Archive for Dairy Industry

Australian dairy farmer’s father and brother were killed in the bushfire, but his daily chores could not be ignored

Australian Army officer Lieutenant Aiden Frost with dairy farmer Tim Salway and his wife Leanne. Photo: Sergeant Max Bree

Tim Salway’s father, Robert, and brother, Patrick, died trying to defend their properties in a New South Wales bushfire, but Tim’s daily chores at the dairy farm could not be ignored.

A raging inferno killed Tim Salway’s brother and father when bushfires tore through the family dairy farm near Cobargo, NSW, on New Year’s Eve.

As Mr Salway returned to their ravaged 600-acre property, milking came first.

“I knew my old man and brother were lying there just over the hill, but we had to get the cows in,” Mr Salway said.

“You can’t afford to miss because they start getting udder issues.

“That was the hardest milking I’ve ever had to do, but you couldn’t just stop and say ‘that was a bad fire’.”

About 170 of the Salways’ 350 cows were lost in the blaze.

Help arrived in the fires’ wake, including an Army strike team to clear and pile up fallen trees from the paddocks, saving the family an estimated month’s work.

“They ripped in with chainsaws, they smashed through, their bosses kept asking me ‘what next?’,” Mr Salway said.

“We’re able to get back in these paddocks, we’re able to work the land again. In time we’ll be able to burn these heaps [of wood].

“They cleared our driveway and just driving in makes you feel better. Things like this keep you going, as tough as it is for our family.”

Lieutenant Aiden Frost, of the 2nd/17th Battalion, Royal New South Wales Regiment, commanded the strike team that arrived for two days of work on January 14.

They also brought water and an Army chaplain to counsel the Salways.

“The intensity of the fire basically ripped all of the trees out of the ground and created huge amounts of debris which rendered the paddocks sort of unusable,” Lieutenant Frost said.

“The farmers have been overwhelmed. We can’t solve the whole problem, but in a couple of days our guys have been able to clear significant amounts of the property, which will eventually allow their cattle numbers to recover.”

Strike teams, such as those commanded by Lieutenant Frost, are working to assist communities in south-east NSW in the wake of the bushfires.

His team has 26 soldiers from Army’s 5th Brigade, mostly infantrymen and combat engineers supported by a medic and signaller.

Four of the infantrymen completed an Army chainsaw course while the team was staging at Holsworthy.

“One minute we’re helping fix fences to stop cattle getting on the road and the next minute we’re out doing engineer tasks like inspecting culverts and bridges, or felling and cutting up trees” Lieutenant Frost said.

“Even if it is just basic, manual labour, the team is really glad to be able to help.”

The Salways’ farm provides milk to Bega Cheese, the same company that makes canned cheese for Australian Army ration packs.

The company couldn’t process the Salways’ milk for 10 days after the fires, meaning it had to be dumped, but Bega Cheese still paid for it. The company also provided the family with generators, to keep things running until power was restored.

“We take for granted where everything comes from,” Lieutenant Frost said.

“Guys like these farmers provide milk to make cheese for ration packs or the supermarket; everyone knows the struggles they’ve had.

“Then to have a fire devastate your farm and lose family members is the last thing any of these people needed. At least we can show that the people of Australia and the Army cares about them.”

When the team finished at the Salways’ property, Tim’s family had worked for 15 days straight to recover, with no end in sight.

“It wasn’t a fire, it was a monster, like a tornado; it’s something I don’t want to see again,” he said.

“The family down the road lost five houses. Up the road, out of about seven houses, there’s only one left.

“I’ve been trying to say it’s not that bad, but when the Army turns up to help you it must be pretty bad.”

Source: Wild Fire Today

Washington dairies struggle after trade wars and low prices

For fifth-generation dairyman Jeremy Visser, 2014 was a record-breaker. Amid soaring global demand for U.S. milk products, Visser made about $500 on each of the 4,000 cows he was running in Stanwood and four other Western Washington dairy operations.

But a year later, as those sweet trade conditions began to sour, Visser’s fortunes also turned. In both 2016 and 2017, milk prices fell so low that Visser lost $100 on each cow. By 2018, the per-cow losses topped $300.

Visser pulled through, in part by mortgaging “everything I owned.” But at least 50 dairy farmers he knows have left the business. The last few years “have been tremendously difficult on us,” says the 42-year-old father of three.

Visser could be speaking for most of the roughly 350 dairy farmers still in business in Washington, which as recently as 2007 boasted more than 800 dairy farms, according to the U.S. Department of Agriculture.

Fourth-generation dairy farmer Jeremy Visser, seen here in 2017, says he mortgaged “everything he owned” to stay in business. (Dan Bates / Herald file)

Fourth-generation dairy farmer Jeremy Visser, seen here in 2017, says he mortgaged “everything he owned” to stay in business. (Dan Bates / Herald file)

With a steady stream of new technologies — including ones that focus on milking, breeding, nutrition and genetics — dairy farmers have seen impressive gains in output. From 1993 to 2018, milk yields from the average Washington dairy cow climbed 25 percent, to more than 12 tons, according to the USDA. And unlike many other businesses, where output often can be adjusted for changing demand, a dairy farm cannot simply idle a herd if prices fall.

“It’s very hard to turn a cow off,” Visser jokes.

But all that new milk has put downward pressure on milk prices — and on dairy farm incomes.

For years, many dairy farmers — especially those at smaller operations — have taken off-farm jobs to help their businesses survive and “keep doing what they love doing,” says Dan Wood, executive director of the Washington State Dairy Federation.

Some dairy farmers have adopted new business models that rely less on maximizing volume.

At the Twin Brook Creamery in Lynden, just south of the Canadian border, Larry Stap, a former Darigold member — and Visser’s distant cousin — has refashioned his dairy business around smaller batches of high-end “craft” milk.

While most commercial dairies use the high-output Holstein breed, Stap’s 200 Jerseys produce less milk, but it contains more butterfat and other solids — and, Stap says, more flavor. That’s a key selling point for his products, which include whole and other milks, fresh cream, and sweetened milks.

Yet even with Stap’s niche, he hasn’t ignored big industry changes.

To control costs in the Northwest’s tight labor market, Stap began switching to robotic milkers in 2015. The machines, which let cows give milk as often as they like, have reduced his labor costs and personnel headaches.

“They’re never late to work and they’re never hung over,” Stap jokes.

But they’re not cheap: each milker costs $200,000, and Stap’s herd needs four.

Much of the innovation in the dairy industry has focused on scaling up, not down. Visser’s dairy enterprise, for example, has roughly doubled since 2014 as many of his friends, neighbors, and others have sold their operations to him on their way out of the business.

That greater size has advantages. A larger operation lets farmers spread costs over more cattle. And a bigger revenue stream makes it easier to pay for those robotic milkers and other technologies — including systems to manage the dairy industry’s other big “output”: each Holstein cow generates 115 pounds of manure every 24 hours.

But going large has downsides, too. Greater output and falling milk prices — they dropped 32 percent between 2014 and 2018 — puts more pressure on dairy farmers to find new ways and places to sell their milk. In some cases, that has meant developing new consumer products. Darigold, for example, has introduced a higher protein, lower-sugar milk, called Fit, which CEO Stan Ryan says is “moving people from things like almond milk back into dairy milk.”

Increasingly, however, Northwest dairies have looked abroad to offload their extra output. From 2000 to 2014, Washington’s dairy exports jumped from $32 million to $232 million. In 2018, the most recent year for which data is available, Washington exported more than a seventh of its total dairy output by dollar value, according to the USDA. The share is even higher at Darigold, which exports 40 percent of its output and hopes to top 50 percent in the near future.

Washington state’s proximity to Asian trading partners gives state dairy producers a key advantage over Midwestern competitors. “We can get products to China or Singapore cheaper than we can get them to Chicago,” Ryan says.

Darigold has invested heavily in boosting its exports — for example, by producing more powdered milk, which is in high demand overseas — and is counting on exports for three quarters of future sales growth.

But relying more on foreign buyers can be risky. From 2014 to 2018, the dollar value of Washington dairy exports plummeted 24 percent as trade disputes cut overseas sales, according to the USDA. Federal relief payments to farmers hurt by the disputes — projected to be around $9.7 million for 2019 — will cover only a fraction of the losses.

The trade disputes also appear to have extended the milk price slump. Though milk prices rose through much of 2019, they’re still 8 percent below the 2014 peak.

The recent rapprochement on trade between the U.S. and China, and the U.S. Senate’s ratification of the American trade pact with Canada and Mexico, have raised industry hopes for a boost in U.S. dairy exports. But trade tensions could easily resurface.

And some of America’s dairy trade partners aim to rely less on U.S. imports. “Russia and China are building their own internal dairy supply,” Neibergs says.

Visser expects more turmoil for the industry. By 2021, he thinks the milk market will likely shift back to its typical 3-year price cycle, where dairy farmers “make money for a year, break even for a year, then lose a lot of money.”

Although 2020 will be a good year, Visser says, “I’m positive that’s about all we’ll get.”

Source: HerlandNet

Scottish dairy farming industry loses 27 herds

More than 25 dairy farmers left the industry north of the border in 2019, according to the Scottish Dairy Cattle Association (SDCA).

Figures from the association reveal 879 dairy herds were in operation at the start of this year, which is down from 5,735 herds when records began back in 1903.

Although the industry lost 27 herds, 15 new ones appeared through either new set-ups or farms being bought and dairying restarting, which meant there was a net loss of 12 herds last year.

SDCA secretary, Janette Mathie, said: “In 2019 we saw a lot of uncertainty for some dairy farmers within Scotland, but many others have made the commitment to make dairying their future and for the generations that follow.”

She said Aberdeenshire lost two herds, while Lanarkshire and Wigtownshire showed a net loss of three and four herds respectively. Ayrshire showed a net increase of three herds over the year.

SDCA figures also reveal the total number of dairy cow numbers decreased by 1,048 to 178,490, however the average herd size was up by two to 203.

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NFU Scotland’s milk committee chairman, John Smith, said it was the first time in many years when dairy herd and dairy cow numbers both fell.

He said: “The reduction in herds has been a long-term trend but to see cow numbers falling is more of a concern.

“On a positive note, new herds continue to be established which underlines our belief that there is a great future for dairy production in Scotland.”

Regional herd numbers and average herd size included: Aberdeenshire 25, 199; Angus, seven, 213; Argyllshire, 10, 173; Caithness, two, 61; Inverness, one, 128; Moray, five, 358; Orkney, 17, 114; Ross and Cromarty, one, 120; and Shetland, four, 54.

Source: Press Journal

Florida family’s dairy farm succeeds as major milk companies declare bankruptcy

Got milk?

This question is getting tougher to answer as the number of dairy farms in Florida has dropped by 30 percent in recent years, according to federal agriculture reports. At the same time, a second major milk company with nationwide ties has declared bankruptcy.

Florida remains a top southern dairy state and is in the top 20 for production in the nation. The credit belongs to the farmers who work the land as job security remains uncertain. 

“Lot of long days,” Cheryl Finney said, “I normally put in 12 to 14 hour days.”

Finney is a second-generation dairy farmer. Her father, Carl Wainwright, started working the land in Suwanee County after years as a milk delivery driver in Jacksonville.

The first farm the family had went bust. It took years to recover, but eventually, Wainwright would buy another parcel just across a dirt road from the old land. 

He changed the model for how the diary farm would work. Decades later, it’s a success story in an industry that hasn’t seen too many.

“By the vison of my dad, he knew a long time ago that one we needed to grow our own feed and number two, he knew we had to get direct to the customer,” Finney said.

She added the dairy farm is committed to quality and because they control everything in the chain of production and distribution, it’s only theirs to lose.

The U.S. Department of Agriculture reports the number of dairies dropped from 108 in 2015 to 71 last November for the same milk-producing counties in Florida.

Borden’s Dairy and Dean Foods – producers of nationwide brands – have filed for Chapter 11 bankruptcy recently. Both companies are looking to restructure and reduce debt.

Finney says she was surprised by the announcements. Her focus is on her own business, which continues to thrive. The hours put in to make it succeed, a trade-off for stellar views.

“It’s peaceful. It’s a good feeling just to be away from it all,” Finney said.

In the last few years, Wainwright Dairy has added to its list the products and the number of consumers.

Source: First Coast News

Pennsylvania invests big in dairy

Dairy is an economic development issue for Pennsylvania, according to the state’s Secretary of Agriculture Russell Redding.

“You can’t talk about agriculture in Pa. without talking about dairy,” Redding told Farm and Dairy in an interview.

The state’s dairy industry generated an estimated 52,000 jobs and $14.7 billion in economic activity in 2015, according to the Pennsylvania Dairy Study, which we’ll talk more about in a bit. That’s why the state has spent so much time studying and investing in the industry.

It all started after Redding came into office in May 2015. He says around that time, they saw the storm clouds on the horizon for the dairy industry. They needed to act. But they wanted solid data to back up their actions.

“We thought we should have a more strategic view of what to do with dairy,” he said. “One, what do we have to do to be competitive? Are we competitive now? And two, to be competitive, what do you have to invest in?”

It started with the Pennsylvania Dairy Study, which began in early 2017. The year-long study surveyed nearly 1,000 dairy farmers, sifted through piles of data, took feedback from people throughout the dairy industry and compared Pennsylvania farms to similar states, just to name a few things. 1

The dairy study also built on a broader report on the economic impact of Pennsylvania agriculture. That one was put together by the Temple University Fox School of Business and Econsult Solutions and released in January 2018. 2 All of that grew into the Pennsylvania Dairy Development Plan, released in August 2018. 3

“Rather than just saying dairy was important to us,” Redding said the study and subsequent plan gave them a leg to stand on and plan of action.

Most recently, Pennsylvania established the Dairy Future Commission to take a hard look at the industry and make recommendations on how to strengthen and improve it. The commission is made up of government officials, state legislators, dairy farmers and processors. The group first met in September 2019. It’ll report back to the legislature in August.

Brett Reinford, chair of the commission and a dairy farmer from Juniata County, gave an update on the commission’s progress at the state Senate Majority Policy Committee meeting Jan. 7, during the Pennsylvania Farm Show. Based on the ideas he’s heard so far, Reinford said the commission is going to bring forth “some bold recommendations.”

“We’re not just looking at what can the legislature do for us, but what can the industry do for itself,” Reinford said.

Show me the way

One of the first, and arguably the biggest, impacts of the plan was investing $5 million to create the state-level grants for dairy producers.

