With fat no longer seen as a dietary evil, skim milk has suffered the sharpest declines in demand in recent years. And it's difficult for dairy producers to reduce production of skim milk because it is left over after making other products such as butter, cheese and ice cream.

As skim milk becomes especially tough to sell, Organic Valley is even drying some of the surplus and mixing it back into low-fat and fat-free milk to boost the nutrients and make it creamier.

"We're just exploring everything we can," said George Siemon, who was CEO of Organic Valley when the plans were developed, but has recently stepped down.

The dairy industry blames rules that limit the fat content of milk in schools for consumption declines, arguing that generations of students are growing up disliking milk because of the watery taste of skim.

In the meantime, it's hoping lattes can make milk go down easier. In Florida, a dairy group said it paid for coffee carts in 21 high schools this past school year. In the Southwest, a dairy group gave grants to seven schools for coffee programs.