American Surplus Reaches Record High: NPR

The cheese is packed for sale at Widmer's cheese cellar on June 27, 2016 in Theresa, Wisc. Dairy production in the US has produced a record surplus of cheese which causes prices to fall.

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The cheese is packed for sale at Widmer's cheese cellar on June 27, 2016 in Theresa, Wisc. Dairy production in the US has recorded a record surplus of cheese that causes a fall in prices.

Scott Olson / Getty Images

It's a stinking time for the American cheese industry.

While the Americans consumed nearly 37 pounds per capita in 2017, reducing the country's 1.4 billion pounds was not enough, according to US. Department of Agriculture. Gluten, which at 900,000 cubic meters is the largest in American history, means that there is enough cheese in refrigerated storage to wrap around the US Capitol.

The warehouse began to build several years ago, mainly because the pace of milk production began to exceed its consumption, says Andrew Novakovic, a professor of agricultural economics at Cornell University.

Over the last 10 years, milk production has increased by 13 percent due to high prices. But what milk farmers failed to realize was that Americans drink less milk. According to USDA data, Americans drank only 149 pounds of milk per capita in 2017, down from 247 pounds in 1975.

Suppliers make the extra milk for cheese because it is less perishable and stays healthy for extended periods. But the Americans turn their noses on the processed cheese slices and string cheese – variants that are a main driver of the US cheese market – in favor of more refined alternatives, Novakovic Here & Now & # 39; s Jeremy Hobson. Despite this shift, the sales of mozzarella cheese, the largest single-type cheese produced and consumed in the United States, continue strong, he says.

"What has changed – and changed quite noticeably and quite recently – people are turning away from processed cheese," says Novakovic. "It is also the case that we see increased sales of more exotic specialties, European-style cheeses. Some of these are made in the United States. Many of them are not. "

Novakovic also notes that imported cheeses tend to cost more, so when people choose them, they buy less cheese in general. The increasing profits of American made cheese and milk mean that prices are falling. The current average milk price is $ 15.12 per 100 pounds, which is much lower than the price required for milk farmers to break with.

"That's the same as for everything else: if you have too much of anything, the price must go down until consumption rises, says Novakovic.

Some analysts have feared that US trade disputes with China and Mexico could also adversely affect the dairy industry. However, according to the US Meierimport Export Council, the impact of retaliatory tariffs on US dairy products has been relatively small, not to mention that the United States only exports about 6 percent of its cheese.

That is, the price of leasing pounds of cheese sit idle in cold storage coming back to milk farmers. Since the 1970s, the industry has consolidated with several cows placed on larger farms, but now they cannot compete either. In Wisconsin, hundreds of farms reported in 2018 The Wall Street Journal .

"Many farmers would say," Well, let it stop. "But the fact of the matter is that we are still pushing a little more milk than we know what to do with," says Novakovic. "And really, it's not a big number, but until the two numbers are reconciled, we will continue to see these low prices. "

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