"Farmers poured out almost 50 million gallons of unsold milk last year—actually poured it out, into holes in the ground"

BW:

Americans eat 35 pounds of cheese per year on average—a record amount, more than double the quantity consumed in 1975. And yet that demand doesn’t come close to meeting U.S. supply: The cheese glut is so massive (1.3 billion pounds in cold storage as of May 31) that on two separate occasions, in August and October of last year, the federal government announced it would bail out dairy farmers by purchasing $20 million worth of surplus for distribution to food pantries. Add to that a global drop in demand for dairy, plus technology that’s making cows more prolific, and you have the lowest milk prices since the Great Recession ended in 2009. Farmers poured out almost 50 million gallons of unsold milk last year—actually poured it out, into holes in the ground—according to U.S. Department of Agriculture data. In an August 2016 letter, the National Milk Producers Federation begged the USDA for a $150 million bailout.

That Taco Bell is developing its cheesiest products ever in the midst of an historic dairy oversupply is no accident. There exists a little-known, government-sponsored marketing group called Dairy Management Inc. (DMI), whose job it is to squeeze as much milk, cheese, butter, and yogurt as it can into food sold both at home and abroad. Until recently, the “Got Milk?” campaign was its highest-impact success story. But for the past eight years, the group has been the hidden hand guiding most of fast food’s dairy hits—a kind of Illuminati of cheese—including and especially the Quesalupa. In 2012 it embedded food scientist Lisa McClintock with the Taco Bell product development team. She worked with the senior manager for product development, Steve Gomez, to develop a cheese filling that would stretch like taffy when heated, figured out how to mass-produce it, and helped invent some proprietary machinery along the way.

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DMI’s original business plan was almost entirely direct-to-consumer advertising. But when consumers started eating out more in the late 1990s, the group shifted to working with companies that took products to the marketplace—particularly restaurant chains such as Pizza Hut and, eventually, Taco Bell.

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It’s worth pausing to note how serious a paradigm change Taco Bell credits DMI with causing: The company’s innovation team once regarded cheese and sour cream as mere garnishes. Now, dairy is often the focal point. Cheese use at the chain has increased 22 percent since the beginning of the DMI partnership.

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“Americans rely on the USDA for dietary guidance,” says Parke Wilde, a food economist at Tufts University who studies the checkoffs. “All these fast-food restaurant-chain partnerships must be pretty embarrassing for the people at the agency working to promote healthy eating.”