Archive for Dairy Industry

Time runs out for South Australia farmers

The ongoing drought and rising feed prices have been the tipping point that forced Victor Harbor, South Australia, dairyfarmers Stephen Treloar and Colin Dohnt to sell their dairy herd.

“It’s been building for a long time – milk prices and lack of equity, but the drought has tipped us over the edge,” Mr Treloar said.

The duo share farm, alongside wives Helen Treloar and Glenda Dohnt, milking about 440 Holstein cows.

This week they shot to national prominence after a Facebook live video of Mr Treloar’s daughter, third-generation dairyfarmer and journalist Casey Treloar, speaking about the forces behind their decision to sell their cows went viral.

Mr Treloar said in the past two years, grain costs have risen about 50 per cent to $460 a tonne, lucerne hay was up about one-third, and cereal hay has almost doubled from $180/t to $350/t.

He estimates production of hay and silage in their district was down 25pc this year.

Longer term, Mr Treloar said electricity prices had doubled in the past five years, leading to a “tight margin” in their operation.

“Until we get rain we need to feed the cattle and that’s a big cost,” Mr Dohnt said.

They have already reduced the numbers of Holstein cows milked, culling heavily, but Mr Treloar said even cull cow prices were down on a few years ago.

The main support to their business has been selling dairy heifers into China, but they say that with the whole industry in such disarray, this market was feeling pressure also.

“We’ve been very close a couple of times to pulling the pin but we pushed on, hoping things would get better,” Mr Dohnt said.

Mr Treloar said things had been steadily getting worse for about the past decade.

“We’d find a glimmer of hope and run with it, but we’ve run out of options,” Mr Treloar said.

This week Mr Treloar will move into a new job, managing a neighbouring dairy farm, while Mr Dohnt will take on the main responsibility of winding up the operation – they estimate it could take about six months.

The lease on one farm finishes this month, and they will need to find a new home for their autumn-calvers by then.

Mr Treloar estimates, across the year, they will receive about 41 cents a litre from their processor, while it costs about 50c/L to produce the milk.

He said the prices being paid did not reflect the value of their milk, with the bulk of their milk sold into the domestic market in Adelaide or used to make value-added products, such as cheese.

“Why aren’t we getting paid comparative to what they’re getting?” he said.

“In Queensland, they pay a lot higher price than we get here.”

Mr Treloar said they prices they received needed to reflect that the cost of production had risen.

“When grain prices go up, the bread price lifts but we cop the high price and have nowhere to pass it on,” he said.

“The industry could wear the drought and grain prices if the milk price had been solidly profitable in the good years, but it’s been marginal in the best years.

“I’ve talked to the very best farmers around here and they’re questioning the direction they’re taking.

“Some are diversifying into sheep and beef.”

Mr Treloar said the issues in the dairy industry could be traced back to deregulation at the turn of the century, with farmers guaranteed a price linked to the cost of production.

“It’s been a race to the bottom since then, with processors using the $1 a litre milk as an excuse not to pay us more,” he said.

Mr Dohnt said there was an imbalance in the retail world when bottled water cost more than milk.

The two have long shared a love of genetics and breeding dairy cows.

“Stephen’s and my passion for our cows has probably drawn us on longer than we should have,” Mr Dohnt said.

“If we’d been in it for the money, we would have pulled the pin a long time ago.”

Last year Mr Dohnt’s cow Mooway Destry Carmel was sashed interbreed senior champion cow at the Royal Adelaide Show, after winning back-to-back senior champion ribbons in the Holstein section.

They are both concerned about what might happen with their herd – if there will even be a market given the broader issues in the dairy industry.

“When you’ve put 40 years into something, you don’t want to see it just go away,” Mr Treloar said.

Ms Treloar has grown up with dairy cattle her whole life and said she had been considering filming a video like this but had held back.

But as she went out to get the cows “probably for the last time”, she decided to try and get the message out.

She said the response to the video has been unexpected.

It has had more than 1 million since Sunday and attracted attention in media outlets.

“I saw the opportunity to speak up when other people might not have the chance,” she said.

“The crux is getting the message out there and helping people understand we may not be in a drought area but we have been severely affected by drought,” she said.

Ms Treloar said the problem was not solely linked to supermarkets selling milk for $1/L, but that was a contributing problem.

