Milk share capital

In the US, milk has a credible story to tell.

What does it mean to maintain a social license? Whether explicitly stated or implicit, this is a concept that consumers are increasingly demanding from their food suppliers. If dairy wants to retain its current customers and win new ones, it will need to maintain the social license we've had for centuries.

According to Chris Wolf, an economist at Cornell University, simply put, a social license is “the acceptance of a company or industry’s practices by the public and relevant stakeholders.”

Social license is important for many reasons, but Wolf singled out one as the most fundamental for dairy farm operators and all businesses that support dairy: “Without social license, industries end up regulated and monitored,” he said. “They end up with extra laws and regulations to deal with, which increases costs and makes things less efficient.” While there are certainly already many standards that dairy companies must meet to ensure animal and food safety, no two farms operate exactly the same way, as each farm chooses the strategies that work best for them.

In the US, the reassuring news is that this approach is maintaining confidence in agriculture. There, per capita dairy consumption reached its highest level since 1959 in 2021, when each American ate and drank, on average, 667 pounds (about 302 kg) of dairy, according to the USDA.

On a broader scale, Wolf highlighted a 2020 Gallup survey in the US, in which more than 1,000 people were asked whether they had a positive, negative, or neutral image of various consumer industries. Agriculture and livestock received the most positive reception, with 69% of respondents saying they were favorable. The sector was already among the highest-rated in previous years, and the pandemic boosted it to first place.

Additionally encouraging are the facts contained in this same list: the food and beverage industry (which had the second most positive response) and restaurants (which came in third). All three achieved a positive perception of over 60%. "So the entire U.S. food industry is very trusted and admired by consumers and citizens," said Wolf.

But even in the US, there's still work to be done. In that survey, 11% of respondents held a negative view of animal agriculture, and while not all of those respondents were receptive to a change of heart, the survey also reported that 19% of respondents were neutral about the industry. Over 98% of Americans don't farm, and a growing number of them don't even know a farmer or have been on a farm, so they lack any context about agricultural production. Remaining proactive in explaining the history of dairy and making sound decisions will be critical to leading the discussion about what the dairy supply chain provides to their communities and the world.

Fortunately, we have a solid foundation to build on, built from decades of good work. "The accumulated trust already suggests that there is a lot of accumulated social capital for the American dairy industry that can be leveraged," said Wolf.

National scenario

Per capita consumption of dairy products in Brazil grew by only 3% between 2011 and 2020 (from 168 liters per inhabitant/year to 172 liters per inhabitant/year), falling below the growth rate of the Brazilian population, which was 8% in the period.

Per capita dairy consumption in Brazil is also below the volume absorbed by the United States (more than 300 liters/year), Europe (233 liters/year) and Argentina (265 liters/year), with special emphasis on our South American neighbor.

Source: https://hoards.com

Adapted text