THE CHEESE STANDS ALONE: American Surplus Reaches Record High.

Over the past 10 years, milk production has increased by 13 percent because of high prices. But what dairy farmers failed to realize was that Americans are drinking less milk. According to data from the USDA, Americans drank just 149 pounds of milk per capita in 2017, down from 247 pounds in 1975.

Suppliers turn that extra milk into cheese because it is less perishable and stays fresh for longer periods. But Americans are turning their noses up at those processed cheese slices and string cheese — varieties that are a main driver of the U.S. cheese market — in favor of more refined options, Novakovic tells Here & Now’s Jeremy Hobson. Despite this shift, sales of mozzarella cheese, the single largest type of cheese produced and consumed in the U.S., remain strong, he says.

“What has changed — and changed fairly noticeably and fairly recently — is people are turning away from processed cheese,” Novakovic says. “It’s also the case that we’re seeing increased sales of kind of more exotic, specialty, European-style cheeses. Some of those are made in the U.S. A lot of them aren’t.”

Novakovic also notes that imported cheeses tend to cost more, so when people choose those, they buy less cheese overall. The growing surplus of American-made cheese and milk means that prices are declining. The current average price of whole milk is $15.12 per 100 pounds, which is much lower than the price required for dairy farmers to break even.

“It’s the same as it is for everything else: If you’ve got too much of something, the price has to go down until consumption rises,” Novakovic says.

So why, after ten years and 1.4 billion pounds of surplus cheese, have prices not come down to equilibrium?