​​​​​​​​​​​​​​The growing number of people becoming adopting a plant-based diet and c​​​​​​​hanging taste​​​​​​​s in​​​​​​​ the milk market is an increasing challenge to the dairy industry in many countries. ​​​​​​​​​​​​​​The US, like many countries, is experiencing a continuous decline in its dairy sector. Over the last 50 years, the consumption of milk in the US has fallen by 42% and the number of dairy farms has halved since 2003.​​​​​​​

Many dairy farmers have seen the price they receive for the milk they produce fall to a level​​​​​​​ that does not cover their production costs and they are forced to shut down and sell off their herds of cows. With dairy farms going back generations, stopping production can be a very sad process for those involved. 

So why has the demand for milk fallen? One reason is the growing popularity of plant-based diets among consumers. Increasing numbers of consumers are choosing an alternative to cow’s milk, such as oat, soy, and almond milk. People are choosing plant-based alternatives for animal welfare, environmental and health reasons and rarely change back once they make the switch. 

The second reason for the decline in milk sales is demographic. Young people consume more milk than old people. With an ageing population in many countries, fewer people want to drink as much milk. 

Another challenge for milk producers is the decline in the demand for conventional breakfast cereals. Iconic brands like Kellogg’s cornflakes, sugar puffs and rice crispies are experiencing a fall in sales and if people are not eating as much breakfast cereal they are less likely to consume milk. Before the year 2000 large numbers of people ate a bowl of cereal with milk as their staple first meal of the day and some of the decline in milk consumption can be attributed to the change in breakfast preferences. 

One reason for the fall in the consumption of breakfast cereals is that they are not considered as healthy as they used to be. As people became aware of the high sugar content of a product like Kellogg’s Frosties they no longer considered these cereals as a healthy option. A similar thing has happened to milk and its association with poor health because of its fat content and its link to lactose intolerance. 

The decline in the demand for dairy milk comes with negative consequences for producers in the market, but are there positives? There may well be environmental benefits because reduced methane emissions from fewer cows and less dairy farming may mean improved animal welfare conditions (although responsible dairy farmers would question this). Drinking less milk may also lead to a healthier population because of reduced fat consumption from fewer people consuming dairy. 

Possible questions to discuss with a class?

1. What type of market structure would be closest to the dairy market?
2. How would you describe the profit situation of producers leaving the market for dairy milk?
3. How would describe the relationship between dairy milk and breakfast cereal?
4. What do you think is the most significant factor leading to the fall in demand for dairy milk?