Fluid Milk Profile

By Madeline Schultz, content specialist, AgMRC, Iowa State University, schultz@iastate.edu.

Profile revised April 2012 by Malinda Geisler, AgMRC, Iowa State University.


The United States is the single largest producer of cow's milk in the world. In 2011, the country supplied 196 billion pounds of milk, a 1.8 percent increase from the previous year. California continues to lead the country in milk production, followed by Wisconsin. New York, Idaho and Pennsylvania round out the top five milk-producing states.

Less than 28 percent of the milk supply is processed into fluid milk and cream products. The remainder is processed into dairy products such as butter, cheese, frozen dairy products and milk powders. In fact, about half of the milk supply is processed into cheese.


Per person fluid milk consumption has declined slowly due to competition from other beverages and because of a smaller percentage of children in the United States. In the five years between 2001 and 2006, skim milk, 2% milk and whole milk each showed slight decreases in per person consumption. According to the Economic Research Service (ERS), the per person consumption of whole milk in 2009 was 49.3 pounds, of 2% milk was 63.2 pounds, of 1% milk was 22.7 pounds and of skim milk was 26.8 pounds. Both 2% milk and 1% milk saw increased consumption from the previous year. 

Overall, USDA's Ag Marketing Service reported total sales of conventional fluid milk products were 53,739 million pounds in 2011, a decline of 1.8 percent from 2010. Milk is regarded as a flow commodity because it is produced every day and must go to market at least every other day. Day-to-day milk supply does not coincide with milk demand. Demand for milk for bottling is nearly zero on Sundays and limited on Saturdays and Wednesdays since most plants close those days due to buyer demand schedules.

According to an ERS study on the milk pricing system, establishing a balance between milk’s supply and demand would require a balance among the following factors:

  • Producer prices remain high enough to maintain production yet not encourage surplus milk production.
  • Consumers willing and able to pay for milk and dairy products.
  • Producers, handlers and the public interested in the orderly flow of milk and dairy products from producers to consumers.

In recent years, producer checkoff-funded Dairy Management Inc. has focused efforts on increasing milk consumption among youth. Milk in resealable plastic containers is available at more than 35,000 Wendy’s, McDonald’s, Burger King and Sonic Drive-In restaurants nationwide. Milk in resealable containers is also being promoted in school cafeterias and through vending machines. More than 6,000 schools now offer single-serve milk in plastic resealable bottles.


The number of licensed dairy herds in the United States totaled 51,481 in 2011, down from 53,132 herds the previous year.  The number of dairy herds increased in only one state: New York. (NASS)

The average number of milk cows on U.S. farms was 9.2 million head. Production per cow averaged 21,345 pounds, 197 pounds above the previous year. The average rate of milk production per cow has increased 14.7 percent from 2002.  (NASS)

The largest number of U.S. dairy farms in 2008 (21,200) consisted of operations with 1 to 29 head of cows, but the farms whose herds totaled over 2,000 head produced 30.5 percent of the milk supply. In fact, nearly 52 percent of U.S. milk cows belong to a dairy operation whose herd is over 500 head of cows, and 57 percent of the milk produced in the United States comes from dairy herds of over 500 cows.  (Census of Agriculture 2009)

In 2011, California averaged 1.77 million head of milk cows during the year and produced 41.4 billion pounds of milk, up 2.7 percent. That same year, Wisconsin averaged 1.26 million milk cows and produced 26.1 billion pounds of milk. (NASS)

Over 90 percent of the milk produced in California and Idaho comes from herds larger than 500 milk cows. In contrast, 24 percent of Wisconsin's milk production, 40 percent of New York's milk and 12 percent of Pennsylvania's milk originates from herds larger than 500 cows.  (Census of Agriculture 2009)      

The United States is the world's single largest producer of cow's milk. Only the 27 countries of the European Union produce more milk in a year, approximately 137.8 million metric tons (MT) in 2011. In comparison, India produces around 52.5 million MT, Russia about 32 million MT and China about 30.7 million MT.  

In its long-term projections, the USDA forecasts that the number of dairy cows will gradually decline to 8.9 million by 2018. USDA also forecasts that milk production will slowly rise to 227 billion pounds and prices will settle to $21.75 per hundredweight (cwt) in the same period.


As of 2010, the United States had 332 commercial fluid milk bottling plants and nearly 1,600 dairy product manufacturing plants. Due to the perishable nature of milk, it must be marketed promptly as fluid milk or processed into a storable manufactured dairy product.

More than 80 plants in the United States manufacture milk powder, accounting for 10 percent of the world’s milk powder production, or more than 700,000 MT. The U.S. dairy industry is positioned as a primary worldwide dairy ingredient supplier.


About 13.3 percent of the U.S. milk production in 2011 was exported. The United States exported $65.1 million worth of fluid milk and cream that year. The two largest markets were Canada with $24.9 million and Mexico, which imported $22.5 million of milk. (FAS)

Since milk can be difficult to transport, store or formulate while in its liquid form, milk processors create milk powder by removing most of the water. The most common forms of milk powder, according to the U.S. Dairy Export Council, are skim, whole and buttermilk. 

The U.S. Dairy Export Incentive Program provides assistance to U.S. dairy suppliers who offer products to exporters at competitive international prices. This program helps develop U.S. dairy export markets and removes nonfat dry milk, butterfat and certain cheeses from the domestic market.


According to USDA's Foreign Ag Service, U.S. imports of fresh and dried milk and cream were $96.5 million. The dollar value of imports from Mexico, Chile and New Zealand, the three largest suppliers, increased over 2010 levels.


Fluid milk competes with other beverages for sales. While skim milk consumption has increased over time and whole milk consumption has decreased, overall milk intake by Americans has dropped in the last 20 years.

Other factors related to milk competition include the fact milk is viewed as a commodity. There are few branded milk products sold. Most milk is private label. Milk competes against worldwide beverage makers with well-known brands.

Milk distribution is another factor. Milk is mainly sold in take home retail outlets, primarily supermarkets. Compared to other competing beverages, its promotion is limited due to product perishability.


Commodity prices are expected to be similar to 2011. The cost and availability of feed ingredients, particularly corn, will continue to be an issue. 

Under the 2008 Farm Act, the national milk income loss contract (MILC) program to provide income stabilization for dairy producers was continued. However, the program now provides more specific guidelines. For example, if the monthly Class I price in Boston is less than $16.94 per cwt, dairy operations will receive a monthly direct payment. From October 1, 2008 to August 31, 2012, payments will be made on as much as 2.99 million pounds of milk per fiscal year per operation.


Dairy, Economic Research Service (ERS), USDA.

Dairy Backgrounder, ERS, USDA, 2006.

Dairy, Food Availability (Per Capita) Data System, ERS, USDA. 

Dairy Products Annual Summary, National Agricultural Statistics Service (NASS), USDA, 2010.

Dairy: World Markets and Trade, Foreign Ag Service (FAS), USDA, 2010.

Global Ag Trade System, FAS, USDA.

International Dairy Foods Association.

Livestock, Dairy, and Poultry Outlook, ERS, USDA.

Low Costs Drive Production to Large Dairy Farms, Amber Waves, ERS, USDA, 2007 - Dairy production is shifting to larger farms because average production costs decrease as herd size increases.

Milk Bottling Plants, Livestock, Dairy and Poultry Outlook, ERS, USDA.

Milk Production, NASS, USDA, 2011.

Milk Production, Disposition, and Income Annual Summary, NASS, USDA, 2010.

National Milk Producers Federation.

U.S. Dairy Export Council.

U.S. Dairy Trade Situation & Outlook, Babcock Institute, University of Wisconsin, 2012.