explore innovative feed management strategies that can reduce enteric methane emissions in dairy cattle, aided by a $537,440 grant through the USDA’s Conservation Innovation Grants On-Farm Conservation Innovation Trial program. Working with up to 10 dairy farms in Michigan and Wisconsin, this project will combine on-farm trials and demonstrations of emerging technologies, providing direct financial support to participating farmers.

  • Clean Energy Fuels Corp. broke ground on a renewable natural gas (RNG) digester at Del Rio Dairy in Friona, Texas. When completed, the Del Rio Dairy digester project will capture the waste from more than 7,500 milking cows and generate an anticipated 1.1 million gallons of transportation fuel annually.

Following up: Farm Credit East merger

Stockholders of Farm Credit East and Yankee Farm Credit have overwhelmingly voted to merge the two agricultural credit associations. Upon final approval by the Farm Credit Administration, the newly merged association is expected to begin operation on Jan. 1, 2022, under the legal name of Farm Credit East.  end mark

Dave Natzke
  • Dave Natzke

  • Editor
  • Progressive Dairy
  • Email Dave Natzke

LATEST BLOG

LATEST NEWS