The Dairy Investment Program provides funding in four key areas: value-added processing, organic transition, research and development and marketing and promotion. The grants require a 15% cash match.

Redding said they identified those four area to focus on but didn’t know what to expect. The farmers and processors applying soon made it clear where their interests were — cheese.

The recipients of the first round of grants were announced in March 2019; 29 projects were funded out of 42 applicants.4 Of those, 22 were for value-added processing, or taking milk and processing it into a higher value product like cheese, yogurt or butter. Five were for marketing and two were for research and development projects.

The grants went to a wide range of producers, from helping a woman with a 25-cow herd get started processing fermented dairy products to helping an established commercial creamery expand its operations.

Sue Miller, owner of Birchrun Hill Farm, in Chester County, is using the grant to expand her cheesemaking operation. She started making cheese over a decade ago at a neighboring farm’s vacant facility. They later built a facility at their farm, where they started making cheese in October 2018. She said they had been looking for a way to add value to their milk and not rely so heavily on the commodity milk market.

“I literally woke up one morning and thought, ‘I’m going to learn how to make cheese,’” Miller told Farm and Dairy. “’Maybe that’s it. Maybe that’s the answer.’”

The transition to cheese has enabled her sons to come back to work on the family farm. They both studied dairy science at Cornell University. Miller said they’ve been growing their operation incrementally and responsibly, building their customer base and product line.

“If we wouldn’t have started down this path, we probably wouldn’t be on the farm right now,” she said. “I don’t see how we could’ve done it with the dairy economy the way it is.”

Cheese might not be the answer for all dairy farms. But Miller urges smaller farmers to be open to possibility

“You have the opportunity to be nimble. You’re not burdened like a big, giant ship. Sometimes it’s hard to make a navigation shift when you’re big,” she said. “There’s no one way to farm. There are many ways to do it right, to do it well.”

Redding said the grant recipients are confirmation of what they saw in the study. The state dairy study pointed to the benefits of adding processing capacity in Pennsylvania. And it saw cheese production, in particular, as an answer for Pennsylvania’s small farms’ success.

The second round of Dairy Investment Program grant funding, another $5 million, was part of the 2019 Pennsylvania Farm Bill, a package of bills that invested more than $23 million into Pennsylvania agriculture programs.

The Dairy Investment Program hasn’t been without its challenges. Rynn Caputo, a grant recipient, told the Senate Majority Policy Committee that being required to pay prevailing wage was a hindrance. Caputo heard of some recipients being unable to use their funds because of such issues.

But the interest for the program remains. Redding said they got more than 70 proposals for the next round of grants. The recipients will be announced in early 2020.

“You look at those projects, and the answer is found in those on-farm value-added projects,” he said, at the state Senate committee meeting. “I think that’s the answer … There’s a need for cheese, a desire for cheese.”

Source: WKBN

International trade agreements are good news for WI dairy farmers

The U.S. Senate overwhelmingly approved a new North American trade pact that rewrites the rules with Canada and Mexico. Known as the USMCA trade deal, It would replace the 25-year-old North American Free Trade Agreement, or NAFTA.

The passage of USMCA comes as good news for Wisconsin dairy farmers.

It’s no secret the dairy industry in Wisconsin and across the country has been struggling.

According to Jamie Mara from Edge Dairy Farmer Cooperative, “Dairy farmers haven’t had a lot to cheer about lately. We’ve had a couple, several years now of low milk prices and other commodity issues, and we’ve just come off a horribly wet, fall harvest.”

But now that the U.S. has come to a trade agreement with Canada and Mexico things are looking up for local dairy farmers. Mara adds, “This has been a critically important agreement between these three countries. It allows any number of industries to do business across these borders tariff-free — anything from automobiles to dairy products.”

Mexico is the number one importer of American dairy products, taking in 40% of what the U.S. exports. Canada is number three on the list.

Together, those two countries account for a little more than $2 billion worth of American dairy exports each year.

At farms like Shiloh Dairy in Calumet County, the passage of the USMCA will help to bring long-term certainty and stability.

“The opportunity to move product, price increases, the ability to create the demand for what our supply is creating each and every day is huge,” says Travis Speirs from Shiloh Dairy.

The USMCA news comes as phase one of a trade agreement with China is signed, allowing the United States to sell dairy products in that country.

“It’s an exploding market, population is growing. They have a demand for the types of products we have, the proteins we have in milk and cheese and milk powder and things like that,” says Jamie Mara.

It’s all encouraging news for dairy farmers who are looking forward to the new possibilities.

Source: WSAW

3 ways dairy farmers are going to do better in 2020

U.S. Dairy Export Council CEO and former Agriculture Secretary Tom Vilsackjoined FOX Business’ “The Claman Countdown” on Thursday to discuss how U.S. trade deals are affecting the dairy industry.

He spoke optimistically about which economic aspects will make 2020 different from the past couple of years, which he admitted were difficult for the industry.

1) China trade deal

“There isn’t any specific commitment to purchase dairy, but it does provide for an easier pathway for infant formula and potentially whey permeate — two important products that we produce here in the U.S. — to be able to enter a market that’s been shut down for some time,” Vilsack told FOX Business’ Ashley Webster.



“We’ve got the USMCA ratification and hopefully opening up of the Canadian market and the elimination of Class 7,” Vilsack said, referencing a new pricing class of milk that some say has given Canadian dairy producers the advantage.

3) Japan trade deal

“We’ve got the Japanese phase one agreement that has ended the tariff differential [and] the disadvantage we had when we pulled out of TPP relative to EU [and] New Zealand,” he said.

Source: Fox

Rain ‘psychologic plus’ for Australian farmers

Grape farmer Graeme McCrabb says this week’s rain is not enough to take the pressure of drought off. Credit: AAP

Farmers struggling to survive NSW’s devastating drought say this week’s rain is “psychologically positive” but much greater falls are needed in the coming months.

NSW Farmers’ Association chief executive Peter Arkle says the rain is a welcome change and it will allow some farmers to plant “opportunity crops or pastures”.

“Hopefully with some follow-up rain, it’ll allow people to build their feed reserves prior to winter, which will be important and hopefully reduce the need for the hand-feeding we’re seeing in lots of parts of NSW,” Mr Arkle told AAP on Thursday.

“The soil profile is so dry that the soil could absorb a lot of this rain which means we may not get a lot of flow into creeks.

“But filling up that soil profile is really important for being able to grow some of those opportunity crops, and for guys cropping, helping them to build their soil water before planting.”

Mr Arkle said farmers needed between 200 and 300 millimetres of rain between now and late April to fill dams and prepare for winter crops which have been disappointing in recent years.

Rain has been falling across much of NSW on Thursday with Moree in the state’s northwest receiving over 50mm.

Showers and localised thunderstorms are expected to continue until Monday.

But Bureau of Meteorology forecaster Jonathan How says this week’s rain will likely be short-lived.

“Unfortunately the outlook for the next few weeks and into February will be much drier and warmer than usual,” Mr How said in a video statement on Thursday.

“It is important to remember that 2019 was a very dry year for many regions and these regions are still carrying over these rainfall deficiencies so we will need a lot more rain in order to make up for this.”

Table grape farmer Graeme McCrabb says the 15 millimetres recorded on Thursday in Menindee – in NSW’s far west – was “psychologically positive” rather than genuinely helpful to local producers.

“It doesn’t really help with feed but it’s nice to know it can still rain,” Mr McCrabb told AAP.

With hot temperatures and dust storms causing havoc in the far west the Menindee local said the rain evaporated quickly with much more desperately needed in autumn.

“It’s not enough but to get 15mm takes some of the pressure off,” he said.

NSW Labor leader Jodi McKay on Thursday questioned whether the government’s fresh milk and dairy advocate, Ian Zandstra, had been doing enough since he was appointed in September.

“It’s so important that we have a dedicated voice in government standing up for dairy farmers and working to get them through these fires and this drought,” Ms McKay said in a statement.

Source: 7 News

How small dairy farmers are keeping up during challenging years

It’s been a rough five years for the dairy industry and it’s forced many Michigan farms to close their doors. Lowell farmer, Renee McCauley says the only way to survive is to change with the times. 

“Dairy farmers are resilient. We work in an economy that is always changing and we are always facing challenges,” McCauley said while standing at her farm Tumbleweed Dairy on Thursday. 

The challenges the dairy industry is facing at a national level are possibly even more prevalent in Michigan.

“We didn’t start with as many farms as Wisconsin for example, but percentage wise we’ve probably lost as many farms as they have,” said Ken Nobis, the senior policy adviser at Michigan Milk Producers Association (MMPA).

Nobis said the downturn came after 2014, when there were exceptionally high prices for milk. 

“There’s multiple issues that have caused it. Primarily, we’ve ended up with more milk than the consumers will consume,” he said. 

Nobis said typically dairy farming runs in a three year cycle: one good year, one mediocre year, one bad year.

“So, when you have four or five years in a row that are bad it takes a long time to recover from that and that’s the problem we have today,” he said. “It’s a pretty deep hole for producers to climb out of.” 

Alternative milk products like almond and oat milk have also played some part in the decline, Nobis said. 

“There’s only so much space in a consumers stomach,” he said. 

The dairy industry has been battling milk substitutes for some time now. 

“The problem we have is when they call it ‘milk’ because the Food and Drug Administration has a definition for milk, and it has to be produced from the mammary gland of an animal and an almond is not a mammary gland of an animal,” Nobis said. 

Fluid consumption of milk has been declining for years, but Nobis said the consumption of dairy products like yogurt and cheese is actually increasing. 

“When you see the variety of choices that are out there, it’s exciting,” McCauley said, who works with the MMPA to sell her product. “It makes me glad to be a dairy farmer.”

McCauley is in the process of taking over the farm she grew up on. Their farm has two employees in addition to McCauley, her mother and her husband to milk their 125 cows twice each day. She recently had to downsize the farm by 50 milking cows. 

While the industry continues to change beyond the farm, McCauley said the treatment of their animals has not changed. 

“Even if we are facing challenges, we are dairy farmers because of our passion and drive we have for caring for cows and that’s our focus and that hasn’t changed,” she said. 

Michigan is largely made up of small farms like Tumbleweed Dairy, and Nobis says when these farms close the impact is far reaching. 

“A dairy farm buys a lot of inputs. So when it closes, it has an effect on the feed dealers, the veterinarians, the equipment companies located in those communities,” he said. “There is a definite economic impact on rural America when dairy farms close.”

Source: WZZ

Dairy industry takes care of itself in Ohio

In Ohio, the dairy industry is one of many parts of the state’s diverse agricultural landscape. The state didn’t want to pick a favorite, so the industry supports itself.

It’s up to groups like the Ohio Dairy Producers Association and the American Dairy Association Mideast. Those two groups lead the way in promoting and advocating for Ohio dairy farmers.

How do you help your industry when you don’t have millions of dollars at your disposal? You get creative, said Scott Higgins, chief executive officer and president of the American Dairy Association Mideast. Higgins is the energetic and passionate leader behind both groups. He’s also chief executive officer of the Ohio Dairy Producers Association.

The Ohio Dairy Producers Association is an advocacy group, ensuring dairymen and women have a voice in legislation, regulatory issues and anywhere else it’s needed. 1

“We’ve been focusing on issues, challenges and opportunities that dairy farmers need us to focus on to deliver the best results possible,” Higgins said.

A place with both challenges and opportunities is in dairy processing. That’s why the ODPA is partnering with the Ohio Dairy Foods Association, the group that represents dairy processors, to do a large-scale opportunity and barrier assessment in 2020.

Higgins said the assessment will look at barriers “that are choking the industry.” It will also find opportunities to meet consumer demand.

“What are consumers looking for? What is going to help us advance and invest in our ability to produce new products?” Higgins said.

If there are things the state or legislators can do to make Ohio competitive, those recommendations will be brought to them.

Otherwise, the ODPA has been busy tackling statewide issues like water quality, environmental stewardship and livestock welfare. Phosphorus runoff from farmland was named by scientists to be the major cause of harmful algal blooms in Lake Erie. You probably know that. Maybe you didn’t realize that ODPA is part of the group that’s working to fix this problem.

The association helped form the Ohio Agriculture Conservation Initiative, a collaborative effort between other ag commodity groups and conservation and environmental groups that’s working to improve water quality. The initiative is a partner in Gov. Mike DeWine’s H2Ohio plan, which is investing money in proven conservation practices for farmers to help with the runoff problem. 2

In all these issues, from water quality to animal welfare, the ODPA is making sure the dairy farmers have a voice. It’s there to show regulators and legislators what farmers are doing right; to protect farmers from burdensome regulations; and to make improvements when necessary, Higgins said.

Don’t stop believin’

The American Dairy Association Mideast is the checkoff program that represents Ohio and West Virginia farmers. Its goal is to increase sales and demand for U.S. dairy products.

How does it do this? A bunch of ways. Partnerships with national food franchises, like McDonald’s and Pizza Hut, and school nutrition and wellness programs like Fuel Up to Play 60. 3

Many of these things happen through the national checkoff program, Dairy Management Inc., and the benefits trickle down to Ohio farmers, Higgins said. An ADA Mideast handout pointed to a 2.2% increase in total dairy sales in 2018, compared with the previous year. 4 The same handout also states milk company partners invested more than $700 million in new and upgraded plants to offer new products.

Storytelling has been the answer to many of the issues the Ohio dairy industry has faced. When the Humane Society of the United States came to Ohio over a decade ago, looking to make changes to animal agriculture like it had successfully done in other states, ADA Mideast took action. 5

“When HSUS came to Ohio and wanted to change the narrative, we said ‘you’re not going to do that.’ We’re going to define ourselves first,” Higgins said. “So I reached out to farmers and asked if we could bring cameras on to their farms and let them tell their stories.”

The checkoff released profiles of dozens of dairy farmers on its website, letting the farmers tell their stories through interviews and videos. Social media has made it even easier to share the stories.

“It’s all about public trust,” Higgins said. “[Consumers] vote at the checkout. We’ve been successful in being able to communicate with consumers.”

Source: WKBN

Dairy farming family faces bleak future after deadly Australian bushfires

There is little that Australia’s deadly bushfires didn’t take from dairy farmers Tim and Warren Stalway.

For nearly two days over New Year the brothers battled fierce blazes that tore through the family’s farms, the flames igniting on multiple fronts and wiping out almost everything in their path.

The pair’s father, Robert, and brother, Patrick, died trying to defend their properties. All the family farms were burned to ashes and debris, and hundreds of cattle killed.

