The drop in demand, slim profit margins, and rising operational costs are major factors behind two of largest dairy companies in the U.S. filing for bankruptcy.
Borden Dairy Company, based in Dallas, Texas, announced Monday Jan. 6 that it’s filing for Chapter 11 bankruptcy, which comes of the heels of Dean Foods also seeking bankruptcy protection in November 2019.
Industry leaders admit they have to adapt especially as shoppers change their dairy buying habits.
Jamie Gibson said she only uses milk in cereal, and has been buying less of it as her kids have grown older.
“I usually buy it once a week,” Gibson said. “In our family most of us just don’t like it and my husband is the only one who drinks it, so we just don’t go through it.”
Another factor of the changing milk market are new plant-based products targeting people who are lactose intolerant that use almond, coconut, soy and rice as key ingredients.
John Wilson is the senior vice president of Dairy Farmers of America (DFA) and does not see the milk alternatives as big competition.
“We think the impact of those alternative beverages are pretty modest really,” Wilson said. “The decline in milk consumption is to the tune of about 2 percent per year which is really not that big of a decline. It’s really more of a long term trend.”
DFA represents about 30 percent of American milk producers including some dairy farmers in the Heartland.
Wilson said, the cooperation does works with Borden Dairy and Dean Farms, but said those struggling companies are not the only options on the table.
“It’s not the majority part of our business,” Wilson said. “We sell milk to a lot of different parties. We process a lot of different products in our own plants and so that diversification gives our members security that they’ve got a market for their milk even in times like this that are difficult for certain companies.”
Other families like Paige Lucy who has three kids, still purchase a lot of milk and plan to stay continue supporting companies that have been producing it for decades.
“I think our kids benefit from all of the calcium in it and I think they need that still,” Lucy said. “I’m a firm believer in them drinking the whole milk like the pediatricians say. It’s what we grew up on. Why fix something that is not broken?”
Dairy Farmers of America added the demand for certain products is actually rising.
Wilson said more cheese and butter is being sold in the states, and dairy companies are exporting more milk powder to other countries.