“It has devalued our product at the domestic level,” she said.

“Processors have lost some power in what they expect supermarkets to pay.”

Mr Treloar said it had been heartening to see the support received.

“It might only be words but it means something when people ask if there is anything they can do,” he said.

 

Source: The Australian Dairyfarmer

Unnecessary Trade War Risks Irreparably Damaging U.S. Dairy

Mexico imports nearly a quarter of the U.S. dairy industry’s exports annually. It’s a critical $1.4 billion marketplace. And it’s one that President Trump continues to risk damaging permanently — and unnecessarily.

Locked in a trade war since May, Mexican leaders are setting aside American business connections that took decades to build as our neighbors to the south find new sources of cheese, butter and other products.

This should have changed in November when Trump declared success with his newly rechristened U.S.-Canada-Mexico Trade Agreement replacing NAFTA. In retrospect, it was a disingenuous statement: The administration has not lifted steel and aluminum tariffs on Mexican and Canadian products, and — in response — those countries are refusing to sign the pact or lift retaliatory tariffs, impacting dairy products and other items.

“If you’re using the tariffs as leverage, if you get an agreement with countries that have come to the table because of that, if you don’t relieve them of tariffs, you’re going to marginalize that as an effective leverage point for other negotiations,” U.S. Sen. Ron Johnson, a Wisconsin Republican, told reporters at a recent press conference.

“The longer this trade war goes on … the greater and more permanent the damage will be,” added Johnson, whose home state saw the dairy-fueled economy lose $139 million through October of last year.

A Pyrrhic victory is defined as one that inflicts such a devastating toll on the victor that it is tantamount to defeat. That’s an apt description of the precipice President Trump stands on today.

His surprise electoral path to victory in 2016 ran straight through the American “Farm Belt,” fueled by Midwest states where agriculture still figures prominently in the day-to-day lives of their citizens. Those same farmers — whether they deal in dairy, livestock, dairy or crops — have generally remained supportive of the president’s efforts to secure more favorable trade deals from nations historically benefiting from lopsided agreements.

However, having won concessions from Mexico and Canada, Trump now risks squandering those hard-fought gains — wiping out thousands of agriculture-related jobs in the process, ignoring one of his core constituencies and, in the most ironic twist of all, irreparably undermining his 2020 re-election ambitions.

A Pyrrhic victory, indeed.

“The president’s trade policies have sent U.S. agricultural exports plunging, exacerbating already difficult economic conditions facing farmers,” Politico’s Ryan McCrimmon recently reported. “Average farm income has fallen to near 15-year lows under Trump, and in some areas of the country, farm bankruptcies are soaring.”

This has been particularly notable in places, such as Wisconsin, where the dairy sector has shrunk by about 1,200 operations — or about 13 percent — from 2016 to October 2018.

Unfortunately, it could get worse. A lot worse: A new report from a national research firm, Washington, D.C.-based Trade Partnership Worldwide, estimates that if higher tariffs remain intact — including those currently in place against China — the country risks 2.2 million lost jobs in the next three years.

President Trump has displayed a willingness to play hardball in order to secure concessions. He is to be commended for his desire to level the playing field in North America and, potentially, beyond. Nonetheless, he has reached a point of rapidly diminishing returns and everyday unnecessary tariffs remain in place, more and more of the very people he claims to be fighting for — American dairymen and farmers — are being pushed into bankruptcy.

President Trump sells himself as a champion for agriculture. However, a good general knows when the day is won and when to remove his troops from harm’s way. If Trump can’t learn the same lesson, he may find few farmers willing — or able — to stand behind him.

About The American Dairy Coalition:

The American Dairy Coalition (ADC) is a farmer-led national lobbying organization of modern dairy farmers. We focus on federal dairy policy.

Dairy producer numbers plummet by record levels in England and Wales

More dairy farmers quit the industry at the start of this year than at any time since March 2007, according to the latest Food Standards Association (FSA) figures.

In total, there were 106 fewer producers registered in England and Wales at the start of February compared with the previous month.

Registrations are administered by the FSA for dairy hygiene inspection purposes, providing the best guide to overall producer numbers.

In the four months since November 2018, 222 dairy farmers, equating to 2.4% of the industry, have quit the sector.

