Congress’s “fiscal cliff” deal on New Year’s Day included a nine-month extension of the expiring U.S. farm bill, preventing retail milk prices from doubling to $7 or more in 2013. That’s a great relief for milk producers, but the last-minute reprieve shouldn’t blind them to the fact that they have already fallen off their own cliff.
Demand for milk has been in a free fall for decades. U.S. milk consumption has dropped 36% since the 1970s. The dairy industry’s plight is a cautionary tale for other industries whose core product falls out of favor or is under attack by activists. It illustrates the dangers of focusing on just one highly commoditized product, ignoring market trends, and trying valiantly to sell what you make rather than to make what people want.
All the milk mustaches in advertising history can’t disguise the fact that milk is no longer the drink of choice—not for teens and 20-somethings, or people with busy lifestyles, or aging baby boomers, or the elderly. With per-capita U.S. milk consumption down 36% between 1970 and 2011, an industry trade group spokesman recently admitted something everybody already knew: The dairy business is in trouble.
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