The Complexity of Ever More Simple-Cheese Output

I got to thinking about cheese and whether that infamous American surplus you heard a lot about two years ago had gotten bigger in the pandemic.  The long and short of it—if that’s the right way to refer to something that comes in rounds—is that yes, it’s bigger, but the reasons are not simple.

It isn’t just bigger because the U.S. government encourages dairy farmers to keep supplying milk products that are in steadily less demand. Though fewer drink cow milk, cheese derived from it actually plays an ever-bigger role in the American diet– but hefty appetites can’t keep pace with the cheesemakers. The 2020 oversupply numbers are partly a function of the particularly bad way that Donald Trump’s trade and aid policies affected American agriculture. Yet nothing’s fundamentally changed from the course we’ve been on for decades, nor is it likely to.

The only surprise from 2020 is that the price of this surplus item—basically American cheddar, Colby and Jack—spiked up.  Apparently that was a function of pandemic-related costs on the supply side, not demand finally overtaking the inventory and providing the woe-is-me dairy farmers with a break. Overall sales, or as the USDA curiously categorizes them, “commercial disappearance,” were roughly even, though American-cheese exports got hit. But cows kept giving us milk and more milk. The fancy cheeses that are associated with dining out—feta, blue, Gouda—did drop in volume. (Takeout meals survived Covid well, sure, but never mind those increasing efforts to insinuate cheese into fast food—that’s mostly a processed form that doesn’t move the big supply needles. Mozzarella, you ask? A story for another time.)

So is this not a compounding problem? Cornell Prof. Andrew Novakovic is encyclopedic on matters dairy, and counsels against alarm about a cheese buildup. “I would push back on the proposition that there is an extensive system of federal ‘dairy supports’ that widely or even periodically distorts dairy markets, with ‘great’ cheese surpluses as a common outcome,” he emails, arguing, “Clearly, stocks have tilted higher relative to usage since the Trump Administration messed up export markets, but even then it’s not all that different from the earlier baseline.”

Yet the USDA data on stocks and production which he helpfully flags show an upward blip just before Trump got his grubby little fingers on the market, and those levels have stayed higher since. Further, regional trends in the U.S. affirm the picture of bloat: the great mid-section of the country (most notably Texas–where per capita production increased 35% from 2015 to 2020–and to which you can add Idaho and New Mexico) has taken up the habit.  Novakovic observes that unlike traditional cheese locus Wisconsin, growth in these states is dominated by large-plant investments in the commodity varieties—exactly what the “surplus” worries, legitimate or not, are about. [Apologies: the links in this paragraph are not working.]

Some commentators of even a progressive flavor have asked why the dairy industry is not “restructured” in return for the help Washington tries to give it, so that oversupply doesn’t persist. But whatever the changes in partisan balance, the farm lobby maintains its grip. For what it’s worth, Joe Biden as a senator from Delaware—not a big milk source—usually sided with the Northeastern Democrats who form part of the support wall. (Hello, Bernie!)  We can’t forget that, on the consumption end, milk and cheese are staples of the food assistance programs, so there is a natural affinity on the Left.

A more normal U.S. economy in later 2021, plus some repair of the international trade channels, may help gets us back toward where we were in 2015 or so. Big Dairy will still find opportunities, while smaller farmers can’t make it. For better or worse diet-wise, American might begin to eat themselves out of the surplus.  Meantime, they can rest easy on this score: their strategic cheese reserve isn’t going away.

Published by timwferguson

Longtime writer-editor, focusing on topics of business and policy, global and local.

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