“I keep saying to myself that it’s not that bad, but it is that bad. It’s fucking terrible,” said Tim Stalway, 42, shaking his head in disbelief at he looked at his burnt out property near the town of Cobargo in New South Wales state.

Warren Stalway fought back tears as he described his anguish at discovering his brother and father had died, and how other farmers donated their hay to keep his farm going.

“People have just turned up, they all want to help,” he said.

The scale of the recovery facing the two fifth-generation farmers is huge. Destroyed machinery, felled trees and blackened farmland were surrounded by miles of damaged fencing on Tim Salway’s farm. Metal tanks were melted and hay and cattle sheds worth tens of thousands of dollars were flattened.

Salway lost 170 cows, including one that was so badly burned that it had to be shot.

“They’re the only heifers I’ve got left,” he said, pointing to 30 cows gathering curiously, the sky behind them blanketed by haze from fires still burning on the other side of the valley.

“I’ve got no heifers for the next three years, they all got wiped in the fire. Just in cattle, if I look to replace them you’re looking at A$300,000 ($207,000).”

Monster bushfires have razed bushland equivalent to the size of Bulgaria since the start of October, killing 28 people, destroying more than 2,500 homes and killing millions of animals.

“The noise of it was like jumbo jets … It snapped trees in half,” Tim Stalway said of the fires that destroyed much of the Cobargo farms. “I watched the flames get sucked down the hill, there was a boom, an almighty thump. It was my dad and my brother. It’s like a bomb’s gone off.”

Warren Salway’s wife Helen, who has cancer, took refuge in a nearby town while he raced through smoke-filled lanes to get back to his farm, twice running his truck off the road.


The bushfires crisis deals a further blow to farmers already struggling following a three-year drought, which has been credited with fueling the fires.

“It’s just annihilated us,” said Warren Salway. “It’s just numbness.”

Salway spent more than a day using a bulldozer and excavator to bury 145 cows and 80 sheep. Many of the cows he found alive had to be shot due to their burns.

“Years and years of breeding and you see them laying in a heap just dead,” he said. “That’s what you live for, your animals.”

Tony Allen, a former local mayor whose own farm had a lucky escape, said the crisis was a wake-up call for policy makers to support an industry already doing it tough.

“The decision is do you want to keep an industry going, do you want to feed Australians with Australian food, or do you want to let the industry just evaporate and live off imported product?” he said. Tim Salway said quitting was not on his mind, but he doubted the family business would survive into a sixth generation.

“I’ve got four kids and unless it improves, none of them will be taking this over,” he said. “Why do you want to do that to them?” ($1 = 1.4497 Australian dollars)

Source: Financial Post

Vilsack Says Prospects Good For Dairy In 2020

The Dairy industry has, unfortunately, been the poster child for the struggles of the American agriculture industry. They had suffered years of lower prices and challenging marketplaces. Family dairy operations have been closing at an alarming rate. For those still holding on, it was a struggle against time. Fortunately, time has a way of bringing things around. The Dairy industry saw some recovery in milk prices during 2019 and is now entering 2020 with some things to feel good about.

Tom Vilsack was Agriculture Secretary during the Obama Administration and the 40th Governor of Iowa. Now, he is the President & CEO of the U.S. Dairy and Export Council. Vilsack says that higher prices are just the beginning of giving America’s dairy farmers a little “breathing room.”

Vilsack says 2019 ended with a strength that makes him very optimistic going into 2020. Also, Vilsack sites the U.S. deal with Japan, and the forthcoming United States – Mexico – Canada Agreement as very positive steps for the U.S. dairy industry.

While we may not see dairy exports directly boosted by increased Ag purchases from China, Vilsack sees the Phase One deal as another way to open the door for more dairy business.

Global instability still has the power to shake the bedrock on which the dairy industry is building the foundation for its recovery. This instability can directly or indirectly affect our market activity. Vilsack says we need to make sure our business is strong in many markets.

Vilsack is looking forward to a better year in 2020, and he looks forward to seeing dairy producers reap the benefits as things start to turn around.

Source: Iowa Agribusiness 

Trump touts ‘tremendous victory’ for Wisconsin farmers, dairy workers

President Trump returned to Wisconsin on Tuesday, once again praising the great economic strides his administration has made, especially for America’s dairyland.

“We’ve created 7 million jobs since the election, including 1 million manufacturing and construction jobs,” Trump said during his ‘Keep America Great’ rally in Milwaukee. “Nobody thought that was possible.”

Trump called it a “giant victory for Wisconsin workers, farmers and dairy producers.”

“A tremendous victory,” Trump reiterated.

According to the Farm Bureau, Wisconsin farmers can use relief from the trade wars. In recent data compiled by the Bureau, farm bankruptcies were the highest in Wisconsin with 48 farms going under in a 12-month period.

On the eve of the signing of phase one of the trade agreement with China, Trump promised the deal, as well as the soon-to-be-passed USMCA agreement with Canada and Mexico, would boost exports of Wisconsin-made products.

President Donald Trump arrives at UW-Milwaukee Panther Arena to speak at a campaign rally, Tuesday, Jan. 14, 2020, in Milwaukee. (AP Photo/ Evan Vucci)

China is the largest importer of pork products, and, according to the Wisconsin Pork Association, during the trade war, prices rose by more than 70 percent.

Ticker Security Last Change Change %
HRL HORMEL FOODS 45.45 -0.45 -0.98%
TSN TYSON FOODS INC. 91.94 -1.52 -1.63%
SEB SEABOARD 4,120.00 -18.19 -0.44%

But in December, China announced it would lower tariffs on frozen pork and avocado products.


Wisconsin company looks to revolutionize dairy industry

Dairy farming is part of everyday life for many Wisconsinites, according to the Dairy Farmers of Wisconsin; there are over 7,000 licensed herds in the state.

Local company, VES, has developed state of the art technology to help those farmers monitor their cows.

“We have developed a concept over the years called animal centered environment and from that we had to develop products and systems that will support the animal centered environments,” said VES Co-founder, John McBride.

What these animal centered environments are can be compared to having central air conditioning for your house, making conditions inside the barn comfortable for the cows, as well as workers.

The new research facility recognizes someone closely tied with VES.

“We brought on Dr Michael Wolf, who we named this facility after to help us understand how to speak and understand cow,” said VES Co-founder Peter Fahrngruber.

The new 20,000 square foot research facility will be built right here in the Chippewa valley and will create several new economic opportunities.

“In the last six to eight months, we’ve already doubled,” McBride said. “We’re looking to bringing another 40 positions over the next couple of years, but with the rebounding of milk prices around the world, that may be of course become greater.”

“We’ve been very fortunate to bring a lot of those people in locally,” said Co-founder Jennifer McBride. “We’ve also brought people in from out of state in to our company therefore helping the Chippewa Valley.”

Even though the new company is based in Chippewa Falls, they have a major impact globally.

“The global dairy industry looks to America as the leader in dairy, and of course Wisconsin is the dairy state,” said John McBride. “The world has really embraced the VES system, we are putting our systems in over 40 countries.”

Along with the new research facility, the project also includes new corporate offices, an animal welfare demonstration center and a global conference center.


Dairy businesses struggling as the companies are filing for bankruptcies.

Two of the major dairies in the United States have recently filed for bankruptcy protection.

The largest milk producer of the nation which is Dean Foods had filed for the bankruptcy in the month of November. Borden is one more producer of milk which has recently filed for bankruptcy.

There were interviews which had been conducted with a Long Grove farmer who is engaged in dairy farming and how it has affected the business that he has been carrying out. This was done in a meeting being conducted on Tuesday of the local farmers.

The farmer whose name is Jean Newell is a farmer from the area of Long Grove and has been for many years farming as a business.

He has said that there were fewer people who were now drinking the milk of the cow and have been beginning to switch to substitutes like the almond milk instead of the conventional animal-based option.

Newell has said that it is a tough period to be in however he is not going to be in it for too long.

Newell has said that it is very hard to be optimistic but he felt that it was a farmer thing to never be pessimistic. He has however said that it is much easier to be saying that at the time for him as he is at the fag end of his career in farming.

He also added that the products such as cheese have been doing well but the problem is that milk is not being drunk by people causing the businesses to file for the bankruptcy protection. He mentions that it is fluid milk which is specifically not doing well.


Drought, fires dry up chocolate milk, yoghurt supplies as Australian farmers pushed to the brink

Robert Miller said he fears he wont be able to feed the cattle he saved from the fires. (Supplied: Robert Miller)

Consumers could see a shortage of flavoured milks, yoghurt and custards as a direct result of the drought and fires, the New South Wales Farmers Association says.

Dairy key points

Key points:

  • The embattled dairy industry has been put under even more strain by bushfires in NSW and Victoria
  • Livestock have been killed by flames and heat, and the drought-fuelled fodder shortage looks set to worsen
  • Farmers say milk prices will have to increase again in order for them to be able to recover

That is because processors have contracts to supply fresh white milk to NSW supermarkets first, at the expense of other branded fresh dairy products.

Bushfires in southern NSW have added significantly to the industry’s long-running woes, with as many as 1,000 dairy heifers estimated to have been killed, according to NSW Farmers dairy committee member Daniel Cochrane.

“There is now a lack of milk, with big producers reducing supply along the NSW coast, from both drought and now the summer fires,” he said.

NSW Farmers Association Dairy Committee chair, Colin Thompson, said the impact of the fires was still being assessed.

Mr Thompson said the fire’s impact ranged from “a total loss of pasture and fences destroyed to a loss of cattle, particularly young heifers.”

“There were a number of dairy farms left without power which saw a loss of milking and farmers were having to get generators onto farms,” he said.

Some farmers have had to pour milk down the drain due to a lack of power.

Mr Thompson, who farms at Cowra in the NSW central west, said losing milk was unavoidable.

NSW Farmers Association is working with affected farmers to try to source fodder and water, which was already in short supply due to the drought.

Major dairy producers at Tallangatta and Keiwa Valley, in north-east Victoria, have also been impacted by fires.

Push for price increase

Robert Miller, who farms at Narawallee, near Milton, is counting an even greater cost from the fires than first thought.

Mr Miller estimated he had lost $100,000 worth of fencing and two thirds of the grazing.

Some of his cows have aborted their calves, not because they were burnt, but because they were heat affected.

Together with the NSW Farmers dairy committee, Dairy Connect and Queensland Dairy Farmers, Mr Miller has pleaded for supermarkets to increase the price of home brand milk to $1.50 a litre.

In response, Woolworths said it was still assessing the impact of the fires on South Coast dairy farmers, and said it already had contributed $32 million in a drought levy for 450 dairy farmers.

Drought causes fodder shortage

The Australian Fodder Industry Association (AFIA) predicts the country could run short of hay as early as March, which is months earlier than previously thought.

“I’m increasingly concerned about the levels of fodder supplies we have in the system,” CEO John McKew said.

“We are still in the harvest, in south-west and central Victoria.

“And South Australian farmers are busy stripping and harvesting … but I’m concerned that with the level of demand we have, is we will see a tightness of supply by the time we get to March-April 2020.

Mr McKew said prices were already very high, risking the situation getting to the point where “it becomes unviable for the future for the buyer and seller”.

He said it was unlikely large quantities of hay would come onto the market before November.

The dairy farmers committee said charities were competing with non-fire affected farmers to buy fodder for affected farms, and that was also pushing fodder prices higher.

Mr Cochrane said the federal drought response had been “fairly pathetic,” and that farmers on the South Coast were locked out of the interest free loans.

For fire-hit dairies, he said $15,000 emergency farm support would run out fast.

Bega Cheese confident of supply

Around Bega’s dairy farms, 800,000 litres of milk was tipped out after the fires, and more was lost from Bodalla and Milton, either because of power cuts or traffic congestion, as tourists fled from the path of the fire.

The Bega Cheese company took an 8 per cent hit on the stock exchange on Monday after the fires, but said its overall production and export markets would not be affected by the fires.

Bega Cheese operates several plants across the border in Victoria with milk supplied from its New South Wales headquarters, which are now back up to production.


N.S. dairy farmers want Canadians to keep buying local

Dairy farmers in the province have had a tough year. Along with numerous other industries, they were hit hard by Hurricane Dorian in September, and the incoming new North American trade agreement will make more competition in the market.

Brian Cameron, general manager of Dairy Farmers of NS, says Nova Scotia is home to over 200 family-owned dairy farms, which produce over 200 million liters of milk annually.

“We’re quite happy to be part of the national system,” he says.

As a province, Nova Scotia produces 2.2 per cent of the national milk consumption. But a partnership with four other provinces means we share the market.

“Over 20 years now we’ve worked with Ontario, Quebec, New Brunswick, PEI,” Cameron explains. “All the dairy farmers in those five provinces share revenues. We blend or average the revenues from the markets that we sell our milk into.”

The dairy farmer says this is beneficial for the three smaller Maritime provinces who are a part of the partnership.

“If there’s market growth in one of the provinces, that gets shared proportionally across the other four. And that’s been a great thing for the three small Maritime provinces, to be aligned with the two biggest dairy provinces, Quebec and Ontario,” he says.

But Cameron tells NEWs 95.7 that the early fall hurricane largely impacted grain corn, which many dairy farmers grow themselves as feed for cattle.

“Unfortunately Dorian interrupted that and messed up a lot of corn fields,” he says. “But then you have to turn around and buy in grain corn from another province to make up the ration.”

This means once again Nova Scotian dairy farmers may be dependent on bigger provinces to supply grain corn for cattle feed.

“But we definitely have to rely on other jurisdictions like PEI or New Brunswick or maybe from central Canada to get the grain corn in that we weren’t able to harvest this year because of Dorian,” adds Cameron.

As dairy farmers within Canada work together, Cameron says another challenge will soon present itself: the new USMCA.

The trade agreement between Mexico, Canada and the United States will allow for American-made dairy products to be sold in Canada. And Canadian farmers need to stay competitive.

“The pricing studies that have been done recently show that Canadian dairy products are priced quite competitively with those in the U.S. and those in other countries,” says Cameron.

Unlike Canada, where the price of milk is stable, Cameron says dairy prices in the U.S. fluctuate frequently.

“In the U.S. system, if the milk price is low, their producers try to produce more milk to make up for the low unit price. And when the milk price is high of course they want to produce more milk to make more profit,” he says. “So the equation there is to always produce more milk. They’ve got way too much milk and it’s not managing the supply the way we do in Canada.”