That figure compares with just 79 producers leaving the industry in the 12 months ending October 2018.

The monthly drop was so dramatic, AHDB Dairy said it was working with the FSA to see if something was distorting the statistics.

An AHDB Dairy spokesperson said the number of dairy farmers in the UK was likely correct, but the increased departure numbers could have been enhanced by producers quitting in previous years without telling the FSA.

The recent introduction of new data protection rules could be a factor if the FSA had “cleaned” its database, effectively catching up with these outgoers,” said the spokesperson.

An NFU spokesperson said the figures, despite needing verification, highlighted a worrying long-term trend and only further highlighted the need for greater transparency in the market.

‘It was like someone died’ – dairy leaver Mike Gorton

Former dairy farmer Mike Gorton said quitting dairy is still the hardest decision he has ever had to make, but three years on he knows it was the right one.

The Cheshire-based producer milked 70 cows until the downturn of 2015, when he was receiving just 15p/litre for his milk with processor First Milk. 

“I wasn’t in good mental health. I had had enough. I told myself if things did not pick up by Christmas I would get out.”

Mr Gorton managed to sell his whole dairy operation to a neighbour on a supermarket-aligned contract, meaning that overnight the same milk doubled in value to 30p/litre.

Leaving was like experiencing a death in the family, said Mr Gorton. “You never get over it, but you learn to live with it.

“Father did not speak to me for a number of months, but I think we are OK now,” he added half in jest.

“I think I have been proven right. The dairy cycles are getting bigger and the upturns are getting shorter – there is not enough time for producers to reinvest in their businesses.”

Mr Gorton advised other producers in a similar position not to allow themselves to enter a downward debt spiral and to leave while they can. 

“The longer you leave it, the harder it is to get out,” said Mr Gorton.

Incredible statistics

“In the past four months, 3% of the industry has gone, which is absolutely incredible,” said Mike Houghton, partner at farm business consultant Andersons.

“Whether that trend line carries on or not it is very hard to see.

“Last month suggests a lot of people in the north of England went and in the far West, so it’s people starting to exit from the strong dairy areas, as well as eastern counties and places where cows are a rare breed these days.”

“Whatever happens, we have had over 200 producers gone in the past four months – it has not happened like that before,” added Mr Houghton.

“I thought supply would begin to fall away, but that is not the case at the moment.”

Rising liabilities

By sector, dairy farming has among the highest levels of farm debt in England, according to 2019 Defra 2017-18 farm business performance figures.

These show 38% of the country’s dairy farms had liabilities of more than £400,000. This compares with just 15% for the cereals sector, 23% for pigs and poultry and just 5% for  for both less-favoured area (LFA) and lowland grazing livestock.

Almost half of all leavers in the February figures were in the north of England, with 49 quitting in total.

The far west and north-west of England respectively saw 24 and 22 producers quit.

Wales had an even spread of leavers across most counties, losing 10 producers in total in February, 0.6% of the nation’s total amount. 

Falling producer numbers have not greatly influenced the national dairy herd size.

The latest AHDB Dairy figures for December 2017 shows milking cow numbers actually increased by 0.7% to 1.904 million milking animals compared with the same month a year earlier.

Despite the declining dairy numbers, Mark Suthern, the head of agriculture at Barclays bank, said its portfolios in the traditional dairy regions were holding fast.

“Our experience is of those who have invested in their business and in infrastructure and are committed to milk production in the long term,” said Mr Suthern. 

“We have seen a small number of enquiries in recent months from those in other sectors like beef and sheep or arable looking to enter dairy production, which is a sign of farmers looking for new opportunities and that the management of the industry is changing,” he added.

 

Source: Farmers Weekly

Water prices force Australian dairy farmers to cut herds and losses

All too hard: Farmers Scott and Bernice Lumsden with Bernice’s father, John Smith, on their Latchfield farm. Picture: Andy Rogers

High water prices are forcing a new wave of northern Victorian and Riverina dairy farmers to cut back their herds and losses or face leaving the industry.

Murray Dairy reports the annual loss of dairy farmers has hit about 11-12 per cent, as allocation water prices skyrocket from $100 a megalitre 12 months ago to $500/ML today.

The industry had already been weakened by the impact of the April 2016 milk price clawback, but Murray Dairy chief executive Jenny Wilson said farmers were now battling to source water.

