Becca Dettlaff
Got Milk?
Milk alternatives are increasing in popularity, causing the US Dairy market, milk in particular, to experience losses in their overall profit, and will continue to do so, due to consumer trends and preferences. For many years, milk alternatives have been growing in popularity whether it be for lactose allergies, health concerns, or veganism as a lifestyle. The government was one of the US Dairy markets’ best customers, and dairy in the US has been known to be inelastic because the because many dairy has been considered staple foods in the American diet. But times have begun to change and consumers are have been finding that there are many health benefits of switching to alternatives to these dairy products.
Nowadays, the demand for milk has been decreasing due to the alternatives and substitutes that are becoming available and increasing in popularity. Milks made out of nuts like almond milk, cashew milk, and even macadamia nut milk have entered the market, as well as coconut milk and soy milk. Many consumers have found there have been many health concerns related to consuming dairy products, and according to the USDA, since the 1970’s the amount of kids that have chosen to stop drinking milk daily has been rising. And because of perfect competition, it is hard for firms within the industry to compete against one another and other drinks that have been entering the market.
Unlike cheese, which consumers’ willingness to pay continually remains pretty high, people have become very price sensitive to buying milk because of all the changing in trends. Raising the prices milk would cause the demand and consumption to decrease.
Work Cited
Merlo, Catherine. “Why Dairy Demand Has Become More Elastic.” AgWeb - The Home Page of Agriculture, 5 Mar. 2015, www.agweb.com/article/why-dairy-demand-has-become-more-elastic-naa-catherine-merlo/.
Schwartz, Elaine. “Perfect Competition Can Explain Less Milk Consumption.” Econlife, 26 Oct. 2017, econlife.com/2014/06/milk-perfect-competition-limits-firms/.
I think this is a really good point that the dairy industry is sort of shifting, in a sense of trends. People are choosing soymilk over general 2% milk, which has an impact on dairy farmers nationwide. However, that increase in non-dairy milk products opens a new door for soybean plantations and nut distributors. They have a good outlook on the future, revenue wise, simply because more people want non-dairy milk. On the flip side though, creating dairy milk from cows may be more affordable than growing coconuts for coconut milk, etc. I agree with you, though; the dairy industry is decreasing, demand and revenue wise, and this will have an impact on sales, output, and general future trends.
ReplyDeleteI feel as if now a days alternatives are becoming more and more common to prefer as a healthier, easier, or more accessible. I would say alternatives are more common in the food category only because in this day and age people are focused on their physical image and their health making sure they have a balanced diet. Although some of the alternatives are quite pricey depending on the product, so that could cause a decrease in the demand knowing getting the original product would be a whole lot cheaper and easier to check out. There is always a price to pay whether it is time or actual money when choosing between the "normal" option versus the alternative.
ReplyDeleteI agree that in these past few years I've been seeing a lot more non-dairy milk options. Personally I like milk alternatives and so when dairy milk's price is being raised, I am open to buying milk alternatives. I can also see as to why demand for milk is decreasing because soy and various nut milks are being viewed as a healthier alternative. You chose a great topic to discuss as it is very recent and pertains to many people and their opportunity costs.
ReplyDeleteDue to the decreasing demand for milk, dairy farmers may begin incurring a loss. Then in the long run, we can probably expect dairy farmers to leave the industry and shift into producing a different product. As Kate mentioned above though, it will be difficult for dairy farmers to switch into non-dairy industries, so I think cheese will experience an increase in supply.
ReplyDeleteSince milk is differentiated now, the overall milk industry is moving away from being a perfectly competitive market. This has a significant impact on dairy farmers whose main product is milk. These farmers are losing profit but they also are losing their government subsidies. With milk being a subsidized product, once the price falls below a certain line, dairy farmers will receive money for continuing to produce milk. As demand decreases, dairy farmers must raise their prices to sell their milk, and with that they lose the subsidies. Overall, the producer surplus decreases. This only encourages the move from cow's milk to other milk alternatives.
ReplyDeleteI agree with your stance that the increase in demand for milk alternatives is becoming popular in the world today. In fact, at my house we not only have dairy milk but almond milk and other alternatives are becoming popular for my family as well. It is becoming a trend in many households. Which means in a perfect competition if there is a decrease in demand for a product in the market/industry all the many firms will cause a decrease in output for the long run. In other words, with consumers wanting milk alternatives instead of dairy products, there will a be a decrease in output for all the firms maybe causing a decrease in income.
ReplyDeleteI think this is a unique topic to bring up and I like the point of view that you had. Personally, I do not drink these dairy alternatives. One, because I'm not the one who shops for my family; two, because these alternatives are more expensive. I do know a lot of people that have switched do want to switch over to the alternatives in the near future for the reasons you had mentioned.
ReplyDeleteI think it’s interesting to see how much the demand for milk has decreased, but looking at our world today, with so many people trying different and weird diets as well as discovering new allergies, it makes sense that all these different types of milk would be in higher demand. To some people not getting regular dairy milk is either a preference, part of a diet, or an allergy. No matter what the cause is for the high demand in other types of milk, dairy farms will most likely continue to struggle as the demand for their major product is no longer in high demand. Because the dairy farms do not have much money anymore, they will most likely try to raise their prices in order to fill the gap, but it will decrease the demand for milk even more.