Cameron says it’s important that Canadians support the local market, which unlike that of the States, is not government subsidized.

“There’s no government money coming to support milk production within Canada. Our producers for that 200 million liters of milk, they receive 100 per cent of their returns from the marketplace, not from the government,” he adds.

South of the border, some Canadians are drawn to cheaper milk prices. But Cameron says that overall, Canadians will get more bang for their buck when supporting their own farmers.

One of the things that we’re wanting to do is to make sure that Canadians know about the supply management story but also know about the benefits of having a dairy industry in Canada, and will choose Canadian dairy products over the U.S. products that come in,” says Cameron.


Are milk bankruptcies impacting Heartland dairy farmers?

Studies show year after year, less Americans are drinking milk, but is it hurting Heartland dairy farmers?

The drop in demand, slim profit margins, and rising operational costs are major factors behind two of largest dairy companies in the U.S. filing for bankruptcy.

Borden Dairy Company, based in Dallas, Texas, announced Monday Jan. 6 that it’s filing for Chapter 11 bankruptcy, which comes of the heels of Dean Foods also seeking bankruptcy protection in November 2019.

Industry leaders admit they have to adapt especially as shoppers change their dairy buying habits.

Jamie Gibson said she only uses milk in cereal, and has been buying less of it as her kids have grown older.

“I usually buy it once a week,” Gibson said. “In our family most of us just don’t like it and my husband is the only one who drinks it, so we just don’t go through it.”

Another factor of the changing milk market are new plant-based products targeting people who are lactose intolerant that use almond, coconut, soy and rice as key ingredients.

John Wilson is the senior vice president of Dairy Farmers of America (DFA) and does not see the milk alternatives as big competition.

“We think the impact of those alternative beverages are pretty modest really,” Wilson said. “The decline in milk consumption is to the tune of about 2 percent per year which is really not that big of a decline. It’s really more of a long term trend.”

DFA represents about 30 percent of American milk producers including some dairy farmers in the Heartland.

Wilson said, the cooperation does works with Borden Dairy and Dean Farms, but said those struggling companies are not the only options on the table.

“It’s not the majority part of our business,” Wilson said. “We sell milk to a lot of different parties. We process a lot of different products in our own plants and so that diversification gives our members security that they’ve got a market for their milk even in times like this that are difficult for certain companies.”

Other families like Paige Lucy who has three kids, still purchase a lot of milk and plan to stay continue supporting companies that have been producing it for decades.

“I think our kids benefit from all of the calcium in it and I think they need that still,” Lucy said. “I’m a firm believer in them drinking the whole milk like the pediatricians say. It’s what we grew up on. Why fix something that is not broken?”

Dairy Farmers of America added the demand for certain products is actually rising.

Wilson said more cheese and butter is being sold in the states, and dairy companies are exporting more milk powder to other countries.


Milk 2.0: How the dairy industry plans to save milk

It’s been a rough few months for the American milk industry.

Dean Foods, the country’s largest milk processor, filed for bankruptcy in November. Borden, another major processor, followed in its footsteps in January.

Cow milk sales have been falling steadily for years. And its volatile prices — which are determined by an archaic system — squeeze dairy farmers and processors with each swing. The pressures have made it difficult for milk producers and buyers to compete with vertically integrated retailers, such as Kroger, which process milk themselves.

Meanwhile, the alternative milk sector is growing quickly. Retail sales of oat milk alone have shot up over 600% over a 12-month period ending in November, and major coffee chains, including Starbucks and Dunkin’, are adding oat milk lattes to their menus. Although those sales pale in comparison to sales of traditional milk, they complicate an industry that has already been upended.

Taken together, it may seem like the milk business is collapsing. But that’s not the case, argued Marin Bozic, an assistant professor in University of Minnesota’s applied economics department.
Milk isn’t dying. It’s evolving.
“It is painful,” he said, adding that “some business models will be no longer sustainable.” But ultimately, he said, this period will lead to a healthier system that responds better to changing consumer needs.
There are bright spots in the sector. American consumers may have cooled on traditional milk, but lactose-free and grass-feld milk sales are increasing. And Coca-Cola’s recent acquisition of a young, innovative dairy brand suggests opportunities for growth remain.

A complicated pricing scheme

Borden dairy products from 1953.

“There’s an old adage in the dairy industry that only five people in the world know how milk is priced in the US, and four of them are dead,” said John Newton, chief economist for the Farm Bureau, a lobbying group. “Milk pricing is very, very complex.”
Minimum milk prices are set by the government because of the unique constraints of the dairy sector, Bozic explained. Milk is perishable, so producers can’t strategically stock up their product as consumer demands shift. And cheese, a more shelf-stable product, changes as it ages. A floor on pricing helps incentivize farmers to stay in an unpredictable business and offers a lifeline when needed.
Some farmers weren’t able to weather the recent cycle of low milk prices, which dragged on for longer than usual because of a global milk glut and the trade war, among other things.
The system is “worth re-examining,” said Tony Sarsam, Borden’s CEO. The many regulations “exacerbate … the peaks and the valleys because there’s so many different interventions.” Borden pointed to the recent increase in milk prices as one of the reasons for its decision to file for bankruptcy.
Because of the pricing scheme, fluid milk’s retail price tag doesn’t respond to consumer demand for milk. Instead, it’s more closely pegged to consumer demand for dairy products like cheese and butter, among other factors. So when milk processors like Borden or Dean “have to pay the same price for milk …. no matter what the demand is, no matter what the supply is — I think that’s disorderly. I think that’s inefficient,” said Newton.
Inefficient or not, the pricing conventions started well before milk processors started buckling. If demand remained consistent, the system would work better.

Vertically integrated competitors

Milk margins are less important to a grocer like Kroger than to milk processors or dairy farmers.

Increasingly, retailers like Albertsons, Kroger and Walmart are processing their own milk.
Kroger operates 17 dairies. Albertsons had seven milk plants as of February 2019. And Walmart opened a milk-processing plant in Fort Wayne, Indiana in 2018.
For Dean Foods, Walmart’s move was devastating, even though the plant serves just a fraction of all Walmart stores. Dean said it missed out on the sale of 55 million gallons of milk in the second half of 2018 because of the lost Walmart business.
Even though milk consumption has decreased, most Americans still like to have milk in the fridge. For grocery stores, that means that milk is a good investment — even if higher input costs mean thin margins or losses, argues Sarsam.
If grocery stores advertise good deals on milk, they can bring consumers into stores. So while raw milk prices fluctuate and send shocks through the dairy industry, milk prices have remained pretty steady on retail shelves. In November 2019, a gallon of fresh, whole fortified milk cost $3.19 on average. That’s up 35 cents from the July 2018 average of $2.84 — the lowest price in over a decade.
Processors, on the other hand, are hurt by low-margin products. Borden cited competition from grocery stores with their own dairy plants in its bankruptcy filing.
The milk processor, however, still sees a rosy future ahead.
Borden plans to continue business as usual during the bankruptcy proceedings. Sarsam notes that despite the difficult competitive environment, Borden has found success with its innovative products, including its lactose-free milk and “kid builder” line, which has less sugar than typical flavored milks and more protein than regular milk. The main reason Borden filed for bankruptcy, Sarsam said, is that a hefty 2017 investment from a private equity firm saddled the company with too much debt.
“There’s a point of view out there that says, ‘Hey with all that’s going on in the industry, the glass is half empty.’ We look at it and say, ‘God, the glass is half full.’ We see all kinds of growth areas.”

The future of milk

Coca-Cola acquired Fairlife outright in January.

There’s no question that interest in dairy alternatives has soared. During that November to November period, sales of oat milk ballooned 662%, and sales of the more established almond milk grew about 6%, according to Nielsen.
But there’s a lot more money in dairy milk.
Oat milk sales amounted to about $60 million for the year, and plant-based milks overall brought in about $1.9 billion, according to the Nielsen data. Cow’s milk sales for the same period were about $12 billion.
A close look at sales data shows that while overall milk sales are declining, sales of certain types of dairy milk are growing.
US sales of flavored whole milk, for example, jumped 8.9% in the first ten months of last year, according to the USDA. During that period, sales of organic whole milk ticked up 4.4%.
Nielsen data shows that sales of lactose reduced or lactose free milk grew 11% between November 2018 and November 2019. Grass-fed milk sales grew about 51% in that period.
That specialty milk niche is attractive to Coca-Cola (KO).
In 2012, Coca-Cola launched Fairlife, a specialty dairy brand, with a partner. On January 3, Coca-Cola announced that it is acquiring the dairy company outright.
Fairlife sells lactose-free milk, which has less sugar and more protein than regular milk. It also sells an Omega-3 fortified version of the product, along with a chocolate variety, protein shakes, “drinkable snacks” and meal replacement beverages.
In a statement announcing the acquisition, Coca-Cola said that “value-added dairy products have been growing steadily in the United States.”
Beverages like lactose-free, nutrient enriched milk can help Coca-Cola achieve its goal of being a total beverage company. They also align with the functional beverage trend, which includes drinks that offer a boost of caffeine, jolt of energy or health benefits.
“From Coke’s perspective, they see milk as a powerful nutrition source,” said Paul Ziemnisky, executive vice president of global innovation for Dairy Management Inc., a trade group.
While grocery stores charge low prices for traditional milk, companies like Fairlife price their product at a premium. A 52-ounce package of Fairlife’s ultra-filtered milk goes for $3.99, making the product more than twice as expensive as regular milk, even when milk prices are high. Other Fairlife products are even pricier.
Ziemnisky pointed to Slate, which makes lactose-free chocolate milk, as another promising startup. Slate products, which are sold in aluminum cans, have much less sugar than regular chocolate milk, and more protein. Live Real Farms, which is owned by dairy farmers, has started selling lactose-free dairy and almond milk blends and bottled smoothies made with whole milk.
“We’re starting to see people think differently,” said Ziemnisky.
Source: CNN

Dairy on the rebound: Industry insiders eye positive swing in 2020

As people peruse the Farm Show and learn about the agriculture industry, CBS21 News is diving deeper into Pennsylvania’s largest ag contributor, dairy. Just this week, the nation’s second largest milk producer, Borden, filed for bankruptcy. But, PA dairy farmers say despite the news, things are getting a little better.

“Prices have been very depressed over the past four years,” said Lolly Lescher from Way-Har Farms.

For six generations, Lescher’s family has been milking cows in Berks County. From Jerseys to Brown Swiss, these Pennsylvania cattle are her families cash crop.

“We have been operating at a loss the last four years. So, we are eating away at our equity, eating away at our savings,” Lescher said.

Just this week, Borden, one of America’s oldest and largest dairy producers announced that it is filing for bankruptcy. The company is blaming a six percent drop in milk consumption since 2015 as one of the many reasons.

“It creates some uncertainty in the markets,” said Dave Smith from the PA Dairymen’s Association.

Even with that uncertainty, Pennsylvania industry experts think things are on a bit of a rebound. Prices which are set nationally have inched up this year providing a bit of breathing room for farmers.

“I think it’s better than it was a year ago. Some prices have moved up just a little bit,” Smith said.

“We are committed to being dairy farmers and I have some children that want to farm. So, we are committed to doing it long term,” Lescher said.

Long-term success for Way-Har Farms means using technology to get the most out of its 250 cattle. From Fitbits to monitor the cow’s health to robotic feed pushers, Lescher and her four kids are adapting this farm for the future.

“I am going to ride the lows and hope for some highs so they can continue on to do what they want to do as well,” she said.

Changing consumption is the best way to help a local farmer. New studies are showing the health benefits of whole milk. Lescher says if each Pennsylvania family was to drink one more gallon of whole milk a week, the industry would flourish.


Wisconsin dairy farmers suffer massive blow thanks to Trump’s trade war

Wisconsin lost 818 dairies in 2019 as farmers across the country suffer from Donald Trump’s trade war with China.

The state of Wisconsin, famous for its cheese, lost 10% of its dairy farms in 2019, Dairy Herd Management reported on Thursday. The loss of 818 dairies was the largest decline in Wisconsin history.

Trouble for dairy farmers started in 2018, when Donald Trump engaged in a protracted trade war with China. In retaliation for increased tariffs from the United States, China placed tariffs on a number of U.S. agricultural exports.

As a result, exports of U.S. dairy to China dropped by more than 50% in 2019, according to CNBC.


The Trump administration rolled out a multibillion dollar bailout for farmers as the trade war dragged on, promising to make up for the financial damage caused by Trump’s policies.

However, milk producers say the aid is not enough.

Paul Bleiberg, vice president of government relations at the National Milk Producers Federation, told CNBC that the bailout “fell short of where the damages were.” The comments mirrored a statement made in late 2018 by Jim Malhern, president of the National Milk Producers Federation.

“This [bailout] was supposed to make sure farmers were not the victims of this trade policy,” Malhern told the New York Times. “I think most agriculture producers feel that the payments have not come close to making up for the damage for the tariffs.”

According to Dairy Herd Management, the rate of dairy farmer loss in Wisconsin “has more than doubled in the last few years.”

Democratic leaders were quick to call out Trump’s role in exacerbating problems in the dairy industry.

“We have a genuine dairy farm crisis, and Trump is making it worse,” Ben Wikler, chair of the Democratic Party of Wisconsin, wrote on social media on Friday.

“These family farms are the lifeblood of so many of Wisconsin’s local economies who are now suffering because of Trump’s broken promises to have their backs,” Philip Shulman, spokesperson for the Democratic Party of Wisconsin, said in an emailed statement. “Instead of trying to buy them off with bailouts, he should wake up to the reality thousands of other farmers across our state are facing.”

More broadly than dairy farmers, the rate of farm bankruptcies has dramatically increased during Trump’s tenure. An August 2019 analysis showed farm bankruptcies in the midwest have increased by 45% since Trump started his trade war with China.

“Trump has repeatedly broken his promise to look out for the dairy industry,” Maddie McComb, spokesperson for the DNC, said in a statement. “Now farmers are paying the price as over 800 farms closed last year in Wisconsin and thousands more struggle to make ends meet under Trump’s watch. It’s clear that the crisis facing American farmers is escalating and the best solution is to defeat Trump in November.”

Trump narrowly carried Wisconsin in the 2016 election, edging out Hillary Clinton by less than 25,000 votes out of a total of 2.8 million votes cast.

Democrats are hoping to win the state in 2020, and will host the party’s July national nominating convention in Milwaukee.


