Higher Costs Could Limit Cheese Consumption
If your land feeds the world, you care about how prices impact your customers. And fuel prices can ripple much more than just the weekly vehicle fill up. When gas prices increase more than a $1 per gallon since January 2025, and diesel costs soared by nearly $2.50 per gallon over that period, it has an impact. Obviously.
Changing Consumer Dining Trends Slow Cheese Sales
It could be why year-to-year cheese inventories have been rising. If consumers are cutting back on their takeout double cheeseburgers or that extra large five-cheese pizza because of unrelenting inflation, then the dairy industry may not sell the cheese that it had hoped.
A report from Popmenu, a restaurant technology firm, showed that consumers are pulling back on eating out, especially at night.
Nearly two out of three families are spending less on restaurants compared to last year, according to Popmenu’s survey of 3,000 U.S. consumers. Eating dinner at home is the biggest change with 46% of respondents reporting that they targeted that meal to make changes.
“Around 30% of monthly food budgets go to restaurants today, down from a high of 40% in 2022,” Brendan Sweeney, CEO and Co-founder of Popmenu, told QSR Magazine. “What that tells us is consumers are spending intentionally, not reluctantly.”
Sweeney said that consumers want deals to return to their previous dining style. “Restaurants have pushed menu prices about as far as they can go. Consumers are looking for value and incentives to come back,” he said.
How Far Have Cheddar Cheese Prices Fallen?
For the cheese industry, dining decisions can slow consumption. And that can lead to lower prices for cheese. CME (Chicago Mercantile Exchange) block Cheddar prices fell below $1.30 per pound for the first time in more than six years, according to Dairy Herd Management.
The 40-pound white Cheddar block is the standard benchmark for establishing cheese prices. The price decline for the unit marks a nearly $0.60 per pound fall from the five-year average.
RELATED: Americans’ craving for significantly more protein and the use of GLP-1 weight loss drugs could boost demand in some areas for the dairy industry.
What Is the Rural Mainstreet Index Showing?
The cheese industry may not find solace in the Rural Mainstreet Index. The rural bank CEOs surveyed remain pessimistic about the economy for the 10-state region.
Financial institution leaders in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, and Wyoming take part in the Rural Mainstreet Index, which is led by Creighton University in Omaha, Nebraska.
Creighton University Economics Professor Dr. Ernie Goss told KMA radio in Shenandoah, Iowa, that the war and fuel cost surges have led to diminished confidence by bank leaders.
“What's going on with the supply chain disruptions as a result of the war with Iran," said Goss, "…that's pushing up diesel prices for example, of course, and also fertilizer--two really prime inputs for the rural agricultural economy.”
Goss said the pessimism has resulted in the Rural Mainstreet Index falling into negative territory – below what the index considers growth neutral – for the fifth month in the past six.
He added, “…that's really having some significant and negative impacts on what we call the ‘rural main street economy. Certainly, over the last several months, that's been the case,” he said.
Goss said the biggest source of stress for rural main street is agriculture dealers, since many farmers are not purchasing new equipment. That continues a three-year trend.
RELATED: Dr. Goss laid out to American Farmland Owner his concerns in late 2024 about potential warning signs for agriculture.