“Farmers across the Murray Dairy (GMID) region own (on average) about 60 per cent of the water they use (as entitlement),” Ms Wilson said.

It means dairy farmers must enter the high-priced allocation (temporary) water market to meet 40 per cent of their needs.

Leitchville dairy farmer John Smith said a lot of people had to get out of dairying or cut back.

“I don’t think we’ll see the dairy industry at the level it has been,” Mr Smith said. “Not with a third of our water being taken up by the government, while others play games on the stock market with our water.”

Mr Smith has just closed down one of his dairy farms and sold its 300 milkers, after the resident sharefarmer said he wanted to cut his losses.

“The sharefarmer said they were only going to lose money, because the water I supplied ran out and we had to go back into the temporary market.

“So, they said to me ‘we don’t want to go into more debt’ and they wanted to get out while they could still get something.”

Mr Smith said he would run some beef cattle on the property, plant cereal crops and irrigate “opportunistically”, if and when water prices became affordable.

Even on the main dairy farm, which Mr Smith’s daughter Bernice Lumsden and son-in-law Scott sharefarm, the herd has been cut back from 800 to 600 cows.

“We have to farm differently, because we’re not going to sit there and cop this shit year after year,” he said.

United Dairyfarmers of Victoria councillor John Keely said it was obvious $500/ML was unaffordable.

But he said dairy farmers faced enormous risks if they didn’t irrigate this autumn.

“I’ve got about 400ML left, which I’m not going to sell,” Mr Keely said. “I’m going to keep milking.”

Source: weeklytimesnow.com.au

Holcomb Named Mid-Atlantic Area Representative

Scott Holcomb, Greene, N.Y., has been named Northeast/Mid-Atlantic Area Representative for the American Jersey Cattle Association and National All-Jersey Inc. effective January 28, 2019.

Holcomb will provide on-farm service to the states of Delaware, Maryland, New Jersey, New York, Pennsylvania and West Virginia. He first began his career with the USJersey team in February 2015 as a part-time Type Traits Appraiser. During this time, he became familiar utilizing the association’s software and performance programs while building relationships with AJCA customers nationwide. Scott will continue serving members as an appraiser in conjunction with his new responsibilities as an area representative.

Prior to his employment with USJersey, Holcomb gained additional industry experience working as a field technician for Lancaster DHIA where he dealt with customer relations and a variety of different breed associations. In 2010, he interned at Lavon Farm in Texas. There he not only managed the large 700-head Jersey and Guernsey herd, but also marketed the farm’s own line of artisan value-added dairy products, Lucky Layla.

Holcomb currently works as an assistant herdsman on his family’s dairy, Holcomb’s Guernsey Farm where he helps manage a 120-head herd. He is a 2011 graduate of Morrisville State College and holds an Associate of Applied Science degree in dairy science. He also attended the New York State Junior Dairy Leader Program offered through Cornell University.

“Scott’s prior background with the Association and dairy industry are advantageous for the position he now fills,” said Neal Smith, Executive Secretary and CEO. “We are excited to have him join our field staff full-time and continue to build strong relationships with our customers while helping them make the most of their Registered Jersey herds.”

The American Jersey Cattle Association, organized in 1868, compiles and maintains animal identification and performance data on Jersey cattle and provides services that support genetic improvement and greater profitability through increasing the value of and demand for Registered Jersey™ cattle and genetics.

 

Dairy industry advocates animal care during transport of cull cows

As the dairy industry continues to put more focus on the welfare of their cattle, progress is being made to ensure cows are fit to be transported when they are culled from the dairy herd. Lily Edwards-Callaway, who is an assistant professor with the Colorado State University Department of Animal Sciences, talked to producers about the welfare of their dairy cattle and safely transporting them during a presentation at the Colorado Farm Show held in Greeley.

Fitness for transport issues are becoming more important as the country becomes more concerned with animal welfare issues, Edwards-Callaway said. “What does fitness for transport mean, what does it look like, and who does it matter to? Dairy cows have a dual-purpose career. It is essential that we consider what is best for them in regards to milk and meat,” she said.