Australian dairy industry calls for increase in milk price in response to the bushfire crisis

cattle stand on the side of a bushfire ravaged road in New South Wales The dairy industry is calling on the major supermarkets to immediately increase the price of milk in response to the bushfire crisis.

Dairy farmers in Victoria and on the New South Wales south coast have been badly hit by the bushfires with thousands of litres poured down the drain and extensive losses on many farms.

The dairy industry says federal and state government help is needed but the supermarkets must lift the milk price to at least a $1.50 per litre to prevent an exodus of farmers.

In a statement Coles says it’s been sourcing Own Brand fresh milk directly from farmers in Victoria and parts of NSW – none of these farmers have been directly impacted by the fires however the company is in regular contact with them and will provide further assistance if required.

Woolworths also provided a statement saying it’s been in contact with the supermarket’s dairy processor in New South Wales, who sources milk from farmers on the South Coast, to seek updates on the impact of the fires.

Once they have a full assessment of the situation, they’ll discuss how to work with the processor to provide support.

Aldi provided statement pointing to a retail milk price rise in July last year.


Dairy farm crisis continues as cost to produce milk increases, but prices to buy decrease

The nationwide dairy farm crisis continues, and it’s impacting farms in Northeast Pennsylvania, too.

It’s costing farmers more to produce milk, but some say it’s been sold at the same rate for decades, forcing 90 percent of dairy farms in the U.S. to shut down.

Two major dairy producers, Dean Foods and Borden Dairy Company have even filed for bankruptcy.

Over at the Manning Farm in Dalton, Lackawanna County, business has been good on its 150-acre farm, but that’s not the case for other farms in NEPA, because production costs are up and customer prices aren’t.

“It makes it very difficult for your average farmer to be able to produce his own milk and make any profit whatsoever,” dairy processor Ken Manning said.

Producing milk for 100 years, the Manning Farm has a way of keeping business afloat- making and selling ice cream.

Milk sales might be down- but ice cream cones and cups are helping business- something other farms could benefit from.

“Ice cream sales have been pretty good,” Manning said. “That thankfully is what keeps us afloat. I don’t think we’d survive on milk alone, so the ice cream is a big focus for us.”

“We’re one of the bigger farms around here, bigger small businesses around here. and we’re doing pretty well,” Tela Fotta said. “But there’s some smaller ones that aren’t doing so well and I really think something needs to be done to help them.”

But as Manning explained, farms face competition from almond, soy and coconut milk.

“That to me is the number one reason why you’ve seen that percentage decrease in fluid milk consumption,” Manning said. “I think the dairy industry as a whole needs to do a better job of advertising the health benefits of milk.”


Canadians want their own dairy farmers

Manitoba’s dairy farmers are beginning to find their footing in a new world that, for the first time in decades, includes significant dairy product imports.

That was the message a three-producer panel shared with the Manitoba Co-operator, at the recent Dairy Farmers of Manitoba (DFM) annual convention.

A year ago those same producers spoke to the Co-operator, saying they felt like powerless pawns in a larger game.

Today they could be described as ‘cautiously optimistic’… despite potentially losing close to 20 per cent of their market if permitted imports translate into products at the grocery store.

But despite that, Alain Phillipot, of St. Claude, said he sees a heartening silver lining — an outpouring of support from Canadian consumers for domestic dairy producers.

“Canadians have shown huge support for supply management,” said Phillipot. “After the USMCA trade deal, when negotiations began, we saw an uptake on the Blue Cow.”

That logo was a voluntary marketing campaign, where dairy producers requested processors include the logo on their label to denote the milk was from Canadian farmers. Initially processors were reluctant because they felt the logo would crowd out other information on the label.

But because of a grassroots demand to know where their milk was coming from, most of these producers have now come around and include the logo on their packaging.

Matt Plett, of Blumenort, said that while the market losses weren’t welcome, at least now the major trade deals have been negotiated, which leaves some sense of predictability.

“In one sense, it’s easier to plan because it’s done,” he said. “We have figures. We know roughly what the market is going to do.”

Matt Plett says there’s a bit more certainty for dairy producers this year.
photo: Submitted

But he also noted he’s been surprised and disappointed before, such as when the Comprehensive and Progressive Agreement for Trans-Pacific Partnership deal was signed. At that point he says he “… breathed a sigh of relief,” because he thought that was the end of trade negotiations.

“But very shortly thereafter, it came up that NAFTA needed to be renegotiated. From our perspective that came out of nowhere,” said Plett.

“So, I would say that feeling that we’re out of the woods and that this is behind us, won’t come back too easily.”

Still smarting

The losses have been very real, with estimates varying a bit, but hovering around the 20 per cent loss of market share, if the various tariff-free import allocations are fully filled.

DFM chair David Weins pegs the total lost market share at around 18 per cent, over the past several years.

Carol Boonstoppel, a dairy farmer from Grunthal, says she’s already seen European cheese being used as a loss leader to bring customers into grocery stores.

“I’ve seen (social media) posts,” she said. “‘Gouda cheese is on sale this week at Sobeys, go get your wheel or two.’”

Her concern is people will only buy so much cheese.

“If they’re going to buy a kilo of European cheese, we just lost our Canadian cheese market share.”

Phillipot noted that this was the first year that the Europeans filled their quota from CETA.

“We’ve got 17,000 tonnes competing with Canadian cheese,” he said.

That’s been offset, at least partially, by the first instalment of a $1.75-billion, eight-year plan to compensate farmers for market losses under the trade deals.

While that was welcome, Phillipot says it doesn’t match what was given up.

“What we’ve lost is forever. That’s never going to come back to Canada,” he said. “That production is lost for us. That means jobs are lost in the processing sector. The compensation will never make up what was lost.”

Still worried

While the big trade deals are out of the way, Boonstoppel pointed out that there are still agreements being negotiated.

She was speaking specifically about MERCOSUR (Argentina, Uruguay and Paraguay) and the Pacific Alliance (Chile, Mexico, Colombia and Peru).

“We had our prime minister say that there will be no more concessions made to the domestic dairy industry, but we’ve heard this before,” she said. “It still feels like there is a dagger held over us.”

She and her husband are looking at exiting the industry in the next 10 or so years with hopes that their children will take over.

“But it’s a little hard to encourage your kid to join an industry where we are unsure that what we have today will be there in 10 years for them,” she said. “Do you encourage your kid, even though they love the job, to go into something where they may face bankruptcy in 10 years?”

Phillipot agreed, saying history has proven dairy producers can’t take the government of the day’s word at face value.

“We’ve learned over time that in trade negotiations you become poker chips at the table when they start trading; and trading isn’t always transparent,” he said.

“You don’t always know what’s going on behind closed doors. Sometimes they think they’re doing something that’s helping you.”

Alaine Phillipot says he and other dairy producers were heartened by an outpouring of support from Canadians over the past year.
photo: Reuters/Rod Nickel

He cited, for example, that policy-makers claimed to have “saved supply management,” but noted the view from the farm level was far different. There they’re seeing market share surrendered domestically, while at the same time the government is agreeing to other side agreements that shut them out of potential export markets.

Phillipot was specifically speaking about the scrapping of the “Class 7” designation. Class 7 was a new milk class Canada had recently added to address the surplus of non-fat milk solids.

“So we lost three per cent of our market and now we’re not able to make it up on the export market,” he said. “They shrunk our market and then bound us to an agreement that doesn’t allow us to sell our protein concentrates. It becomes very difficult.”

Silver lining

Politically the picture is definitely beginning to lighten, the panel participants said.

One of the biggest victories came in the October federal election, when Maxime Bernier, the most vocal opponent of the industry’s supply management system, lost his Quebec seat to a former dairy farmer.

“To me, Canadians have clearly shown they trust us and they’re behind us and we want to be good stewards of that trust,” said Plett. “Also, the fact that a former dairy farmer beat Max Bernier in his own riding, I find encouraging.”

But despite receiving the public’s support as well as the support of the four major political parties, dissenting voices on supply management are still there. And it wasn’t lost on them that Bernier came very close to strengthening those voices when he came within a hair’s breadth of winning the Conservative party leadership race. However, Phillipot was quick to point out that, while it wasn’t the only plank in his platform, it was the issue that sank him, in the end.

“I don’t think we should ever feel safe because then you start to take things for granted,” cautioned Plett, though he did agree the major parties have all clearly demonstrated their support.

“I think it was good that, in his own riding, Bernier was easily beaten by a Conservative despite splitting the (small-c) conservative vote,” Plett said. “The fact that he raised this as a wedge issue and subsequently lost the Conservative party leadership and then his own seat, are promising things. But the ideas are always out there.”

Consumer support

In the end the Canadian consumer was the greatest source of optimism for these farmers.

“I’m more confident now than I was before because we’ve seen Canadians back us up,” said Phillipot. “After this election, it became clear that people are behind us. That’s what’s going to count in the end.”

He said he is currently investing in his dairy now and that his son will be entering the business soon.

“I believe there is room for him and that he’s got a future,” Phillipot said.

Boonstoppel is also feeling a little more positive, for similar reasons.

“The Canadian consumer has really stepped up to the plate,” she said. “We’ve actually seen a market increase of consumers wanting our Canadian product. As long as we have a Canadian consumer who’s willing to buy our product, we’ll be here.”

Plett is in a bit of a different position than Alain and Carol because his kids are a bit younger.

“We’re not really at that crossroads yet of what the future holds,” Plett said. “But I’d probably echo their sentiments. In one sense, nothing’s changed. UMSCA has not been ratified yet, so how that will end up looking is a still up in the air. But the support that Canadians have shown towards the dairy industry is encouraging.”

Phillipot summed up the mood when he said challenges weren’t unique to the dairy sector.

“Challenges exist no matter what industry you’re in. We’re in a good industry and there’s a lot of camaraderie in the dairy industry,” he said. “These challenges always need to be dealt with but we’ve shown the ability to do that in the past and I trust that we’ll figure it out for the future as well.”


Dairy industry woes show need for Farm Bill fixes, lawmakers told

Moves by two of the country’s biggest dairy producers – Borden Dairy and Dean Foods – to file for bankruptcy show the need for immediate action to strengthen Pennsylvania’s dairy industry, the chairman  of the state’s dairy future commission  told lawmakers on Tuesday.

Borden Dairy, announced Monday that it is filing for bankruptcy protection. The announcement followed the bankruptcy of Dean Foods Co., the nation’s largest milk producer, in November.

The issues facing the dairy industry arose at a legislative hearing held at the Pennsylvania Farm Show, the nation’s largest indoor agricultural expo, running all this week in Harrisburg.

Brett Reinford, chairman of the Pennsylvania Dairy Future Commission, created as part of the state’s PA Farm Bill, said that the pair of bankruptcies show that the dairy industry has problems that need to be confronted.

“It’s a clear sign dairy is struggling across the nation and here in Pennsylvania. We really need to figure some things out,” said Reinford, the owner of Reinford Farms, a dairy farm near Mifflintown. He added that he expects the 23-member commission will hand down “unique” and “bold” recommendations about what ought to be done to help the dairy industry in Pennsylvania.

The commission has only met three times, including an initial organization meeting. Its recommendations are due by Aug. 1, he said.

“I would expect to see, a minimum of 15 recommendations but upwards of 30 or 40,” Reinford said.

Reinford said the commission is focusing in four general areas, farm-level, market-level, state-level and consumer-level. Farm-level changes would trying to suggest how farms can reduce production costs. The market-level will be looking at whether the Port of Philadelphia can be better-used to export dairy products. State-level changes could include recommendations about tax policy reforms that might help dairy farmers. And At the consumer-level, the commission is looking at things like product-innovation and trying “to build consumers for life,” Reinford said.

Senate Agriculture Committee Chairman Elder Vogel, R-Beaver, said the Borden bankruptcy seems like “another domino in the domino effect. I don’t know where it’s all going to shake out.”

Agriculture Secretary Russell Redding told lawmakers that the implications of the Dean Food bankruptcy raises more immediate concerns in Pennsylvania because of the amount of business that processor does in this states.

“Fifty percent of fluid milk processed in Pennsylvania is done by Dean Foods,” Redding said. “It’s critical we’re paying attention to that.”

Pennsylvania ranks seventh nationally in total milk production, with nearly 520,000 cows producing more than 10.6 billion pounds of milk annually, according to the Department of Agriculture.

According to the Associated Press, the amount of milk that Americans drink annually has fallen 40% since 1975. In 1996, annual milk consumption was roughly 24 gallons per person, a number that dropped to 17 gallons per person in 2018.

Meanwhile, sales of oat milk increased by a whopping 636% between 2018 and 2019. Cow’s milk sales fell by 2.4% during those same 12 months.

The commission isn’t the only effort included in the Farm Bill to help the dairy industry, Redding said.

The Farm Bill also included a $5 million Dairy Investment Program to help support on-farm innovation to help farmers expand into value-added products like cheese, yogurt and ice cream, he said.


US dairy industry suffering as Americans consume less milk

Borden milk for sale Monday in Richmond Heights, Ohio. Photograph: Tony Dejak/AP

The US dairy industry, the largest in the world, is under severe pressure as the consumption habits of Americans shift.

Borden Dairy filed for bankruptcy protection, the second major US dairy to do so in as many months. Borden produces nearly 500m gallons of milk each year for groceries, schools and others. It employs 3,300 people and runs 12 plants across the US.

American refrigerators are increasingly stocked with juice, soda and milk substitutes made from soy or almonds. At the same time, protein bars, yogurts and other on-the-go breakfasts have replaced a morning bowl of cereal. That has hammered traditional milk producers like Borden, which was founded in 1857.

The amount of liquid milk consumed per capita in the US has tumbled more than 40% since 1975. Americans drank around 24 gallons a year in 1996, according to government data. That dropped to 17 gallons in 2018.

As milk consumption has fallen, dairy farms have closed their doors. In court filings, Borden says 2,730 US dairy farms have gone out of business in the last 18 months alone. The remaining farms can command higher prices, but that pinches Borden, which can’t charge consumers more because of pressure from big competitors like Walmart. Walmart opened its own milk processing plant in Indiana in 2018.

“Despite our numerous achievements during the past 18 months, the company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry,” said Borden CEO Tony Sarsam in a prepared statement late Sunday. “These challenges have contributed to making our current level of debt unsustainable.”

Borden tried to revive sales last year by relaunching its iconic mascot Elsie, the smiling cow that first appeared on milk cartons in the 1930s. It also released new products like gingerbread-flavored eggnog and Kid Builder, a children’s milk with higher levels of protein and calcium designed to compete with Fairlife, a trendy milk brand made by Coca-Cola Co. Borden said sales rose, but not enough to offset broader trends in the industry.

