USDA Milk Purchases Update – Aug ’18
The USDA recently announced that for the first time ever, it will purchase $50 million in pasteurized fluid milk to benefit Americans who do not have regular access to milk. According to the USDA, the funds will be used to purchase between 12-15 million gallons of fat free, low fat, reduced fat and whole milk. The milk will be distributed through food assistance programs and food banks. When assuming a conversion rate of 8.65 pounds of milk per gallon, the USDA purchases will be equivalent to approximately 100-130 million pounds of milk. For perspective, the USDA reported total U.S. packaged fluid milk sales of 47.7 billion pounds throughout the past 12 months of available data. Based on this figure, the announced USDA milk purchases are equivalent to approximately 0.2% of the total fluid milk volumes sold throughout the past 12 months. U.S. fluid milk sales are on pace to decline on a YOY basis for the ninth consecutive year during 2018, with sales declining by an average of 1.8% annually over the nine year period. The USDA milk purchases will help offset only a small portion of the recently experienced declines in U.S. fluid milk sales. When assuming a conversion rate of 8.65 pounds of milk per gallon, the USDA milk purchases would offset just 15% of the 2018 projected annual YOY decline in milk sales based on declines experienced through May.