Nearly a third of cows are culled annually from U.S. dairy herds, and most are culled due to health and productivity issues. “More than 75 percent of the cows deviated clinically from the normal condition,” Edwards-Callaway said, referring to a recent study. In this study, 31 percent were lame, 20 percent had mastitis, and 22 percent had wounds, but all of them were considered fit for transport. Edwards-Callaway asks, “When a cow leaves the farm, do we know what her journey will be like?”

HOW LONG

Nearly 92 percent of dairy operations have sold some cows through a nearby livestock market, and 37 percent have sold cull dairy cows directly to packing plants. Edwards-Callaway refers to a National Beef Quality Audit completed in 2016 that looked at 154 loads of cull cattle. That report showed, on average, dairy and beef cows were in transit for 6.7 hours, but a few were in transit for more than 24 hours.

Edwards-Callaway reminds producers that once they bring cull cows to the livestock market, they have no idea how far she will be transported once she is purchased. “Road transport can be stressful with multiple handling events, mixing with other animals, handling by various people, no milking and changes in ownership,” she said. During their journey, these cows will have times where they don’t have access to feed or water, and the journey to their destination may be long.

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Because of the stress, Edwards-Callaway believes producers need to be more pro-active in their culling techniques, considering if the animal is actually fit for transport. The condition of the animal and the distance it is expected to travel should be considered, and it may not hurt to have the herd veterinarian play an active role in that decision, according to some research consultation conducted in Canada that Edwards-Callaway shared. The study also stated that producers should train their personnel to become more involved in recognizing and handling animals that need to be culled, she said.

Many times, dairy cows are culled for clinical conditions or weaknesses that aren’t normal or the same as beef cull cows. “Dairy cows have a higher risk of becoming non-ambulatory during a long haul,” she said. “They also have a higher risk of dying, and a higher incidence of becoming dark cutters.”

Edwards-Callaway shared some research showing that dairy cows spend more than 50 percent of their time lying down, and if they are deprived of that time, they will lie down even longer. During transport, animals may be denied the ability to lie down for long periods of time. However, Edwards-Callaway reminds producers this is not unique to the dairy industry.

BRUISED CARCASS

“What are the financial disincentives for sending unfit dairy cattle to market?” she asked. Producers may profit on the sales price, if the cow makes the trip. There may also be savings associated with euthanasia and carcass removal. Livestock auction markets may worry about losing a consignor’s future business, if they don’t accept their cull cows. “They may just go down the road to the next market where they will take them,” she said.

Processors need to consider how much margin they can make from processing a lean cow, death loss transporting that cow, and the possibility the animal may not pass regulatory inspection. Other considerations are scrutiny by in-plant inspection, alignment with retail and customer expectations, and quality defects, she said.

The 2016 BQA report also showed 64 percent of carcasses from cull bulls and cows were bruised. Edwards-Callaway tells producers that cows and bulls typically show more bruising than fat steers, which may be attributed to the semi trailer being too short for taller dairy cattle. Referring to the report, Edwards-Callaway said looking at the relationship between body condition and bruising, cull cows with a lower body condition score had more bruising. “Only 3 percent of the animals experience a traumatic event at unloading. Nearly 71.4 percent of these bruises were dark red or purple, which means they are not very old bruises,” she said.

Edwards-Callaway shared a statement by her protegee, Gary Smith, who served on the faculty at CSU and Texas A&M. “It all boils down to timely marketing and management. When a cow’s productivity goes downhill, get her to market. When you know her teeth are gone, get her to market. When she’s a little bit lame, get her to market.” The key, Edwards-Callaway said, is in not waiting too long.

Source: thefencepost.com

Industry’s Passion Motivates New Zealand Dairy Women’s Network Leader

Being in an industry filled with so much passion is an aspect of dairying which Dairy Women’s Network chief executive Jules Benton loves after nine months in the job.

“Obviously it’s not without its challenges but I always say ‘if there is a problem what’s the solution?’ ” she told Dairy News.

“With every challenge we say ‘okay, what are we going to do for our members around this?’

“We are always thinking what does it mean for our members — how can we help them?”

The focus is making sure they are delivering on that. “And keeping that engagement and having some fun. It is a serious industry but making sure we have some fun, and think about wellness and well-being.”

Benton is a newcomer to the industry, having come to the helm of the 10,000 strong network after a recent position as general manager for Wolters Kluwer CCH New Zealand, a research and workflow solutions company. Prior to that she spent ten years consulting to businesses to develop leadership capability, streamline processes and promote professional development and education.