Dean Foods, the nation’s largest milk producer, filed for bankruptcy protection in November. Both dairies are based in Dallas. The two companies controlled about 13.5% of US milk sales last year, according to Euromonitor, a consulting firm.

Like Dean, Borden says it will continue to operate during its restructuring. Late last month, a Texas federal bankruptcy court allowed Dean to access $850m in debtor-in-possession financing.


Wisconsin Loses 10 Percent Of State’s Dairy Herds As Fallout From Low Milk Prices Continues

Terry Chea/AP Photo

Wisconsin lost 10 percent of the state’s dairy farms in 2019, breaking last year’s record high.

The latest data from the state Department of Agriculture, Trade and Consumer Protection shows there were 7,292 registered dairy herds in the state as of Jan. 1.

That’s 818 fewer than at the start of 2019 and the largest decline since state records started in 2004. Wisconsin lost just over 7 percent of its herds in 2018. 

Mark Stephenson, director of dairy policy analysis for the University of Wisconsin-Madison, said Wisconsin usually sees a 4 percent decline in herd numbers each year. But the prolonged period of low milk prices from 2014 to 2019 have forced many farms to sell their herds.

And Stephenson warns the decline will likely continue, even though milk prices have started to improve.

“I think we’re going to find that this has a long tail. Our milk prices are recovering right now and it’s a much better time for milk prices than it was say at the beginning of 2019,” Stephenson said. “But there are a lot of farms that just have such damaged balance sheets that I don’t think they’re going to recover from this. It’s a matter of when they decide they need to exit the industry.”

But Bob Cropp, UW-Madison professor emeritus, said he’s hopeful things will improve in 2020.

“For the year, we’ll definitely have a higher price. So that will slow the exiting of dairy farmers, I would think, if those things improve. And in fact, we may see some dairy farmers trying to get back a little bit of their dairy herds,” Cropp said.

Stephenson said most of the affected farmland has stayed in agriculture, either being bought out by another operation or farm owners switching to crops or raising livestock. 

He said Wisconsin’s identity as “America’s Dairyland” or the state’s dairy industry as a whole isn’t in jeopardy.

“I think we can look forward to a dairy industry for a long period of time and we aren’t producing any less milk than we did last year. In fact, it’s a little bit more. It’s just happening on fewer farms,” Stephenson said.

Florence County lost its last remaining dairy farm, joining Forest and Oneida Counties with zero registered herds.

Clark County continues to have the most dairy farms at 729 herds. 


Germany introduces new milk production standards

The organization, which is an initiative of The German Farmers’ Association (DBV), German Raiffeisen Association (DRV) and German Dairy Industry Federation (MIV), provides a process assurance system for milk production.

The aim of the QM Milch standard is to monitor the production process, thereby assuring the quality of the raw milk at farm level.

The QM Milch standard covers all the basic requirements that must be met throughout the process of producing cow’s milk in Germany. It applies to all milk producers who participate in the QM Milch certification program, both voluntarily and pursuant to the terms and conditions for milk deliveries set by dairies. Under the certification process, suitable arrangements are made to place the certification body in a position to provide all relevant certification services.

QM Milch’s list of criteria sets the conditions to be met for its certification program, which stem from legal provisions, good farming practices, and further requirements for milk production.

Animal health and well-being

Producing milk as a foodstuff must respect certain hygiene and housing conditions, the document says. Additionally, there are strict provisions relating to the health of the cattle. Also, cows that produce milk as a foodstuff must exhibit no recognizable signs of general health problems.

Routine monthly herd inspections are carried out to check udder health. Should there be a suspicion that an animal has an udder infection, an individual examination is necessary to determine how to treat the animal, or to ascertain whether it suffers from a chronic infection, or is resistant to treatment.

Animal identification and the farm register

Statutory provisions stipulate milk producers must place two ear tags on each cow. According to the order on the movement of livestock (Viehverkehrsverordnung -VVVO), each livestock producer must also keep a farm register. Any changes to the herd must be recorded in the official database on identification and origin (HI-Tier-Datenbank).

Milk production and storage

Milking parlors must have sufficient lighting and ventilation. The milking equipment, clusters and cooling tanks must be serviced regularly. There are specific hygiene requirements for milking that must be respected by the milking staff. The milk must be cooled and stored in a way that guarantees that it will not be adversely affected.


There are special requirements on the purchase and use of feed.

Milk producers may only use bought-in feed (compound and straight feed) from manufacturers and traders who respect an agreement based on the national standard feed framework agreement.

Feed is tested for any undesirable substances in the framework of monitoring programs carried out by official bodies and other institutions. Every delivery of feed must also be documented by the milk producer with delivery certificates, itemised invoices, or other elements of proof.

Veterinary medicinal products (VMPs)

Milk producers must clearly identify all cattle that have been treated.

Milk is regularly checked for inhibitors (several times a month), and all milk producers carry out their own on-farm checks to attend to their herds with the help of a veterinarian.  Milk producers must also record every instance of VMPs being used on their livestock.

The document also notes that dairies need to carry out regular chemical analyses of the milk or dairy products. General checks and individual examinations test for substances (residues and contaminants), which are harmful or could lead to undesirable changes to the organoleptic properties of the milk or dairy product.

The new standard came into effect January 1, 2020, and replaces the QM Milch standard 2.0.

The standard is a dynamic system that is constantly being further refined to include new findings and requirements, and it will be updated every three years.

Documents are available online​, in German, with English versions available.


New Zealand slams illegal sales tactics employed by unregistered raw milk firms

The New Zealand Ministry of Primary Industries (MPI) enforced regulations in 2016 to govern the sales of raw drinking milk to the public, requiring all sellers to register with the ministry, follow a particular set of hygiene rules when harvesting, bottling, storing and distributing the milk, frequently test their milk, and keep contact details for their customers in case of food safety issues.

A review​ took place around the end of 2018, and the ministry opened the review to seek public consultation​ from both suppliers and consumers in May 2019.

Despite these regulations having been in place for several years, MPI has said that raw milk sellers are still trying ‘various tactics’ to sell their product without registering with the ministry.

“[These] suppliers have been using various tactics in an attempt to continue selling their product, including selling it as bath milk or pet milk,”​ said MPI Food Compliance Manager Melinda Sando via an official statement.

“These tactics are not legal in our view and are a way [these sellers are trying to] get around the regulations and avoid the costs associated with being compliant including food safety testing costs, registration costs, and audit costs.”

She added that if discovered, these sellers would be penalised accordingly and that pleading ignorance would not be accepted as an excuse.

“[All] suppliers were able to take part in the consultation process around the introduction of new raw drinking milk regulations – [They] knew what the rules were designed to do and why they were brought into effect.
“They need to stop selling unregulated product immediately and will only be able to resume selling once they have met all requirements to make them compliant.

“We make no apologies for holding to account people who are breaching the regulations. The rules exist for a reason – to protect human health.”

The dangers of raw milk

Raw milk is essentially unpasteurised milk. It has been known to contain harmful bacteria that could cause illnesses, which was what prompted the MPI rule enforcement back in 2016.

“Raw unpasteurised milk is a risky product as it hasn’t been heat-treated (pasteurised) to remove illness-causing bacteria including E. coli, listeria and Campylobacter,”​ said Sando.

“These types of bacteria most commonly cause severe diarrhoea and vomiting, but occasionally some have been linked with more serious complications that include miscarriage, paralysis, meningitis, and serious kidney problems in children. Raw milk may also be a source of tuberculosis (Tb).

“There have been multiple instances in the past of people getting sick after drinking raw milk from some of these suppliers.”

Nonetheless, years after the rule enforcement, this is still a source of debate for raw milk supporters in the country, many of which claim that pasteurisation merely removes a large amount of the milk’s original nutrients, and that good bacteria is destroyed along with the bad in this process.

“Years ago, people who lived in rural areas would have had easy access to milk, [but] with increasing urban density, those who lived in the city would not have had this. [Days-old] raw milk, was associated with increased risk of disease like tuberculosis – [which] is where pasteurisation came into play,” ​said microbiologist Kate Greeneklee in a presentation supporting raw milk.

“It was acknowledged that pasteurisation changed the taste of milk and decreased some of its nutrition, but this was far outweighed by the reduction in illness.

“[I believe that today], pasteurisation is no longer necessary to prevent diseases [like diphteria] or to deter food-poisoning bugs like Listeria – having healthy cows, keeping the milk properly and consuming in a few days is what’s important.”

MPI’s published list of registered dairy operators licensed as of December 2019 to sell raw milk shows 25 such firms – two fewer than the 27​ that were available back in 2018.

That said, MPI stressed that the aim was not to shut down the raw milk industry as a whole.

“We support consumer choice. We’re not saying people can’t drink raw unpasteurised milk. What we are saying is that when people do choose to drink raw unpasteurised milk, they’re able to make that choice with a degree of confidence that the milk they’re consuming is produced within the regulatory framework,”​ Sando emphasised.

“Purchasing from MPI-registered suppliers who are being audited regularly to ensure they are managing risks and testing regularly helps consumers reduce the risks if they choose to drink this product.”


Australian supermarkets told to raise milk prices as dairy farming industry ‘devastated’ by fires

The dairy farming industry will be “devastated” from the bushfires unless supermarkets raise milk prices and government assistance becomes available, a prominent farmer is warning.

Key points:

  • Dairy supplies could be at risk as a result of deadly bushfires destroying livestock and charring land
  • One farmer said raising milk prices to as much as $1.75 could help save the dairy industry
  • Worsening drought conditions and production costs are pushing dairy farmers out of business

Bushfires have killed as many as half a million animals this season, including livestock across the NSW South Coast and Gippsland in Victoria.

Thousands of cattle, sheep and horses have perished in the blazes, while some farmers have been forced to euthanise hundreds more.

South coast dairy farmer Robert Miller said fresh milk supplies could be significantly compromised as bushfires rage through crucial dairy land.

“Every dairy farmer in NSW is suffering now. We’ve got a shortage of milk and it’s only going to get worse,” he said.

“The whole of our rural economy is going to be greatly affected.”

But the dairy industry is already struggling from the crippling effects of drought and persistently low milk prices.

Fires have destroyed more than 160 hectares of his pasture — half of his farmland — near Milton.

He was able to save half of his heifers near Cobargo, but around 200 perished on New Year’s Day.

“It’s emotional and stressful enough just dealing with the fires at home but having to euthanise animals … it’s our livelihood,” he said.

Mr Miller said closed roads have meant limited access to the fodder required to feed the animals who survived the bushfires.

“I’m out of feed. We’re waiting on trucks to bring feed in but with the fires, it’s too dangerous to bring hay in. All the paddocks and pasture has been burnt.”

While many farmers are still yet to assess the extent of damage, Mr Miller said urgent Federal Government assistance is needed for coastal areas considered too lush to be in drought.

“We’ve got no cash reserves. We’ve been in drought for so long. We can’t meet the $10,000-$15,000 a day bill to feed animals,” he said.

Mr Miller said although he could access concessional loans, they fell short of the “$2 million interest-free” drought funding that would bolster the recovery effort in the aftermath of such a disaster.

“We’re after the proper loans to assist us. The Prime Minister needs to make these changes immediately,” he said.

“We’re not desert anymore, we’re a lunar landscape here.”

A spokesperson for Minister for Agriculture Bridget Mackenzie said there are emergency payments available in fire-affected areas, including the Bega Valley in NSW.  

“Some assistance drought measures are available to farmers in hardship regardless of the cause”, the spokesperson said.

Mr Miller said retailers should also lift the price of dairy products on Monday to help support the industry.

“It needs to go up. I was saying $1.50 a litre but maybe it needs to go to $1.75,” he said.

Supermarkets likes Coles and Woolworths said recent fires have not impacted fresh milk supplies.

But Max Roberts, President of Bega Cheese, said that could change as many farmers were unable to collect milk due to power outages.

“When the fires went through we lost power to a number of dairy farms and cattle weren’t milked for up to 60 hours,” he said.

“There’s certainly going to be a loss of production there.”

The industry has already suffered a tragic blow with the deaths of prominent dairy farmers Patrick and Robert Salway in Cobargo while protecting their home from a bushfire on the NSW South Coast.

Nowra-based farmer and recently appointed NSW Dairy Advocate Ian Zandstra said significant production costs and worsening drought conditions could force many farmers out of the industry.

“Some farmers have been devastated and they will have a hell of a challenge ahead of them with the cost of purchasing feed and rebuilding their farms,” he said.

“It’s a high cost industry and it needs to be willingly targeted with federal support.”

“It’s not an industry you can enter and exit so easily at will.”

Source: ABC

Wisconsin Dairy Farms Decrease by a Tenth in 2019

Another year of low milk prices brought the total number of dairy operations in Wisconsin down by a tenth in 2019.

According to the state’s agriculture department, there were 7,292 herds milking during the first week of January. That’s a drop of 818 since the same time a year earlier. In comparison, America’s Dairyland lost 691 herds during 2018, and 503 in 2017. Clark County continues to hold the highest number of herds in the state with 729, followed by Marathon County with 438. Milwaukee County registered just one herd as of January 1, with Forest, Florence and Oneida Counties each losing their remaining dairy farms during the past year.

Despite having less herds, the state’s remaining dairy operations are still milking over 1.28 million head of cows and producing a record amount of milk. DATCP records show that 90 percent of state dairy operations are Grade A certified, with 10 percent licensed as Grade B. Wisconsin has been keeping track of dairy farm numbers since 1950. At that time, the state had 143,000 dairy operations and accounted for about four percent of the nation’s total dairy farms.

Source: Wisconsin Ag Connection

Chinese dairy giant seeks scale, eyes expanding domestic market

The year past was special for China Mengniu Dairy Company Limited. For the first time, Mengniu made it among Brand Finance’s list of top 500 most valuable brands in the world. 

Established in 1999, the company has grown into a mature dairy company in China in just 20 years, sharing dominance of the Chinese dairy market with its main competitor Yili Group. 

Last year Mengniu acquired Australian infant formula maker Bellamy’s Organic and Lion Dairy & Drinks, Australia’s second-largest milk processor, respectively for 1.5 billion Australian dollars (one billion U.S. dollars) and 600 million Australian dollars (418 million U.S. dollars). 

