Biting the Hands that Feed Us: Food Laws vs. Culinary Reality
Government has tilted the scales in milk’s favor for so long that dairies forgot how to compete.
In early November [2019], Dean Foods, the nation’s largest dairy producer, filed for bankruptcy protection. The company, which has secured nearly a billion dollars in debtor financing to keep it afloat temporarily, is looking to sell off some or all of its assets as it attempts to reorganize and survive.
The filing isn’t exactly a surprise. As I explained in a column earlier this year, Dean Foods was a sinking ship.
Many factors caused the company to fail. For one, Americans are drinking less cow milk. “Overall, dairy consumption (including fluid milk, cheese, and butter) has plummeted over the past four decades,” I wrote. “Per capita, Americans are drinking nearly 100 lbs. less fluid milk than they did in 1975.” In place of cow’s milk, Americans are turning in small but growing numbers to cow’s milk alternatives, including almond, soy, coconut, and oat milk.
Other factors, including falling cereal consumption and competition from Walmart—once one of its largest customers—have also hurt Dean Foods. Rising pension costs also ate into the company’s line. Its stock lost nearly all of its value last year. What’s more, decreasing demand for cow milk also comes as dairy farmers continue to break production records. Low demand and robust supply have driven dairy prices to a 50-year low.
But changing consumer preferences, overproduction, and competition from non-dairy producers only tell part of the story of the downfall of Dean Foods. The big picture has the government’s messy fingerprints all over it.
For starters, the U.S. Department of Agriculture (USDA) is deeply involved in promoting dairy producers and production.
The Nation’s Biggest Dairy Is Failing Despite Relentless Government Intervention