RICHMOND—An increased U.S. consumer demand for high-fat dairy products is boosting the value of milk fat to the extent that dairy processors are holding back milk fat that previously might have been exported.

The dairy industry news website dairyreporter.com cited a National Milk Producers Federation analysis in an article noting that the value of milk fat has increased significantly in the U.S. market. The increased demand for milk fat has strengthened U.S. butter prices and had a significant effect on the price dairy farmers receive for milk.

The article quoted Peter Vitaliano, NMPF vice president of economic policy and market research, as saying the trend “goes much beyond butter. … Virtually we have every major category of dairy products increasing their use of milk fat and in many cases increasing their share of the milk fat supply.”

New demand has spread from the U.S. market to Europe, New Zealand and Australia as well. “This story,” Vitaliano told dairyreporter.com, “is just getting started.”

Tony Banks, a commodity marketing specialist for Virginia Farm Bureau Federation, concurred. “Milk fat demand is being driven by increased wholesale and retail demand for butter, butter oil, cheese, milk solids and whole milk powder, and this reflects changing consumer preferences for dairy products.”

Media: Contact Banks at 804-290-1114.