The dairy industry is a large and important part of the food industry, and certain parts of the dairy industry also have strong connections to other sectors, e.g. when milk products are included in cosmetic products or pharmaceuticals.
A dairy is a business enterprise established for the harvesting and/or processing of animal milk. The industry is dominated by cow milk and milk from the Asiatic buffalo, but certain other animals also make significant commercial contributions, e.g. goats and camels.
Dairy products are produced in many different parts of the world, and the structure or the dairy industry vary significantly depending on geographical location.
Centralization
As with many other sectors of the food industry, the diary sector went through major centralizations throughout the 20th century. This has happened both to farming – with larger farms replacing many small ones – and to the processing side, where fewer and more efficient plants take in a bulk of the total milk production. Examples of countries where this trend has been very strong are the United States and New Zealand.
With centralization came accusations of price-fixing and violations of antitrust laws. As early as the 1920s, a limited antitrust exemption was created for U.S. dairy cooperatives in the United States with the passing of the Capper-Volstead Act of 1922.
During the Great Depression, some U.S. states adopted price controls for certain milk products. In 1937, Federal Milk Marketing Orders started unt the Agricultural Marketing Agreement Act of 1937, followed by the Federal Milk Price Support Program which was launched a few years after the end of World War II.
In the early 21st century, charges of antitrust violations were made against major dairy industry players in the United States, and a notable round of price-fixing charges was settled in 2016.
Cooperatives
Dairy farmer´s cooperatives are common in countries with a large and well-established diary industry. A notable example is Ireland, where farmer´s cooperatives own many of the large-scale milk processors.
In many developing countries, there is a trend towards a growing role for dairy cooperatives that can sell milk whole-sale. This trend is partly fuelled by foreign investments in the dairy industry.
Important: In the United States, it is now fairly common for farmers and processor to do business through individual contracts instead of forming cooperatives. Still, the farmer´s cooperatives are major players on the U.S. dairy market. As late as 2002, the country had nearly 200 farmer´s cooperatives and they account for 86% of the milk sold in the United States.
Processing plants
For logistics reasons, it has been convenient to place milk processing plants fairly close to urban centres. This has been especially true for products with a fairly short shelf life and a need for an unbroken cool-chain, e.g. fresh milk, yoghurt and soft cheese. Plants producing products such as milk powder, whey powder and hard cheese do not need to care as much, and it has often proven better to place them in rural areas where land is cheaper and the dairy farms are close by.
In the 21st century, we have seen an increased specialization for milk processing plants, albeit with some notable exceptions. Eastern Europe is still a hotspot for huge plants that will produce a very wide range of dairy products for the Eastern European markets. This is an inheritance from the Communist era, when such broad plants were in vogue.
Centralization of dairy processing – where a few huge plants handle milk from a very large geographical area – has been met with criticism by environmentalists due to the increased need for long-distance transport. This is true for both milk-to-plant and products-to-stores transports.