“One thing I have realised about the dairy industry is ‘boy, they are passionate’. They do get a little bit down but they bounce back… when organisations such as our partners DairyNZ… are supporting them.”

It was “fantastic” to see DairyNZ chief executive Dr Tim Mackle’s recent NZ Herald article which she read as telling farmers “we have your back”.

“There is a lot of negative media on farmers. So if industries and businesses come out and support farmers, if you have support and encouragement around you, it lets you focus on why you went farming. That is because of your love of land, animals and people.”

It’s a tough industry, she says, “but, my God, farmers are tough”.

“Mycoplasma bovis has taken a real toll financially and mentally on many of our members; we need to make sure we support them.

“Having events and having the network say ‘we hear from you, we support you’… DairyNZ and our other partners are absolutely committed to that.” 

Benton says the focus is on people. “And because we are part of the Dairy Tomorrow strategy everything we do anchors DWN back to that; it’s really important.

“We are part of ‘commitment five’ which is building great workplaces for NZ’s most talented workforce…. So it’s challenging to get team members out there. 

“It’s no secret there is a labour shortage, certainly in the dairy sector, so we want to have great employers and employees and bring learning and education to all parties.

“DWN is a good vehicle for getting information out. We have close to 10,000 members and they love coming to our events; it gets them off-farm. 

“Our events and knowledge sharing workshops are all practical, just-in-time learning; we work with our partners on what is happening in industry, what farmers need to know, what is coming up… a bit of thought leadership as well, stretching the imagination and bringing those learnings to them. We want them to have fun learning but we want to get important messages out at key times.”

They will start payroll workshops this month in partnership with payroll provider PaySauce. They will also run workshops on accommodation for employees and their usual calving workshops with partner Seales Winslow.

“We try to get in as much learning as possible before members head off to calving. Then we replan the programme so that during calving we are getting the next modules ready to roll out at the end of October through to early December.”

DWN supports all six of the commitments in the Dairy Tomorrow strategy but she says ‘number five’ (talented workforce) and ‘number six’ (growing vibrant and prosperous communities) have special focus for them.

“We love the people one; it fits well with what we are as an organisation and where we see ourselves in connecting people. We are enjoying being part of that wider strategy.”

Network invests in members

Keeping members healthy is important to Dairy Womens Network, which led to this year’s conference theme of ‘Invest in You’, on May 1-2 at the Christchurch Town Hall.

Changing trends will be one theme of the event.

“But also having time to take a breath and spend two days with like-minded people and sharing and connecting,” says Dairy Womens Network chair Jules Benton.

“We always listen to members but this year we have asked ‘what do you want at the conference?’ With member feedback we believe we have delivered a two day event that will hit their hot spots.

“It’s about food, nutrition, healthy thinking, innovation, animal welfare, family trusts. How many of our members have family trusts that are pretty scary and they don’t get the right advice? What do family trusts mean and how do you make sure they are administered properly?

“We will have Vicki Ammundsen, a leading trust lawyer in New Zealand, is excited about spending time with our members; it won’t be technical talk, but down-to-earth advice and knowledge sharing.

“We have a fabulous new speaker no one will have heard of in New Zealand — Sue Stockdale, from UK — on goal setting. She is a coach and mentor looking at relocating to NZ.”

Stockdale was the first UK woman to ski to the North Pole.

“She will take members through her journey; we are shaking it up a bit,” says Benton.

“The gala event will be the dinner with the Fonterra Dairy Woman of the Year award — glitz and glamour and connection. Feedback from members is they want to get off-farm and connect and have a good time.

“It’s red carpet and having a lot of fun. We are hosting it in the newly refurbished town hall in Christchurch which is beautiful. 

“Some people may not have been to Christchurch post-earthquake; some may not have been there at all. It shows when tough times happen there is light at the end of the tunnel and Christchurch is representative of us and there was a strong connection to host the conference there.”

 

Source: Rural News Group

Thanks John, for the milk price!

Dairy farmers have former Fonterra chairman John Wilson to thank for the milk price they enjoy today, says Sir Henry van der Heyden.

In a eulogy at Wilson’s funeral in Hamilton early this month, van der Heyden told of Wilson’s relentless push for a fair and transparent milk price.

