Changing pricing incentives and global demand are encouraging producers to focus more heavily on protein production
The U.S. dairy industry is increasing its focus on milk protein as changing market incentives, global dairy demand and evolving milk-component pricing formulas encourage farmers and processors to produce a more balanced milk composition.
According to a report from CoBank’s Knowledge Exchange, protein production in the United States began growing faster than butterfat production last August. The development comes after a decade in which butterfat levels increased significantly faster than protein, creating challenges for cheesemakers and highlighting differences between U.S. milk composition and supplies from major dairy-exporting regions.
Protein gains become increasingly important
Butterfat and protein are the two most economically important components of milk. They are essential to the production of cheese, butter, whey and milk powders, while also influencing farm income, processing yields, domestic consumption and international trade.
Over the past decade, U.S. dairy farmers have achieved substantial gains in butterfat production, largely driven by strong demand for butter. However, protein growth has lagged behind.
Corey Geiger, CoBank’s lead dairy economist, said butterfat gains had doubled protein growth during the previous decade as the industry responded to underserved domestic butterfat markets. With U.S. butter production and exports now at historically high levels, the focus is shifting toward improving protein production.
The changing balance is particularly important for the U.S. cheese industry, which relies on an appropriate relationship between milk protein and butterfat to achieve desired cheese quality and processing yields.
U.S. protein-to-fat ratio trails EU levels
For cheesemaking, a protein-to-fat ratio above 0.80 is generally preferred, although requirements vary depending on the type of cheese being produced.
The U.S. protein-to-fat ratio declined from 0.83 to 0.77 over the past decade. As a result, adding milk-protein solids has become a standard practice for many American cheesemakers.
By comparison, the European Union maintained a ratio between approximately 0.83 and 0.84 during the period, while New Zealand began and ended the 2015–2025 period at around 0.77.
| Region | Protein-to-fat ratio / growth trend |
|---|---|
| United States | Ratio declined from 0.83 to 0.77 |
| European Union | Remained around 0.83–0.84 |
| New Zealand | Around 0.77 at beginning and end of period |
The EU, New Zealand and the U.S. collectively account for approximately two-thirds of global dairy exports. Their milk composition therefore has important implications for international competitiveness.
U.S. protein production shows stronger recent growth
Despite the challenges involved in increasing milk protein, U.S. dairy farmers increased protein production by 7.4% between 2015 and 2025.
Notably, around two-thirds of that improvement occurred during the final five years of the period, indicating that progress has accelerated.
Protein production gains are more difficult to achieve than butterfat increases because protein improvements rely heavily on animal genetics. Breeding strategies and dairy genetics therefore remain critical tools for increasing the protein content of U.S. milk.
New Zealand recorded protein production growth of 2.1% during the first half of the 2015–2025 period and 1.7% during the second half. The European Union recorded increases of 2.1% and 1.5%, respectively.
Pricing formulas could encourage further protein growth
Changes in milk pricing formulas are increasingly influencing producer incentives. As the economic value attached to protein rises, farmers have greater motivation to select genetics and production strategies that improve protein yields.
Dairy breed associations and other industry initiatives are also supporting the transition by encouraging genetic improvements focused on milk components.
Abbi Groves, an agricultural commodities economist with CoBank, said restoring the U.S. protein-to-fat ratio to 0.83 would require several years of sustained higher protein growth.
Cheese and export competitiveness at stake
A more balanced milk composition could provide benefits for U.S. cheesemakers by reducing reliance on added milk-protein solids and potentially improving processing efficiency.
The shift could also influence the competitiveness of the U.S. dairy industry in global markets. While the country has successfully expanded butterfat production, it will continue to require domestic and international markets for its growing butterfat supply until protein production catches up.
With global demand for dairy ingredients continuing to evolve, the ability to produce milk with an economically balanced combination of protein and butterfat could become increasingly important.
For the U.S. dairy industry, the next phase of production growth may therefore depend not simply on producing more milk, but on improving the composition and economic value of every litre produced.
