Dangerous Protectionist Precedent to be Set with Dairy

Large and established dairy industry players are seeking congressional protection from their non-dairy competitors.

April 8, 2019

By: Bobby Casey, Managing Director GWP

non dairy competition

Plant based dairy alternatives have been around for a good while. Nobody made much of a stink over them. They have been coming out with myriad alternatives ranging from rice, soy, coconut, hemp, almond and cashew based milk alternatives. Quaker recently even got on board offering oat milk.

They’ve come a long way, and have tried to rival the flavor of animal based dairy.

No one said word one in protest. That’s probably because plant based dairy was never perceived as legitimate competition. Certainly no real threat to the market share good old-fashioned cow’s milk has enjoyed for decades.

“Sure, you can have your cute little soy whatever, but I know you’ll still keep a gallon of the cow’s milk for everyone else in the house,” is probably what they thought. A dangerously complacent position to take, without doubt.

If this were the tortoise and the hare, dairy milk would be the hare. And while they were sleeping, guess who caught up? VegNews reports:

Sales of dairy milk plummeted by $1.1 billion in 2018 according to statistics revealed by the Dairy Farmers of America during its annual meeting. In 2017, sales of dairy products amounted to $14.7 billion and dropped by eight percent to $13.6 billion in 2018.”

Now granted this can largely be attributed to a fall in milk prices of approximately 8%:

During 2018, the milk price averaged $16.20 per hundred weight compared to $17.65 in 2017; a decrease in milk price of 8.2%.”

Falls in dairy milk consumption cannot be explained by fluctuations in pricing. There’s been a shift in demand. Dairy milk consumption has dropped close to 25% between 2000 and 2017, according to the USDA. That’s not dealing in price. That’s dealing in volume.

And if the price is falling that could mean higher supply and lower demand. The exact opposite phenomenon is happening in China, where demand for dairy is through the roof.

In fact, according to one market study by MarketsandMarkets, “The dairy alternatives market is projected to grow from USD 17.3 billion in 2018 to USD 29.6 billion by 2023, at a Compound Annual Growth Rate (CAGR) of 11.4% during the forecast period.”

Regardless of your personal dietary convictions, or lack thereof, the market is doing what it does. The capitalist response to any grievance is to get out there and bring an alternative to market. And a growing number of businesses have done exactly that.

If you didn’t notice from that mind-numbing Farm Bill that passed late last year, the farm lobby is a juggernaut. The fires of cronyism are being stoked.

In March, senators from dairy producing states decided to reintroduce the “Dairy Pride Act”. Formally called, “The Defending Against Imitations and Replacements of Yogurt, Milk, and Cheese to Promote Regular Intake of Dairy Everyday Act”.

Those who have read Atlas Shrugged know what this sounds like: “The Anti Dog-Eat-Dog Act”. I’ve linked to the bill itself here, but I think the formal title does a fine job of explaining its purpose.

Evidently, these plant-based shysters are riding on the coattails of dairy’s good name! They are deliberately mislabeling their products with dairy terms such as “milk”, “cheese”, and “yogurt”. Despite the alternatives’ obvious efforts to call out that their products are NON-dairy, this is still seen as deliberate mislabeling.

How is it mislabeled if they tell you there’s no dairy? And how obtuse must you be to buy something that’s labeled “non-dairy”, and later claim “I didn’t know there was no milk in it”?

Arguably, calling pasteurized milk “milk” is also a misnomer. Distilling actual milk down to 20% of what it was, is hardly the same as fresh and raw from the cow.

This call for “truth in labeling” as gone so far that six states have cracked down on the low carbohydrate alternative to rice, “cauliflower rice”. It must now read: Riced Cauliflower. To call it “cauliflower rice” is dishonest.

This sounds like Americans and British bickering over whether this dessert disc is a cookie or a biscuit… and if this fluffy taller puck is a biscuit or a scone. No one who has a basic command of the English language feels deceived by these differences. You learn them, and you carry on.

Regulation’s purported purpose is the “keep consumers safe”. Standardizing what our food products can be called seems well outside the bounds of safety. In fact, it ensures that competition cannot enter the marketplace.

Only grandfathered standard-bearers can use these terms? Generic terms being coined as industry owned by the federal government is dangerous.

We have crypto-currencies.

We have electronic mail.

But we can’t have non-dairy milk?

Certainly there could’ve been an uprising to restrict the definition of “currency” to only government issued fiat units. And the USPS could have taken up arms insisting that “mail” can only refer to physical envelops and packages delivered by government postal services.

Do you recall something similar happening to Tesla? Tesla found itself being defined out of states like Colorado, Arizona, Virginia, and Texas. If you want to sell cars in these states, here’s what you have to do:

All new car dealers must provide a franchise agreement in order to receive a license from the state.

“Dealers must maintain facilities of at least 1,000 square feet, with room to display two cars and the capability to service customer cars on site.

“Tesla sells their cars direct from the manufacturer, so they don’t have dealership franchises like other automobile companies do. And since their cars are electric, they don’t need a service center. The majority of problems are software related and can be fixed remotely.”

It’s a way to stifle competition. Michele Simon, the Executive Director of the lobby group Plant Based Food Association, said the following:

In an era of increasing innovation in the food industry, this legislation would send a chilling message to small and emerging businesses: The marketplace is rigged against you in favor of large and powerful special interests. This mean-spirited bill would harm innovative plant-based food companies that are growing rapidly, providing new, great-tasting options for consumers. This bill would declare the free market dead with the promotion of protectionist policies pushed by dairy-state politicians and their lobbyists.”

You don’t have to be a vegan to appreciate what she’s saying, and upset by the wagon circling the dairy lobby is doing.

For anyone entering the marketplace trying to compete with an established industry, this should be upsetting if not disturbing. The United States is not a “free market capitalist” society.

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