(NAFB) Consumer demand is reshaping the dairy industry, and the biggest growth isn’t coming from traditional products like cheese and butter. Instead, processors are investing heavily in high-protein milk, yogurt, and other dairy products as demand continues to climb. Market analyst Shawn Hackett says one of the biggest drivers is the rapid adoption of GLP-1 weight-loss medications, which are changing how consumers eat.
“All these GLP1 drugs that now everyone is starting to take, and if you look at the market share in the US and in Europe and elsewhere, the market share growth of these GLP1 drugs are going parabolically higher. And what we absolutely positively know is that if you don’t consume (3:46) more protein and more fiber as a result of taking these drugs, you will lose muscle mass to an unhealthy degree. And I think that message has become clear that while food consumption on certain products goes down, meaning the actual caloric intake falls, the demand for proteins and fibers is going to go up strongly. And I think what much of the expansion that’s going on in the dairy is how do we produce more protein to feed this new budding growth that’s out there?”
Hackett says that shift could translate into stronger returns for producers if they’re able to supply the type of milk processors now want.
“If the dairy producer is producing more of the milk that is wanted or needed by the processor to make these higher protein products, they’re going to see the benefit meaning everyone has to adjust and alter what they’re producing, what they’re feeding their animals in terms of what the components are coming out, and what are your protein components, what are your fat components. Everyone has to gear towards where is the greatest profitability, because if you have more protein components and you’re able to sell that milk to processors that are making higher protein derivative products, then you’re going to see a much larger milk cut than those that are just producing the more conventional milk that we have been producing for quite some time. And so it’s not immediate, but the quicker you get on it, the quicker you’re going to start seeing the benefit.”
While producers are focused on meeting changing consumer demand, another challenge is emerging. Coca-Cola recently paused production at some U.S. Fairlife facilities following a cyberattack. Hackett says the incident is another reminder that cyber threats are becoming a growing risk for the food supply and could have ripple effects across agricultural markets…tape
“And I think what Fairlife just saw, it’s going to happen more and more and more, and it’s going to be a big feature that will drive prices higher and lower based upon who’s getting crimped and who has the opportunity to sell in those opportunities where somebody is not able to sell because of a cyber attack. It’s a real problem. It’s not going away, and it’s a big, big risk on availability of supply and who has the ability to get that supply over time. I think everybody, all hands on deck, have to try to figure out how do we make our food supply more secure. And I would say one way to do it is to produce more of your food domestically. What I mean by that, like in North America versus trying to bring food in from foreign lands where you can’t control the security side of the equation as well as you can at home. And I think every country is thinking about maybe sourcing more regional supplies because of that reason.”
Market analyst Shawn Hackett joining us, president of Hackett Financial Advisors.
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Audio provided by Susan Littlefield, American Ag Network
Audio with Shawn Hackett, market analyst, Hackett Financial Advisors
