Consumers Calling the Shots: Desire for Transparency is Reshaping Dairy Supply Chains

January 2019 - Ben Laine

 

Key Points

  • Dairy consumers are increasingly removed from the farm and are seeking more transparency when it comes to how and where their food was made.
  • Demands for transparency take many forms and will continue to grow and evolve with consumers’ incomes, diets, and demographics.
  • Meeting these evolving demands provides opportunity for some dairy producers, cooperatives, and processors, but will require re-working supply chains into greater segmentation and direct contracts with farms.
  • Procuring milk that meets specific emerging demands involves paying premiums to incentivize farms to undertake costly new production practices and involves the risk that consumer preference may shift toward something else in a short period.
  • Dairy farmers located near consumer centers can tap into higher value markets by marketing directly to consumers to capitalize on consumer desire to be more connected to the farm.
  • Cooperatives are able to tap into existing value by promoting their family-farm owned structure and may see opportunities to segment and manage premiums within their own milk supply.

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