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

Profile revised June 2011 by Malinda Geisler, content specialist, AgMRC, Iowa State University.
 

Overview
Only about one-third of the U.S. milk supply is actually processed into milk and cream products; the remaining two-thirds of the milk supply is used to manufacture a wide range of dairy products. Sales of these dairy products, such as butter, ice cream and yogurt, account for tens of billions of dollars annually in the United States. Producers can capture a part of that billion-dollar market by processing and selling their own line of value-added dairy products manufactured on their farms.

Processing
The United States has 1,273 dairy product manufacturing plants. With 210 plants, Wisconsin continued to support the most plants in any state. Other leading dairy processing states are New York with 108 plants and California with 106 plants. 

Value-added Products
Butter
U.S. butter production in 2010 totaled 1.6 billion pounds, 0.5 percent less than the previous year. California produced 35.6 percent of this butter. More than half of the butter now made comes from cream not needed when milk is used for fluid milk or cheese.

Frozen Desserts
As of 2010, 385 plants in the United States processed ice cream. That year, ice cream plants made 912 million gallons of regular ice cream, 380 million gallons of lowfat ice cream, 49.7 million gallons of frozen yogurt and 49.3 million gallons of sherbet.

U.S. Frozen Dessert Production

Source: USDA.

With 29 percent of the market, vanilla remains the most popular flavor of ice cream. Chocolate captures 14 percent of the market, followed by strawberry with 3.3 percent. 

In 2008, per capita consumption of ice cream was 13.9 pounds, lowfat ice cream consumption was 6.8 pounds per person and frozen yogurt was 4.3 pounds per capita. According to the USDA, per person ice cream consumption peaked at 23 pounds in 1946. Per person consumption from 1949 through 1987 was relatively constant. Since 1988, U.S. consumers have generally eaten less ice cream overall. They have also shifted to ice cream with higher milkfat and higher priced, in addition to frozen yogurt and other dairy products from the freezer.

Sour Cream
Total sour cream production in the United States was 1.2 billion pounds in 2010. Approximately 116 dairy plants throughout the country process sour cream.

Yogurt
Yogurt production in 2010 was 4.2 billion pounds at 116 processing plants. In contrast, yogurt production in 1980 was 570 million pounds. Per person yogurt consumption was 11.8 pounds in 2008, well below the 62.8 pounds of yogurt consumed annually in Sweden.

Yogurt is being touted as a healthy or functional food due to probiotics. According to Dairy Management Inc., probiotics “are key ingredients in any product promoting digestive health.” About 80 percent of the yogurt manufactured in the United States contains Lactobacillus acidophilus. The Bifidobacterium strain is also found in dairy products. The probiotics market in the United States is estimated at being almost $1.5 billion in 2010. 

Yogurt is now being incorporated into other products. General Mills', Kellogg's and Quaker Oats sell cereals containing yogurt. McDonald's and Wendy's offer yogurt-based products on their menu. Purina has introduced dog and cat foods containing yogurt. Yogurt has also been added to toothpaste, mouthwash, facial masks and suntan products.

Exports
U.S. dairy exports totaled $3.7 billion, the second highest total on record. The volume of U.S. dairy exports was 1.6 million metric tons (MT). The bulk of U.S. dairy products is still consumed domestically. Dairy products that are exported include butter, cheese, ice cream, yogurt, whey, lactose, infant formula, milk powders and fluid milk and cream.

Primary markets for U.S. dairy exports are Mexico and Canada. Mexico purchased $837 million in U.S. dairy product exports while Canada purchased $385 million in U.S. dairy products in 2010. Mexico is the largest buyer of U.S. cheese, ice cream and yogurt. 

Exports of U.S. butter and dairy spreads were 56,849 MT in 2010 valued at $202 million. Mexico was the top market for U.S. butter exports. The United States exported more than 32,000 MT of ice cream in 2010 valued at $75.6 million. Mexico was the top buyer of U.S. ice cream exports.

Imports
According to USDA's Foreign Agricultural Service, the United States imported $2.2 billion worth of dairy products in 2010. It was the smallest quantity and value of imported dairy products in the past five years.

Outlook
The dairy export forecast indicates favorable conditions for 2011. Demand for U.S. dairy exports are expected to remain strong with economic growth in most of the countries that are key markets.

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

Food Availability, Economic Research Service (ERS), USDA.

Global Agricultural Trade System, Foreign Agricultural Service (FAS), USDA.

Global Probiotic Opportunities, Natural Products Insider, April 2011.

Innovate With Dairy

Livestock, Dairy & Poultry Outlook: Tables, ERS, USDA.

Outlook for U.S. Agricultural Trade, ERS and FAS, USDA.

U.S. Dairy Export Council

U.S. Dairy Trade: Situation & Outlook, Babcock Institute, University of Wisconsin-Madison, 2011.

 
Profile written November 2006 and revised June 2011.