Branding was the first thing that pushed the company to make the acquisition, said Jeffrey Lu, CEO of Mengniu. Bellamy, for example, as a world leading organic infant formula, is complementary to the company’s portfolio and will enhance its competitiveness in the infant formula market.  

After the acquisition, Bellamy is expected to see huge growth by expanding markets outside Australia, which had a population of only 24 million in 2017, signifying a much smaller market compared to China and Southeast Asia. 

“Having the growth opportunity will definitely bring more opportunities for the supply chain, and for the upstream, which includes the farmers [in Australia],” the CEO said, adding “so this…I see a perfect match, is a strong brand, very good nature [of Australia], strong upstream supply chain and huge opportunity to grow.” 

Raising dairy consumption in China may restructure world dairy supply chain 

China’s dairy market of 62 billion U.S. dollars is still little more than a tenth of the world’s by value. But according to research firm Euromonitor, it will overtake America as the world’s biggest market for dairy by 2022. 

Today, the annual per capita consumption of dairy products is 36 kilograms in China, while the average per capita global milk consumption amounts to about 100 kilograms.

“This means that you have three times to grow…that was a very important message meaning that the local production will expand. I always said that the Chinese dairy or nutrition improvement will have a big impact to the global supply chain of dairy, maybe an opportunity to even restructure the total supply chain,” Lu said.

Lu explained that this restructuring will affect where cows are grown, how to feed them, and also how to improve efficiency. 

“There will be a reorganizing to a certain extent,” he said. 

Source: CGTN

Dairy Processors Milking Kenya Farmers Dry

Ten years ago, for every litre that a farmer sold to milk processors, they were paid Sh28. The firms would refine the milk and extract cream, butter, ghee and cheese. All these valued by-products would then find their way to supermarket shelves.In the case of the consumers, for every half-litre packet of milk sold at various retail stores across the country, they paid an average of Sh33 or Sh66 for a litre in 2009.However, last year, milk processors paid farmers on average Sh35 per litre of raw milk, Sh7 more than the Sh28 they paid in 2009.Meanwhile, consumers forked out an additional Sh38 for the same quantity of processed milk, according to official data.While retail prices for milk went up by 57 per cent in the nine years to 2018, farmers who delivered milk to processors during this period saw their earnings increase by a slower rate of 26 per cent.Everyone else in the dairy supply chain has been having a party except farmers and consumers, with the former receiving little for their sweat and the latter paying through the nose for a pint of milk.

Prices of many goods and services did change during the nine years to 2018, including dairy products, however, the farmers’ share in the increase has been limited. The high cost of living might have hurt Kenyans, but it has devastated dairy farmers whose produce has continued to fetch very little from processors.It was even better for milk processors and other market intermediaries during the dry season.After a crippling drought in 2017, non-producers benefited from a 79 per cent price increase, while farmers only managed a 39 per cent increase despite digging deeper into their pockets to ensure supply of the critical commodity. But with the cost of living – measured by tracking the changes in prices of certain essential consumer products – increasing by more than 60 per cent, farmers have seen the little they might have gained from the price increase wiped out.Data from the Kenya National Bureau of Statistics (KNBS) has also confirmed what has since turned into a crisis, with milk farmers in some parts of the country struggling to make ends meet after some leading milk processors decided to reduce prices they paid farmers citing an oversupply of the produce.Following the milk glut, some farmers are reported to have poured thousands of litres down the drain, even as consumers around the country continue to pay higher prices amid the unusual rise in supply.Currently, a half-litre packet of milk is going for around Sh50.Some MPs have called for the import of milk particularly from Uganda, to be stopped. However, given that the two countries are in the East African Community, it is difficult to bar the free flow of products across the borders.Even as some dairy farmers have suffered a decline in farm-gate prices, the cost of animal feeds, which is their largest overhead cost, has increased by 73 per cent during the nine years.The cost of 100 kilogrammes of animal feeds rose from Sh842 in 2011 to Sh1,454 in 2018, ravenously eating into farmers’ earnings.Timothy Njagi, a research fellow at Tegemeo Institute, a policy think-tank, said that although there has been over-production of the milk due to good rains, the structure of the dairy industry and market is also “killing farmers.”The industry is dominated by a few processors who absorb over 90 per cent of the total milk that is available for sale. These processors include Brookside, New KCC, Githunguri and Kinangop.This generally means that the processors have the bargaining power when determining prices to be paid to farmers.As a result, there is a possibility of abuse of buyer power, with  an Economics lecturer at Maseno University, Scholastica Odhiambo, noting that there is a need to encourage more producers to form cooperatives to negotiate prices on their behalf.One such cooperative that has since become the yardstick for success in the sector is Githunguri Dairy.Dr Odhiambo said that as more milk is produced with less market access, prices become depressed.“As we stand, an individual farmer’s power of bargaining is dismal,” she said.In some areas such as Nyandarua, leading milk processors have been buying raw milk at Sh17 a litre, down from Sh30 two months ago. However, in other regions such as Kitale in Nzoia County, farmers have been receiving as high as Sh33 for a litre.Earlier in the year, regulations were mooted that sought to prohibit smallholder farmers from hawking milk, a move that would have played into the hands of huge processors who have been pushing for factory-processed milk.The regulations have since been shelved following an outcry from the public.Farmers might also be suffering from the effects of the defective 2017 subsidy programme, which saw 15,312 tonnes of cheap powdered milk valued at Sh4.9 billion brought into the country duty-free.In Nyandarua, for instance, farmers told The Standard that their milk business had declined substantially over the past year.One of them, Joseph Gitau, said the move to liberalise the market had made it impossible for them to sell their milk at a better price.The farmer at Milangine village, who has been in the dairy business for more than 10 years, says the venture is no longer sustainable.“Feeding my family is now a struggle. I don’t know how I will pay school fees for my children beginning January. It is tough,” said Gitau, one of the prominent dairy farmers in the area.Two months ago, things changed for the worse after milk processors dropped the purchase price of the commodity by almost Sh20.The processors among them New KCC, Brookside Dairy, Nyala and Kinangop dairy factories dropped the price from Sh35 to Sh17 per litre.Before this, the milk prices had dropped to Sh23.Nyala Dairy Cooperative Society director James Njuguna said there was a milk glut in the region and no market.“We have been forced to reduce the buying price as there is a lot of milk in the region and yet we have no place to sell our produce. This is our last option,” he said.Officials from the New KCC Nyahururu region and Kinangop Dairy declined to comment on the matter.Another farmer, Jane Muthoni, said they have incurred heavy losses as a result of the price drop.“There was no explanation given by the management of the dairy processing plants where we deliver the milk. It took effect simultaneously in all dairy plants,” she said.“We need help from the government as prices of hay prices and other food for our animals keep on increasing. We do not understand why they dropped the milk prices.”John Njenga, a farmer in Shauri village wondered why the milk prices reduced and yet the commodity was in high demand.“It is common sense that when the commodity is in high demand, the price goes up. We are experiencing the opposite in Nyandarua,” he said.Local leaders led by Nyandarua Women Rep Faith Gitau have now called for the government’s intervention. The MP blamed middlemen for exploiting farmers.“They are taking advantage since not all farmers are able to drop their milk to the local dairies. The government must come to the rescue of the farmers and control the dairy sector,” she said.

Source: Standard Media

A nonprofit that’s supposed to promote dairy pays its leaders millions — while the farmers who fund it are going out of business

Wisconsin lost almost 800 dairy farms in 2019. Is the 2020 outlook better?

After one of the toughest years on record for Wisconsin’s signature industry, dairy farmers across the state are hoping for a better outlook in 2020. Two key events have the potential to reshape the landscape for farmers, experts say: The passage of the USMCA agreement and President Donald Trump’s recent announcement that on Jan. 15 he plans to sign phase one of a deal with China that would begin deescalating trade war tensions between both countries.

Calf on Dutch Dairy LLC in Thorp on January 1, 2020 (WSAW Photo)

But after Wisconsin lost 773 dairy herds in 2019, an increase of more than 100 farms lost from the previous year, Wisconsin farmer and Vice President Patty Edelburg of the National Farmers Union says most farmers are simply ready to leave 2019 behind.

“We have a few new markets open to us, when it comes to dairy,” Edelburg said. “We’re hoping for higher prices. If we don’t see higher prices…I have a feeling we’re gonna lose quite a few more farms like we did this last year.”

Milk prices going into this January are slightly higher than last year’s January price of $16.90 per hundredweight, according to the United States Department of Agriculture. For Amy Penterman, owner of Dutch Dairy in Thorp and the Vice President of Dairy Business Association, that’s a promising start to the year.

“We’re just hopeful, and we have a lot of optimism on the horizon, we just hope to continue to build on that,” Penterman said. “Farmers are so resilient, and when times are tough—they just keep going…We’re gonna see through the end of the tunnel, and we’re gonna make it.”

If milk prices rise and fair weather holds, dairy and crop farmers alike can hope to make it through another year, Edelburg noted. But Edelburg worries for the smaller dairy herds that find it difficult to survive amid increasingly larger dairy farms. According to statistics produced by Dairy Farmers of Wisconsin, milk production has soared from 11 billion pounds of milk production yearly to more than 30 billion pounds since 1930, while the number of farms has decreased from more than 150,000 to fewer than 8,000 in that same period of time.

“We can’t afford to lose any farms anymore here in Wisconsin,” Edelburg noted. “That’s just a detriment to a lot of our small communities and our small towns.”

While the trade war has had a higher impact on commodity farmers, decreasing tensions ahead of the anticipated January deal between the U.S. and China could still have a trickle-down beneficial effect on dairy farmers, experts agree. Additionally, the USMCA agreement will bring changes—and new markets.

“Once our buyers and our investors can see there’s a future in trade and that there’s other countries that are buying, then that will give us some stability so that we have something to work towards,” Penterman noted.

Edelburg, however, says the National Farmers Union isn’t sure how beneficial the USMCA will be for the dairy industry in particular.

“We’re not really excited about the whole idea of USMCA, that it’s gonna be a huge fix for dairy,” Edelburg told NewsChannel 7. “There’s some potential for some new markets there, with Mexico and a little bit more with Canada. We may see improvement in milk price with that, but that’s yet to be determined.”

The resilience of farmers in the face of adversity, however, is what will keep the industry going.

“There’s not one farmer that’s not a hard worker. Every farmer, no matter what, works their tail off.”

Source: WSAW

Biggest Dairyfarm in China 20,000 milking cows

Professor Li Sheng Li and Joep Driessen on one of the biggest farms in the world, very well managed by the Chinese.
Highlights: They have one feeding space and one resting space per cow. Also, there’s have a stress-free calving line. They are doing a good job within the system they have.

Some more details: 20.000 milking cows, 8 rotaries of 80 cows. 1 barn is almost 4 hectares. Within half an hour they have the milk packed and shipped. Top quality milk, low cell count: 150.000.


Future of fresh milk drains away with another Australian producer bowing out

Drought and a broken industry has claimed another dairy producer, Big River Milk which processed and bottled its own brand of single-source coffee milk.

Another dairy producer has closed its gates, offering the enterprise for sale, citing drought, cost of feed and other issues like saline creek water for turning off the tap to production.

An unsympathetic consumer hasn’t helped, with half continuing to pay $1.10 a litre – as much as niche brands spend in processing and transport.

“The cost of bottling and delivery was more than we could get when we competing against Norco and others,” said Big River director Tim Bale. “The value of Big River Milk was in its single source product with no additives and the cafes loved it but they didn’t want to pay too much.

“At the end of the day retail prices affect the whole industry. It’s disappointing but in hindsight we should have pulled the pin 12 months ago.”

As if drought, high grain prices, and threat of nearby bushfires weren’t enough, an important water source for the farm – Alumy Creek – turned saline as river levels in the Clarence dropped and council opened flood gates to kill aquatic weeds and reduce acid sulfate run-off.

Tilba Real Dairy on the South Coast milks 230 Jersey cows and is surviving but charges more than $5 for two litres just to keep afloat. Bottling and transport costs alone equal the price of no-brand milk in the major supermarkets.

General manager Erica Dibden is calling on consumers to ask themselves how much do they value premium quality milk and do they want to maintain Australian owned industries into the future.

“How do we create a value for a product that is so manipulated and so squashed down?” she says.

At the consumer end there is no empathy. They always expect things to stay in the shop forever but there is no guarantee.

“This issue has been going on for a long time. But this drought is scary and tragic and people are not taking the issue of food security seriously enough.”

Norco chairman Greg McNamara said the price issue wouldn’t go away as long as half the consumers chose to buy at the $1.10/l price.

And yet the loss of farmers remains “scarily real” with fresh milk production down from 8.3 to 8.1 billion litres last year and back from 12bl in 2002.

Part of the problem is a single price for fresh milk up and down the eastern seaboard. The cheaper production costs associated with Victoria are exacerbated this year with northern NSW and Queensland in drought while the south records its best season in two decades.

Independent milk producer Greg Dennis, Scenic Rim Real Dairy near Beaudesert, Qld says his enterprise remains in production and the brand enjoys a terrific on-line reputation but in the last three years sales have been compromised by enormous pressure from the major processors with the most local cafes reluctant to pay more.

“At the consumer end there is no empathy,” he says.

“They always expect things to stay in the shop forever but there is no guarantee.”

“We are setting ourselves up for a massive failure because no one is listening to market signals.”


Australian dairy: The M&A story for 2020

Amidst battery minerals and fintech stocks, Australia and New Zealand’s dairy companies have become the cream of the crop, maintaining steady growth.

But is this pattern of global growth likely to extend beyond 2020? It’s the question on everyone’s lips as this year’s prize cash cow enters a period of geopolitical volatility.

Over the next 12 months, Australia’s dairy producers will see slight uptakes in commodity prices, but this will do little to offset rising production costs and difficulties faced by local farmers. Even as demand is forecast to remain robust in the coming years, analysts say global producers could become constrained by the supply market.

As China’s economic boom begins to slow, some say the Aussie dairy sector could be left crying over spilt milk.

The surge in Chinese milk-powder imports

In 2008, China was rattled by an epidemic that affected over 300,000 infants. The culprit was melamine; a chemical compound used in fertilisers and plastic production that was used as an additive in the country’s homegrown baby formula products.

Eleven years later, trust in Chinese-brand infant formula has failed to return, with consumers continuing to look internationally for milk-powder suppliers. The scandal was the catalyst for a rise in imports, setting up global dairy players to meet growing demands.