“His relentless questioning and his ability to process and retain vast amounts of information means we have a tremendous legacy from him in the milk price,” he said.

“John is the godfather of the milk price… the milk price is all dairy farmers really worry about; it represents security. We should light a candle to John every season.”

Wilson succeeded van der Heyden as chairman in 2012.

Illness had forced Wilson to step down as chairman last July and he died at his Te Awamutu home on January 28. At least 1000 people attended his funeral.

Van der Heyden, who has stayed out of dairy industry affairs since retiring from Fonterra’s board, said he was “more than a little humbled” to be asked to speak at the funeral.

He said Wilson had the ability to “rise to the top the way cream does”.

“All by itself and what put him there was his ability to bring farmers along with him. He had enormous ability to absorb, interpret and use information intelligently and persuasively. 

 “He would turn information into visionary concepts that farmers could believe in. 

“He connected with them in their language and on their terms and they chose him as a director and ultimately as chairman.”

Van der Heyden took exception to a newspaper columnist having recently called Wilson his pupil.

“He got this totally wrong; John was always his own man and plenty of people can vouch for that.”

 Van der Heyden explained Wilson’s work on the milk price before and after Fonterra was formed.  Before Fonterra the New Zealand Dairy Board handled all dairy exports and the co-ops managed the domestic market. 

The NZDB paid farmers for their milk using a basic formula of revenue minus costs; co-ops added a margin depending on how good they were in the local market. 

Van der Heyden said farmers could see how the co-ops made their money but they could never see what drove the revenue line in the Dairy Board.    

“This was a multi-million-dollar business but we could never get a handle on their costs: it was all a matter of faith and it drove John mad. He believed to his core that farmers should be able to see the numbers — warts and all — and know they were absolutely right. 

“So, when we introduced Trading Among Farmers, John was like a terrier in getting the milk price right and, above all, truly independent. 

“He knew it had to stand up to scrutiny from all corners – politicians, competitors, regulators and especially farmers. There could be no possibility of money moving around   to benefit investors over farmers or vice versa. 

 “Today we have a model based on revenue less costs which is fully transparent [in both respects] and independently reviewed by the Commerce Commission. So, for example, farmers today know the milk price has benefitted by 40c/kgMS as a result of efficiencies and savings. They also know the days of lagging behind European dairy farmers are long gone.  That price parity is one of John’s legacies.”

 

Source: Rural News Group

Toxic algal bloom prevention ‘too expensive’ for Australian dairy farmers to do on their own

A month after toxic algal blooms killed up to a million fish in the Murray Darling Basin, farmers say the cost of preventing similar tragedies in West Australian waterways is “too expensive” for them to handle on their own.

Effluent run-off from dairies is thought to be a significant contributor to algal blooms in regional waterways — something that can be toxic to fish and cause a smelly sludge in build-up in waterways.

To mitigate the risk, effluent systems are designed at dairies to reduce run-off.

But there are concerns the effluent management systems in WA are not up to scratch.

The State Government has been offering grants of up to $60,000 for farmers to upgrade their systems to “best practice” through the Regional Estuaries Initiative and the Revitalising Geographe Waterways project.

But in the two and a half years they have been running, just two people have completed upgrades.

Cash-poor industry prohibiting upgrades

The issue of effluent run-off is not lost on dairy farmers, with many admitting upgrades are needed.

Scott River dairy farmer and Nuffield Scholar Ross Woodhouse has recently spent $160,000 on upgrades of his own.

But he said due to the current state of the industry there was no way he could afford the best practice upgrades that the State Government was supporting.

“You’re getting $60,000 for a $300,000-$400,000 capital spend and farmers just don’t have the capital to commit to the project,” he said.

“I think everyone is conscious of the issue and farmers are doing a lot — fencing waterways, planting trees and distributing fertiliser in responsible ways — but that sort of capital cost is [unaffordable].”

Costs for upgrades vary depending on the size of the farm and the condition of the current system.

What can be done to encourage upgrades?

Mr Woodhouse said a rethink of the incentive program was needed.

He suggested a slurry system, like the one he has implemented at his property, which sprays the effluent onto dry areas of land to avoid run-off as a more affordable alternative.

High hopes for incentive projects

According to the Department of Water and Environmental Regulation, the systems they design are based on the dairy industry’s code of practice in WA.

