US dairy processor Dean Foods profits rise

America’s largest milk processor, Dean Foods, is forecasting a rise in profits, as the price it is paying to farmers has been driven down by a ‘glut’ in milk production.

Dean Foods buys raw milk from farmers, pasteurises and processes it, and then sells it on to retail stores, restaurants, and food-service vendors.

In the first quarter of 2016, the average price for Class I Mover, a raw-milk benchmark, will drop about 14% from a year earlier, Dean’s analysts said.

The price that US farmers received for milk dropped in 2015 and will decline again this year as production climbs, the US Department of Agriculture said in its latest report.

Faced with declining US milk consumption, Dean is developing its DairyPure brand.

The product has no artificial growth hormones and was introduced in May to counter the growth of organic milk and soy and almond-based substitutes.

DairyPure increased its market share to 9.9% in the four weeks to January 24, possibly helping erode private-label market share, Bloomberg Intelligence analyst Ken Shea said in a report earlier this month.