Can whole milk in schools help the dairy industry?

Can whole milk in schools help the dairy industry?

Brief:

  • In an effort to increase consumption of fluid dairy milk, last month, two congressmen introduced The Whole Milk for Healthy Kids Act of 2019, which would allow whole milk to be served with school lunches.
  • The bill was put on the floor by Rep. Glenn Thompson (R-Pa.) and Collin Peterson (D-Minn.) and is starting to gain support from dairy organizations, according to Dairy Reporter. 
  • Right now, students in U.S. public schools have access to skim, 1% and 2% milk options that are both flavored and unflavored.

Insight:

It’s official: 2018 was the worst year-over-year growth in domestic milk production since 2013, according to a new report from Rabobank — and that is just looking at sales numbers. Since 2014, prices have been falling consistently. They are now 40% lower than four years ago. As a result, dairy farms are closing left and right, and the number of dairy cows has decreased by 30,000.

The continued decrease in price and demand for dairy already forced the U.S. Department of Agriculture in 2016 to offer dairy producers approximately $11.2 million in financial assistance to help deal with challenges. Still, it is clear that more needs to be done to combat such drastic changes within the industry.

However, it’s hardly likely that a bill intended to allow whole milk in schools is going to make significant changes to the downward trajectory path. Still, it points at an interesting trend within the industry. According to Mintel research, the last five years have shown flavored milk to be the fastest growing segment of the dairy milk category with sales reaching $1.74 billion in 2017, an 18% increase since 2012. At the same time, whole milk sales have increased 8% since 2012, and were estimated to reach $5.36 billion in 2017.

The research shows that skim and low-fat milk options are the ones with plummeting sales, down 28% in the last five years.

Seeing these trends pick up steam, USDA Secretary Sonny Perdue recently permitted schools to start offering 1% flavored milk options in school meal programs. Now lawmakers want to reintroduce all the fluid milk options in an effort to stem the flow of consumers away from milk.

But why did whole milk disappear in the first place? In 2010, lawmakers passed The Healthy, Hunger Free Kids Act, which mandated all milk served in National School Lunch Program and School Breakfast Program had to be skim or low-fat, and any flavored milks had to be skim. The idea was to limit the total fat content of meals, while ensuring students got the necessary vitamins and minerals.

Since that law went into effect, studies have shown whole milk actually contributes to lower rates of obesity. USDA sales figures show the most growth in flavored whole milk. It could logically be concluded that the best option would be to reintroduce the product to cafeterias where children are likely to pick up chocolate or strawberry milk as a tasty treat.

Still, with dairy prices where they are and the continued pressure on the market from plant-based milk alternatives, it is unlikely that this bill could do much to change the tide. The real solution will take an increase in export demand, as well as a greater change in consumer perception of where dairy milk belongs in their diets.