Source: Quartz, Dairy Association of China, 2018

Key dairy players

Following the scare, Australian and New Zealand companies emerged as key suppliers of powdered milk and infant formula to China.

According to Dairy Australia, our homegrown producers manufacture two per cent of the world’s dairy, but end up accounting for six per cent of the global supply.

Large-cap A2 Milk (ASX:A2M) brought in A$1.2 billion in revenue over FY19, up a staggering 41 per cent on the previous financial year’s figures. The company also recorded a 47 per cent increase in profits from FY18, and analysts say this growth is set to continue. A2M is poised to build on its forecast annual earnings by 14.6 per cent across the next three years as it responds to Chinese demand.

The major Australasian dairy company isn’t the only producer making waves, with Bellamy’s Australia (ASX:BAL) stocks tacking on substantial gains during this year’s third quarter. At the beginning of September, BAL’s share price was listed at A$7.77 but surged to A$13.03 within a fortnight after accepting a A$1.5 billion buy out from Chinese dairy company Meinghu.

Despite acquiring contracts with Eastern players over the last 12 months, shares in Bubs Australia (ASX:BUB) have barely budged. Analysts attribute this to a hunger for expansion in a period of volatility, with prevailing uncertainty over the dairy sector’s impending roadblocks. Only time will tell if Bubs has bitten off more than it can chew, though forecasters say the company could overcome obstacles become profitable over the next three years.

The long road ahead

But even as large caps enjoyed steady gains, these figures diminish against the landscape of last year’s returns.

In 2018, many of these conglomerates averaged 170 per cent growth; nowadays, these companies have tumbled 20 per cent in the year-on-year stats. Smaller companies are failing to fare much better — out of the 17 ASX-listed companies with exposure to dairy, just seven recorded a profit in FY19, and these are predominantly conglomerates who maintain a large slice in the dairy sector pie.

“The outlook for FY20 remains tough. Falling milk supply and excess manufacturing capacity is continuing to cause fierce competition for milk and is seeing dairy manufacturers once again offer a farmgate milk price well in excess of what it should be under more normal circumstances,” says Morgans senior analyst Belinda Moore.

Will Chinese demand slow?

In 2019’s second quarter, China reported its lowest GDP growth figures in 30 years. As one of the world’s largest economies begins to slow, trade volatility with the U.S. has created uncertainty over China’s future dairy demands.

“China is the world’s biggest dairy importer and home to the largest group of participants on the dairy auction platform,” says New Zealand bank ASB senior rural economist Nathan Penny.

“[China’s] growth has been slowing over 2019 and the purchasing power of its currency has also weakened recently … nonetheless, the Chinese household sector and its food purchases are faring better than other parts of the economy,” Nathan continued.

“The relative strength of the Chinese household sector appears one key factor underpinning dairy prices,” he concluded.

2020 and beyond

In spite of the current air of volatility, forecasters say dairy prices will remain steady throughout 2020. According to analysts at Rabobank, the problem lies with producers struggling to turn improved market conditions into production growth.

“Production across the big seven exporters – the United States, European Union, New Zealand, Australia, Brazil, Argentina and Uruguay – is expected to increase by just 0.4 per cent in the last quarter of 2019 and by 0.8pc in the first quarter of 2020,” predict forecasters at Rabobank in their third quarterly report for 2019.

While global production could average out and make incremental gains, analysts say milk production on our home soil could fall by as much as three per cent.

If the outlook for all types of players in the Australian dairy sector is to improve, we need another catalyst to trigger supply growth. If this doesn’t occur, our dairy darlings could be in for trade shortfalls beyond the 2020 outlook.


Time, conditions might be right for beginning dairy farmers

Congressman Collin Peterson, D-Minnesota, talks with Carl Olson, a dairy farmer from Mayer, about the state of the dairy industry during a visit to the First District Association annual meeting Dec. 14.

After the difficult few years that the nation’s dairy farmers have been through, Collin Peterson said many might be skeptical of the advice he shared with First District Association members Saturday.

“People have given me a hard time for saying this, but I think if you’re a young person, and you want to get into dairy, there has never been a better time, in my opinion,” Peterson said. “And I’ve been around this business for 40, 50 years. There’s never been a better time to get into this business than now, if that’s what you want to do.”

Peterson credited First District Association leadership with the bold statement they made by pursuing a massive expansion of their Litchfield processing facility.

“For a change, things are looking a little more positive for the dairy industry than the past,” he said. “I want to commend you … you guys provide great leadership in putting these new improvements on your plant and moving you in the right direction.”

That optimism is especially strong for young people considering a future in dairy, Peterson said, as a combination of factors have opened the door to potential success.

A significant factor is the Dairy Margin Coverage Program, which provides dairy operations with risk management coverage when the national milk price and the average cost of feed falls below a certain level.

The safety net provided by the program, in addition to other economic factors, give prospective young farmers a solid base upon which to build their business, Peterson said.

For someone considering entering dairy farming, it is a classic example of buying low.

“You’ve got barns sitting empty that you can lease,” Peterson said. “You’ve got cows that have been relatively cheap. You can work things out with your neighbors to provide feed. So, you can get into this without really putting any capital into it. You can take the margin coverage to the bank and use it as financing.”

Peterson said the original Dairy Margin Coverage Program was “screwed up” in the 2014 bill that created it. He said he thought at the time that “$6.50 above feed cost was too good,” an opinion shaped by $7 per bushel corn.

“So we ended up not having a safety net that worked, and some people that got burned,” Peterson said. “It’s been somewhat of a change to get people to look at the new Dairy Market Coverage that we put in the last farm bill.”

The new program has a milk margin-minus-feed-price of $9.50 or less, which has proven to be a much more palatable number for most dairy farmers, Peterson said. The program also included a 25 percent discount if farmers signed up for five years. About 75 percent of dairy farmers nationwide enrolled for five years, Peterson said.

“It paid out a number of months this last year,” he said. “If the futures prices hold as they were being projected, there probably won’t be as much payout next year.”

As bright as the picture might be for someone looking at getting into dairy farming today, the scene is considerably darker for those who got into the business the past three or four years.

“If you’re a young guy that started out at that time, you’re probably behind the 8-ball,” Peterson said. “That’s a problem. There’s probably not enough profit in dairy to get you out of that situation.

“But if you start off and don’t have any debt and you can put together the right situation, I think … you’ve never had a better opportunity,” he added. “I think you can make it work.”


Dairy Outlook: December 2019 “A Bright Future”

The recently reported October All Milk Price was the eleventh straight month of improved milk price and milk income (Tables 1 and 2). Feed costs have been up and down throughout the year, causing margin and income over feed costs (IOFC) to grow at a slightly slower pace (Figure 2). Futures on Class III and IV (Figure 3) suggest that a price plateau is ahead in 2020 around the $20/cwt all milk price. These futures prices provide great promise for 2020 as a year to rebuild balance sheets and make some sorely needed reinvestments on dairy operations. Another positive development for the American dairy producer is the very recent agreement on the United States, Mexico, Canada trade agreement (USMCA). Mexico is the number one export destination and Canada is the number three export destination for American dairy products. The USMCA cements our dairy trade relationship with Mexico as America furnishes 90% of all dairy products imported by Mexico. The USMCA also clears some dairy trade disputes between the United States and Canada and provides an opportunity to export additional American dairy products to our northern neighbor. All of this sends a very positive price signal to the markets and will be another factor that points to 2020 being a very good year.

However, in the face of excellent milk prices, we know that American dairy producers will rapidly increase production. When year over year milk production in America rises above 1.5%, milk markets usually respond with downward pressure on milk price. According to the latest WASDE (World Agricultural Supply and Demand Estimates) report (Nov 8, 2019), the all milk price forecast for 2020 is unchanged at $18.85 per cwt. One of the unknowns of 2020 that will affect milk prices, especially in the 2nd half of the year, is how quickly our national dairy herd and milk per cow increases. Quarterly dairy cow replacement values from USDA NASS for the third quarter of 2019 indicate that dairy operations are expanding and/or refreshing their herds in the Western states. Prices over $1,400 were registered in TX, NM, CA and AZ. However, in the Northeastern and Midwestern states like PA, MN, OH and VT replacement prices were still below $1,200 (LMIC, Nov. 2019).

New Dairy Data

The data from the 2017 USDA Census of Agriculture has been released over the past months. It provides some astounding information regarding changes to the dairy industry in the United States such as the top counties for the number of cows and dairy herds.

Lancaster County, Pennsylvania leads all other counties in the nation for the number of dairy herds: 1,491
Tulare County, California leads all other counties in the nation for the number of dairy cows: 500,402

Many analyses look at the top 25 counties for number of cows or number of dairies. Cross referencing the two lists shows only four states with the same county on both: California, Pennsylvania, Minnesota, and Wisconsin. The first county in each state was evaluated in Figure 1 to examine the nearly 40 year span of USDA Ag Census data on cow numbers, farm numbers, cows per farm, and sales per cow.

Figure 1: 1978-2017 USDA Agriculture Census Data for Dairy Variables in 4 Top Dairy Counties

* Sales per cow were adjusted for inflation to match the 2017 values and based on the number of dairies reporing dairy sales. In the three graphs with a second y-axis, Tulare, CA is graphed against the right y-axis. All other counties are graphed against the left y-axis.

Average herd size differs by 18 fold between Lancaster, PA and Tulare, CA. Even though this is not new, since California has been known for large herds for 30 years, it is noteworthy that 55% of all milk cows in the United States are in herds of 1,000 cows or more. Twelve years ago, that number was only 20% of milk cows. The national dairy industry has rapidly scaled up in size. This can also be observed in Stearns, MN and Clark, WI, even though they still have relatively smaller herd sizes, they are increasing in herd size faster than that experienced in Lancaster, PA.

While some of Pennsylvania’s progressive herds were growing during the past 12 years, the overall dairy industry in our state made little movement in herd size. It is recognized that some of our dairy farms are located in areas that would be very difficult to expand to 600-1,000 cows. However, if size allows for a lower cost of production (and in most well managed herds it does), our industry finds itself structurally imbalanced and potentially at a competitive disadvantage to dairy producers in other regions of the country. Size is only one of many factors that influence profitability on a dairy farm. The last graph in Figure 1 displays the sales per cow, and shows that the milk sales per cow in Lancaster has come down to be much closer to that of the other counties. The question remains can cost of production in Pennsylvania also realign to be competitive with other dairy states? The Pennsylvania dairy industry will be challenged in the years ahead to find other paths to profitability. This will be essential to remain competitive with the increasingly larger scale of the United States dairy industry.

Income Over Feed Cost, Margin, and All Milk Price Trends

Table 1: 12 month Pennsylvania and U.S. All Milk Income, Feed Cost, Income over Feed Cost ($/milk cow/day)

¹Based on corn, alfalfa hay, and soybean meal equivalents to produce 75 lbs. of milk (Bailey & Ishler, 2007)
²The 3 year average actual IOFC breakeven in Pennsylvania from 2015-2017 was $9.00 ± $1.67 ($/milk cow/day) (Beck, Ishler, Goodling, 2018).

Table 2: 12 month Pennsylvania and U.S. All Milk Price, Feed Cost, Milk Margin ($/cwt for lactating cows)

¹Based on corn, alfalfa hay, and soybean meal equivalents to produce 75 lbs. of milk (Bailey & Ishler, 2007)
²The 3 year average actual Milk Margin breakeven in Pennsylvania from 2015-2017 was $12.33 ± $2.29 ($/cwt) (Beck, Ishler, Goodling, 2018).

Figure 2: Twelve month Pennsylvania Milk Income and Income Over Feed Cost ($/milk cow/day)

²The 3 year average actual IOFC breakeven in Pennsylvania from 2015-2017 was $9.00 ± $1.67 ($/milk cow/day) (Beck, Ishler, Goodling, 2018).

Figure 3: Twenty-four month Actual and Predicted* Class III, Class IV, and Pennsylvania All Milk Price ($/cwt)

*Predicted values based on Class III and Class IV futures regression (Gould, 2019).

Table 3: Twenty-four month Actual and Predicted* Class III, Class IV, and Pennsylvania All Milk Price ($/cwt)

Month Class III Price Class IV Price PA All Milk Price
Nov-18 $14.44 $15.06 $18.00
Dec-18 $13.78 $15.09 $17.60
Jan-19 $13.96 $15.48 $17.70
Feb-19 $13.89 $15.86 $17.90
Mar-19 $15.04 $15.71 $18.50
Apr-19 $15.96 $15.72 $18.30
May-19 $16.38 $16.29 $18.60
Jun-19 $16.27 $16.83 $18.80
Jul-19 $17.55 $16.90 $19.10
Aug-19 $17.60 $16.74 $19.40
Sep-19 $18.31 $16.35 $19.60
Oct-19 $18.72 $16.39 $20.10
Nov-19 $20.45 $16.60 $22.23
Dec-19 $19.15 $17.07 $21.76
Jan-20 $18.69 $17.40 $21.49
Feb-20 $18.05 $17.60 $21.25
Mar-20 $17.68 $17.72 $21.11
Apr-20 $17.46 $17.90 $20.38
May-20 $17.41 $18.06 $20.43
Jun-20 $17.41 $18.15 $20.47
Jul-20 $17.54 $18.24 $20.62
Aug-20 $17.63 $18.29 $20.69
Sep-20 $17.69 $18.33 $20.75
Oct-20 $17.55 $18.27 $21.48
Nov-20 $17.48 $18.23 $21.42

*Italicized predicted values based on Class III and Class IV futures regression (Beck, Ishler, and Goodling 2018; Gould, 2019).

To look at feed costs and estimated income over feed costs at varying production levels by zip code, check out the Penn State Extension Dairy Team’s DairyCents  or DairyCents Pro  apps today.

Data sources for price data

  • All Milk Price: Pennsylvania and U.S. All Milk Price (USDA National Ag Statistics Service, 2019)
  • Current Class III and Class IV Price (USDA Ag Marketing Services, 2019)
  • Predicted Class III, Class IV Price (Gould, 2019)
  • Alfalfa Hay: Pennsylvania and U.S. monthly Alfalfa Hay Price (USDA National Ag Statistics Service, 2019)
  • Corn Grain: Pennsylvania and U.S. monthly Corn Grain Price (USDA National Ag Statistics Service, 2019)
  • Soybean Meal: Feed Price List (Ishler, 2019) and average of Decatur, Illinois Rail and Truck Soybean Meal, High Protein prices, National Feedstuffs (USDA Ag Marketing Services, 2019)


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