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A new product from Country Crock labeled as “dairy-free butter” has sparked growing concern within the dairy industry.

The dairy industry urges FDA action against ‘dairy-free butter’ labeling, citing federal standard violations and consumer confusion.

The dairy industry is mounting a strong pushback against the use of traditional dairy terms, particularly the word “butter,” on plant-based alternatives. The American Butter Institute (ABI) has formally requested the U.S. Food and Drug Administration (FDA) to take decisive action against products like Country Crock’s “dairy-free butter.” The ABI argues that such labeling is misleading and violates federal standards, which define butter as a product made exclusively from milk or cream.

This intensifies the ongoing struggle within the agribusiness sector to control the narrative around butter labeling. Christopher Galen, executive director of the ABI, contends that plant-based manufacturers are attempting to “leverage the premium perception of real dairy butter.” He labels the term “butter” for plant-based products as a “total oxymoron,” which could undermine the integrity of food labeling. The dairy industry’s argument hinges on federal identity standards, which legally define butter as a milk-derived product.

By allowing “fake butters” to use the term, they argue, the regulations are breached, and it potentially misleads consumers within the dairy product market. This debate is not new. The National Milk Producers Federation raised similar objections in 2019 regarding plant-based butter labeling. The dairy industry maintains that only milk-origin products should use dairy-specific terms.

The outcome of the FDA’s decision on this matter could greatly affect the competitive dynamics between dairy and non-dairy markets, highlighting the growing regulatory challenges faced by both traditional dairy producers and plant-based innovators.

Galen emphasized that labeling a non-dairy item as butter is a direct violation of federal standards. Galen remains hopeful that the Trump administration will give the complaint careful consideration and respond with greater sympathy to their concerns.

A newly released 2025 report from the International Dairy Foods Association (IDFA) unveils the remarkable economic contribution of the U.S. dairy industry.

According to the report, the dairy sector not only supports an impressive 3.05 million jobs across the nation but also contributes nearly $780 billion to the U.S. economy. This comprehensive economic impact underscores dairy’s role not just as a food supply, but as a crucial economic driver and job creator.

The vast interconnectedness of dairy farms, processors, and related industries highlights the sector’s influence on the broader economic fabric. The financial contributions from this industry also extend to public finances, generating $83 billion in taxes that bolster public services and infrastructure nationwide.

Moreover, the U.S. dairy industry’s export capabilities further solidify its stature, with $8.2 billion in annual exports, enhancing the nation’s international trade position. These findings emphasize the sector’s substantial influence, making it an essential component of both national economic health and global market presence.

In response, the IDFA aims to broaden awareness of the sector’s contributions through increased engagement in industry and public discussions.

The U.S. dairy industry has traditionally relied on monthly milk production reports from the USDA to monitor the availability of milk supplies and project dairy product output. Historically, decreases in farmgate milk production indicated reduced supplies of both fluid milk and key milk components, like butterfat and protein, which are essential for producing dairy products such as cheese, butter, and yogurt. A decline in milk supplies often signaled the potential slowdown of dairy processor expansion plans.

However, the dynamics of U.S. milk production are evolving. While the total volume of milk production has declined for 14 consecutive months through September 2024, the production of butterfat and protein—key components in many dairy products—has increased in 12 of those months. This shift underscores a significant transformation in the industry, where milk composition now plays a more critical role than overall milk volume.

A report from CoBank’s Knowledge Exchange describes this “decoupling” of fluid milk production from milk component production as a paradigm shift driven by increased consumer demand for manufactured dairy products. More than 80% of U.S. milk is used for producing solid dairy products that depend heavily on milk components, while less than 20% is used in fluid beverages.

To adapt to these changes, the report suggests that the USDA’s milk production reports should be expanded to include data on protein and butterfat levels, providing a more comprehensive view of the industry. Corey Geiger, lead dairy economist at CoBank, noted, “A more robust report would be informative to producers, processors, and retailers for better planning and risk management.”

The shift in focus from milk volume to milk solids is reshaping the dairy market. Cheese production, for instance, has benefitted from higher butterfat and protein yields in milk, with each 100 pounds of milk yielding 11.2 pounds of cheese in 2023, compared to 10.1 pounds in 2010.

This trend extends beyond the U.S. domestic market, as manufactured dairy products are driving export growth, further emphasizing the demand for milk components. With over $7 billion invested in new dairy processing capacity, both at home and abroad, the industry is poised for continued growth in response to these shifting demands.

The Milk Component Pricing provisions have incentivized dairy producers to focus on increasing protein and butterfat content in their milk, driven by soaring consumer demand for high-quality dairy products like cheese and yogurt.

While updating the USDA’s monthly milk reports to include milk component data may pose challenges, Geiger emphasizes the long-term benefits for the industry, given the permanent shift towards milk solids in consumer preferences.