An Oversupply Of Cheese & Meat Hurts Producers; Means Better Prices At The Store

Image courtesy of Allison

Supply and demand: the push and pull of time, money, materials, and desire that influences the price and availability of all commodities. An overreaction to a shortage today can result in a glut a few years from now, and vice versa.  So how did we end up with the current overabundance of cheese, meat, and grains in the U.S.?

You might remember that just a few years ago, the prices for such goods was on the rise. This led farmers, ranchers, and others to increase their herds, the Wall Street Journal reports.

But two years later, when the prices of these items dropped, the newly expanded operations has caused supplies to pile up in the U.S.

“Farmers have had every reason to expand because of strong global demand,” Shayle Shagam, livestock analyst with the U.S. Department of Agriculture, tells the WSJ. “But now we have a lot of products looking for a home in a smaller number of places.”

In fact, there is so much cheese available in the U.S. that each consumer would have to eat an additional three pounds — in addition to the 36 pounds they already consume — this year just to bring the supply to normal levels.

The oversupply of cheese likely won’t be going anywhere anytime soon. Dairy farmers are expected to produce 212.4 billion pounds of milk this year — the most in history, according to the WSJ.

To make matters worse for these farmers, dairy prices have continuously dropped in recent years.

One Wisconsin cheesemaker says his company invested millions of dollars to expand their plant in 2014 when prices were above $2 a pound.

Now, he tells the WSJ, that instead of using space to make specialty cheese, he’s had to expand his standard cheddar product in order to sell more at a lower price to make up for costs.

While the excess supply of meat, cheese, and other products puts a pinch on companies who make the goods, it also translates into better prices for consumers, the WSJ points out.

The USDA estimates that retail prices for beef products will fall as much as 2% this year, while cheese prices were down 4.3% year over year.

A Cheese Glut Is Overtaking America [The Wall Street Journal]

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