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Farmers in the U.S. are pouring out tens of millions of gallons of excess milk, amid a massive glut that has slashed prices and has filled warehouses with cheese.

More than 43 million gallons' worth of milk have ended up in fields, manure lagoons or animal feed, or have been lost on truck routes or discarded at plants, according to data from the U.S. Department of Agriculture. That is enough milk to fill 66 Olympic swimming pools, and the most wasted in at least 16 years' worth of data requested by The Wall Street Journal.

Desperate producers are working to find new uses for the excess, like getting more milk into school lunches, and in revamped tacos and Egg McMuffins. But many can't even afford to transport raw milk to market at current prices, which have plunged 36% on average since prices hit records in 2014.

"Everyone has dumped milk, from Minnesota to New England," said Ken Nobis, head of the Michigan Milk Producers Association.

Dairy and meat producers in the U.S. and abroad expanded their operations two years ago in response to a shortage, setting the stage for the current global glut.

American farmers are in the process of harvesting record-large corn and soybean crops, and meatpackers are now producing the most ever meat and poultry. As a result, food prices in the U.S. have plummeted and farm incomes this year are headed for their third consecutive drop.

On Tuesday, the USDA pledged to buy about $20 million of cheddar cheese to help struggling dairy farmers, the second time it has intervened in the market in less than three months.

The Michigan Milk Producers Association, a farmer-run cooperative, has added shifts at its dairy plants in Ovid and Constantine and bought equipment to handle an additional million pounds of raw milk each day. As the market has softened, the group has donated 83,000 gallons of milk to a food bank.

Even so, over the summer, the co-op had to dump a batch of excess skim milk into lagoons of manure because it couldn't find a trucker to haul it to a plant with spare capacity in Wisconsin. "Any milk disposal is a very difficult decision," said Mr. Nobis. "No one gets any value whatsoever out of it."

Meanwhile, Dairy Management Inc., a de facto marketing firm that is paid for by America's 43,000 dairy farmers, has invested tens of millions of dollars in the past year to develop new milk-heavy menu items with McDonald's Corp., Yum! Brands Inc.'s Taco Bell, Domino's Pizza Inc. and about 10 other companies it calls "dairy partners."

Food scientists and dietitians funded by DMI worked with McDonald's, for instance, to replace liquid margarine with butter in its breakfast egg sandwiches, muffins, buns and other menu items. The new recipe was introduced at 15,000 restaurants in September 2015. McDonald's spokeswoman Becca Hary said switching to butter was part of the chain's "customer-led" shift to source simpler ingredients, and contributed to "a double-digit percentage increase in Egg McMuffin sales."

With Taco Bell, the dairy group created the "Quesalupa," a cheese-laden cross between a flat quesadilla and a firm-shelled chalupa that made its debut in February.

DMI ramped up spending on strategic partnerships last year to over $30 million, more than double the investment six years ago, when the group first began researching and developing new products with companies.

Thanks in part to cheesier pizzas and more buttery buns, commercial use of those two dairy products was up 4% in the year through July. On average, each American last year ate an extra pound of cheese and butter combined, according to the latest USDA data. That has helped the industry combat a decadeslong decline in American's consumption of fluid milk.

McDonald's switch to butter alone is projected to use up to 600 million pounds of milk annually.

"If you create the innovative products that people want, in the ways they want them, you can be successful," said DMI Chief Executive Tom Gallagher.

Even organic dairy farmers, whose costs can be as much as double those for conventional producers thanks to their smaller scale and pricey feed, have resorted to selling milk to faraway or conventional plants to get rid of it, sacrificing their price advantage.

"There are California producers so desperate to move organic milk they're coming after our market in Atlanta," said Eric Newman, vice president of sales at Organic Valley in La Farge, Wis The dairy cooperative this year shipped organic milk powder to a customer in Europe at a steep discount. "It's a mess," Mr. Newman said.

(END) Dow Jones Newswires

October 12, 2016 11:25 ET (15:25 GMT)

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