The US dairy industry is evolving.
Exports are growing quickly, less drinking milk is consumed, more cheese and yogurt are being consumed, and dairy producers are changing their milk to meet these changes.
Exports of US products are up tremendously. Year to date, the dollar value of dairy exports is up 35%, and exports now account for 15.5% of US dairy solids produced.
Domestic consumption continues to shift away from liquid milk to processed products like cheese and yogurt. How is the producer changing his operations to make milk that fits these needs?
Most of the US producers are paid on the basis of the weight of protein, fat, and other solids in their milk. Water in milk is given no value. Therefore the producer has an incentive to increase the production of dairy solids.
Protein is his most valuable solid followed by butterfat and other solids. Payment for protein accounts for more than 50% of his revenue. This payment system is consistent with the changing needs for components in milk.
While there are many things a producer can manage to improve solids production, one of the most impactful emerging technologies is amino acid balancing of feed. Amino acid balancing targets the most needed and best paying components in milk.
There are 20 amino acids that must be available in the right quantities to make milk protein.
The cow can make ten of these, but the other 10 must come directly from the feed. If one of the twenty required amino acids is not all available, then the other 19 will not be used for milk production. Most of the unused amino acids will be passed in the form of ammonia in the urine.
The amino acids that are most commonly in short supply are methionine and lysine.
Feeding products like fish meal that are high in these amino acids can help provide these amino acids. However, to most efficiently provide these, synthetically produced amino acids must be used. The poultry industries worldwide have done this for decades to maximize meat protein development.
The dairy industry has gone slower because of the more complicated ruminant digestive system, which requires that these amino acids be protected through rumen and then be released in the intestines for absorption in the blood stream. The technology to do this is complicated, and in the past these protected amino acids have in the past been available in limited supply from just a few manufactures.
For nutritionists to properly balance amino acids in feed, it requires that they have the knowledge required to implement amino acid balancing and that they have modern diet balancing software that can calculate the bypass value of the amino acids in all feed ingredients.
This knowledge base, good bypass amino acids supplements, and modern software are increasingly available, and the use of these is growing fast. In parts of the US like the upper Midwest, which is a very well developed dairy area, it is estimated that 20% of the diets are now balanced for digestible amino acids. This probably represents the tipping point of acceptability in that region.
This technology is used occasionally in Europe and is in its infancy in other parts of the world.
As consumers demand more processed dairy products and as the global export and import markets expand the need for components, this technology will undoubtedly grow worldwide.
John Geuss (left) is the editor of US dairy commodities blog, MilkPrice.
For John's detailed month-by-month examination of American dairy commodity movements, visit MilkPrice.