Dairy Farmers of America SWOT & PESTLE Analysis

Strength

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Weakness

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Opportunity

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Threats

1. Exposure to political pressures given that dairy is related to the crucial farm welfare sector: Given the fact that the members of the DFA are a set of more than 13,000 dairy farmers spread across the country and especially in the milk producing states, it is logical that the company and its members would be an influential vote bank for the federal and state governments. This notion is reinforced by the fact that the DFA has a PAC of its own that funds election races. All of this brings with it a certain degree of volatility and dependence on federal state governments to ensure stable and uninterrupted supply and processing of milk for the company. This also results in volatility in the prices of raw milk that the company faces at its input side, all of which pose a threat to their long term profitability. This reliance on political patronage for both stability of its supply and the subsidies and price support it receives for most of the dairy farm inputs including cattle feed and supplements, is a major threat to the dairy industry as a whole, and DFA in particular. In the light of the recent acquisition of more than 44 of Dean Food’s company’s milk processing units, the DFA is now more invested than ever in the liquid milk processing business line.

2. Threat from plant-based alternatives to milk, like soy and other plant-based milks: In the recent decades, the United States has seen a growing trend of both the emergence and social acceptance of plant-based alternatives to traditional liquid milk. These products include Soy milk, milk made from the extracts of various nuts, among others. Several social factors have been in play that has led to this shift in tastes and demand by the American customers. The rise of veganism, that shuns all animal based dairy products, is a significant threat to the dairy industry. The threats from both, the change of popular culture and the rise of plant based milk alternatives are a double edged sword, that can potentially hurt the demand for the products of the DFA. The core assets of DFA lie in the milk processing and procurement business, exposing the company to the vagaries of milk price volatility and milk demand volatility.

The remaining section under "Threats"is available only in the 'Complete Report' on purchase.

Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Dairy industry causing climate change by piling pressure on water resources and pasture land supply: The dairy industry exacts heavily on the natural resources of the area where it is set up, right from water for maintaining the cattle and the pasture land for the cattle feed. This heavy demand for land and water has raised questions on the sustainability of these dairy farms, and by extension, the whole dairy industry. New studies have started to point out that raising and maintaining cattle is also a significant contributor to climate change, by taking up large swathes of fertile land for setting up and maintaining pastures for cattle feed. This has a particularly significant effect on the surrounding areas of the dairy farms, which often see their groundwater reserves depleting. There have also been cases of soil erosion, reported in the farmlands, which have converted into pastures for maintaining grass for cattle feed.

The remaining section under "Environmental"is available only in the 'Complete Report' on purchase.