Fake Milk: An Introduction

I recently read an article from the Associated Press called: ‘Fake milk’ is the latest food fight among industry leaders. It discussed contentions surrounding guidelines for what is or isn’t milk according to the Food and Drug Administration. Essentially, dairy producers argued that their use of milk was misleading, and in violation of the FDA’s standard of identity for milk which states “complete milking of one or more healthy cows.”┬áProponents of alternative milk argued that these standards of identity are too restrictive, or just aren’t relevant. In this post, I will focus mostly on the economics of milk and milk alternatives, rather than the debate on what is and isn’t milk.

When discussing demand in economics, we often talk about what actually determines demand. In most of my classes, the first determinant discussed is tastes and preferences, and the second is the price of related goods. These related goods generally fall into two categories, substitutes or complements. Substitutes are goods bought instead of the original good, and complements are bought with the original good. Recently, sales of alternative milks such as soy milk and almond milk have been at an all-time high. My question is, what is driving this boom in alternative milks? Is it simple substitution? A factor of changing tastes and preferences? Income effects? My hunch is that it is a combination of all three.

I will be revisiting this topic over the course of several blog posts in the coming weeks. For now though, I will leave you with a quote from my father, a 7th generation farmer and dairy owner.

“Show me the teats on an almond, and then I’ll call it milk.”

Max Coleman

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