Olympic dairy marketing, U.S. cheese surplus & more in dairy industry
The world was turned upside last month for those of us in the Northern Hemisphere. It’s winter south of the Equator where Brazil hosted the summer Olympics. That gave me a different perspective on current events.
While Britain was leaving the European Union, the rest of the world was coming together over the summer Olympics in Rio. The political conventions in Cleveland and Philadelphia and their candidates simultaneously attracted and repelled Americans. It has been some summer, hasn’t it?
Certainly it’s been a productive year for the cheese industry. But be careful what you wish for. Dairy farmers produced so much milk and dairy processors turned it into so much cheese that there was a surplus. In August, the U.S. Department of Agriculture stepped in to buy 11 million pounds of cheese for $20 million (equivalent to $1.818 a pound). It will go to food pantries. My friend at INTL FCStone Financial, Chicago, said he believes Uncle Sam will be spending more.
Roll out the barrel?
“We’re going to go out on a limb here and say that the U.S. government is not going to deliver a 500-pound barrel of white cheese to the Greater Chicago Food Depository,” said Robert Chesler. “That means they’re going to be buying consumer-ready cheese,” he said. Those 5-pound loaves are priced on the high side of $1.90 to $2.20 per pound, he said. Since USDA won’t buyless than 11 million pounds, the final receipt at checkout will be more than $20 million.
One reason for the excess is that a strong U.S. dollar made our cheese more expensive to foreign buyers. Another reason is that Russia is no longer a customer. Without buyers, the cheese went to the warehouse. Congressmen and -women support USDA’s move because it helps their constituents. But there is no stomach in Congress before the election to ratify the Trans-Pacific Partnership. The trade pact is supported by theInternational Dairy Foods Association and other dairy and agriculture associations. Congress’s reluctance is too bad because we need trade.
The British people gave up on interacting with the world through trade when they voted to leave the European Union. This British exit has become known as Brexit. Tom Suber of the U.S. Dairy Export Council notes in his essay that, “Depending on how things shake out, Brexit could result in anything from a re-ordering of trade ties to and among EU countries, toa continuing erosion of globalization that could make all trade more difficult no matter the nation or industry. Tools that facilitate U.S. competitiveness and counter anti-trade momentum become more important than ever in light of potential Brexit fallout. The pending Trans-Pacific Partnership (TPP) trade agreement is a perfect example of a means for the United States to ensure tighter ties to a less disrupted market.”
Dairy goes to Rio
The Brexit fractured the Old World and sent ripples across the Atlantic Ocean to U.S. shores. The effect was short-lived as far as the stock markets were concerned.
Soon the entire world coalesced at the summer Olympics in Rio de Janeiro (where it was winter in Brazil). U.S. milk processors and Chobani leveraged their official sponsorships with the U.S. Olympic Committee to tout the benefits of milk and Greek yogurt, respectively. A separate deal negotiated by the Milk Processor Education Program makes chocolate milk “the official recovery beverage” of USA Swimming, which selects our Olympic swim team members.
Did you see the muscles on those athletes? Team USA was ripped. Associating milk and chocolate milk with young, physically fit medal-winning athletes creates a powerful and long-lasting image. These role models should hold more sway with young consumers than B-List celebrities sporting milk mustaches.
I also happened to watch the movie “Eddie the Eagle,” about the improbable British ski jumper in the 1988 Winter Olympics. Though Michael “Eddie” Edwards did not win a medal (he did set Britain’s national record), milk was his beverage of choice. If only Team USA swimmer Ryan Lochte had limited himself to nonalcoholic chocolate milk.
An ‘I’ in dairy but not in team
I’m a fan of track and field. These events are individualcompetitions, except for the relay races. Those are won or lost on teamwork. They require split-second timing to pass the baton in a tightly defined area. Practice and teamwork makes perfect.
Teamwork is in evidence at Litehouse Inc., an employee-owned cheese and salad dressing maker in Sandpoint, Idaho (here). With 700 owners and a management team, how does anything get done? When I visited Sandpoint this summer, I asked Dan Hoffman what employee ownership means.
“It means having the responsibility to [do] your job well to make sure that the company thrives,” said Hoffman, the company’s senior vice president of operations. “But it’s also a responsibility to stand up and say when you’re not sure that things are being done right.”
Whether you are competing in the Olympics or making cheese in rural Idaho, you need to be connected to the world – the wide, wild world of dairy. We are all in this together.