ReplyDeleteI thought that the topic of milk alternatives was an interesting one. I thought that you did a good job at describing the differences and competition between milk and the alternatives of milk. The only thing that was unclear to me was that with the increasing in popularity of milk alternatives I would think that the demand for milk would go down. In your piece you made it seem like price was a factor for these alternatives which is increasing due to the demand and popularity of the alternatives. You then proceeded to say because of the price increase the demand is likely going to decrease for these alternatives and therefore I would think the demand for milk would then increase which was confusing for me because you said it was decreasing due to these alternatives. Also what was the statistic behind people buying cheese despite the price changing? Other than that good job on the post and I thought that it was an interesting topic.
ReplyDeleteThis is a really interesting topic that I never would've thought to write about, but worked out really well regarding the surprising economics behind it. Personally, I have never liked milk and always refused to drink it, but I actually don't mind almond milk or coconut milk. And I think that veganism has recently become a huge trend, whereas no one had really heard of it just a few decades ago. Not only veganism, but new diet crazes and even new odd allergies are being discovered every day. Although we don't normally think about how diets or allergies affect the economy, they can be substantial. Awesome topic!
ReplyDeleteI agree that this is a very interesting topic and something that is really not thought of very much from an economical point of view. i think this is a very important topic to talk about now though as the new health movement is truly sweeping our world. With everyone concerned about what they are putting in their bodies, different products that before where never looked at differently are now being changed to meet the needs of these consumers. If a company in our modern day world is not willing to change their product to make it healthier and to meet the consumers needs in the health industry, they are going to see a consistent loss in profit like you said.
ReplyDeleteI agree with the prediction of the demand for milk to decrease in the future. This is true because when you go to the grocery store there are many substitutes for cows milk as you mentioned. For me personally I am lactose sensitive so I can relate to the people that you mentioned. In my house a few years ago, my mom always bought a gallon of milk. Then we reduced to a half gallon of milk. Now that my sister moved out, we don't buy cow's milk and by almond milk mostly for smoothies.
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ReplyDeleteIt is nice to see the actual statistics on this, as this is something that is easily noticed in day to day life. Throughout grocery stores it is easy to see the amount of alternatives that have become increasingly popular. I believe you were right in that this has to do with the health concerns that people are becoming more aware of. People are now looking at cow's milk as something that only a calf should be drinking but still want the nutritional benefits and joy milk brings. This is a significant economic probably for producers and it is only getting worse.
ReplyDeleteIt is interesting to hear that a very typical product like milk is experiencing a decrease in demand. I feel as though you wouldn't hear of substitute products until only a few years ago, however one would still think people want to buy milk. It is understandable that there may be more allergies to milk, as well as the fact that veganism is a major trend in today's society, though it is crazy that all of a sudden there is a huge change in demand. Overall, this topic was very interesting to think about and where the milk market is going and will be going in the future.
ReplyDeleteI think it is interesting that juices and other milks derived from nuts are taking over the "milk industry". Although I do relate to having an allergy to the lactose in milk, I know others around me continue to drink milk every day. I know many parents show their children the endless benefits of drinking milk, which allows the demand to remain high. Although it will be interesting to see how the demand continues to decrease due to healthier alternatives, such as coconut milk and others, that provide a handful of the same benefits.
ReplyDeleteDue to the decrease in demand for milk, there must be some ideas to raise the demand a little by lowering its price or something of the sort. Not everyone will just stop buying milk, because for baking and other goods that use dairy there might still be a need and demand for such, so the milk industry won't go down for good it will just have to compete a little more than it use to.
ReplyDeleteEven though you said that the milk demand have been recently decreasing, I struggle to see way that is the case. Milk is an extremely good source of calcium and other vitamins essential for a healthy body. I understand that switching to a healthier lifestyle is a trend now days which could be why the demand is decreasing, but milk should still be a part of that diet since it offers those minerals and vitamins. Whether it is skim or not, milk should have some implication in a everyday meal.
ReplyDeleteGreat job picking this topic! I have never thought about the competition in the market between milk and milk alternatives. I don’t like to drink the milk alternatives however my older sister does like soy milk. She says that there is a richer taste to it than regular milk. To each their own, you know? When I go grocery shopping, I see more and more new brands offering milk alternatives. I worried though that if the decline in milk sales continues to grow, the number of dairy farmers will begin to get smaller. Dairy farmers already have to fight factories that produce milk faster than they can, but now they also have to fight milk substitutes too!
ReplyDeleteThis is an interesting topic that you chose to pick for your blog post. I have read a couple articles about this topic of the issue of demand for milk decreasing, despite the fact that milk itself has been and most likely still will be so well established in the drink market. I remember reading about how individuals in the government are often highly influenced by the dairy industry due to the lobbying power of the companies that produce dairy-based products. I wonder if in order to continue pleasing these industry whether or not the government will purchase surpluses or have some sort of other intervention into the milk industry's output? I'm curious to see what actions the government might take if the demand for the product continues to fall due to the increasing popularity of substitutes for the drink.
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