Despite the low uptake so far, the State Government believes the programs will still meet its target of 30 farms by 2020.

Kath Lynch from the Department of Water and Environmental Regulation is heavily involved in both projects and said there were a further 29 people that had put up their hand to be involved in the project.

While these are only expressions of interest, and did not guarantee upgrades will go through, she said she was confident the projects would be a success.

“I think it’s an amazingly good uptake, to be honest,” Dr Lynch said.

Dr Lynch said the code of practice on effluent systems was always open to change with further research, but the State Government could not support effluent systems that were not considered best practice.

“Our commitment to the taxpayer who is funding the incentive [the code of practice] is the minimum standard that we will go to,” she said.

The power of poo

In the interim, residents of the Shire of Augusta-Margaret River have another solution brewing — turn the poo into power.

Dairy farmers and the Lower Blackwood Land Conservation District Committee have teamed up with Augusta-Margaret River Clean Community Energy to explore the possibility of building a biodigestor at Scott River.

A biodigestor can turn organic matter into energy and also produces a smell-free manure.

While it is early days, and the business case is still being worked on, deputy chair Ian Williams said it was looking promising.

“The base case is to sell the power into the grid, but the more attractive option is that it’s used behind the meter so that the farmers can use the energy that’s there,” he said.

A biodigestor was recently built at a dairy in west Victoria, and a year on was still looking to be a success.

Mr Williams said it was currently about seeing if those methods could be applied to a region with a different land layout and different diet.

“It’s looking promising, we’ve got a reasonable story to tell. It’s up there for people to look at and kick it around and at this point they haven’t kicked it over.”

 

Source: ABC News

Government of Canada invests in Quebec dairy processor to help expand operations and improve competitiveness

The dairy processing sector plays an important role in Canada’s economy, producing good, high-quality and nutritious products for Canadians across the country. In 2018, the sector employed over 23,000 Canadians and accounted for over $14 billion in manufactured shipments of milk and dairy products. The Government of Canada knows the importance of ensuring the sector remains productive and competitive, and able to respond to new opportunities.

While visiting the Smucker’s Foods of Canada Corp. factory in Sherbrooke, Minister of International Development Marie-Claude Bibeau, on behalf of the Minister of Agriculture and Agri-Food Lawrence MacAulay, today announced an investment of up to $1.8 million under the Dairy Processing Investment Fund. The funding will allow Smucker’s Foods to invest in upgrades to equipment which will enable them to introduce production of heavy cream, and process new formats of evaporated and condensed-sweetened milk.

This funding is part of a broader $11.7 million investment by Smucker’s Foods to expand the plant, and introduce new, high-performance equipment and production systems.

Quotes

The Government of Canada is proud to contribute to the modernization and competitiveness of the dairy processing industry, helping it grow and prosper. We are committed to ensuring our world-class dairy processors stay on the cutting edge and continue to meet growing consumer demand for high-quality products while creating well-paying jobs for Canadians.”
– Minister of Agriculture and Agri-Food, Lawrence MacAulay

“With this investment in Sherbrooke, the company who already supplies Canada with Eagle Brand and Carnation products will expand its offering and, with that, increase demand for Canadian milk by almost 4 million tons. This is good news for our dairy farmers!”
– Minister of International Development, Marie-Claude Bibeau

“We are excited to announce this significant investment in our facility, which will help ensure the sustainability of our operations and expand our capabilities. This investment, funded in part by contributions from the Ministry of Agriculture, will support updates to our equipment which will enable our ability to produce new products and increase our demand for domestic milk.”  
– Dominique Mathieu, Sherbrooke Plant Manager

Quick Facts

  • Smucker’s Foods of Canada Corp. is a dairy manufacturer specializing in the manufacture of evaporated and sweetened-condensed milks. The company’s Sherbrooke plant employs 35 people.
  • To date, 19 dairy processors have been approved for funding valued at over $21.4 million under the $100 millionDairy Processing Investment Fund, for a wide array of projects in cheese, milk drying, yogurt, cream and butter projects.
  • Canada’s dairy sector is also supported by the associated Dairy Farm Investment Program. To date, over 1900 projects have been approved for funding support valued at over $128 million, including over 870 projects and over $49 million in Quebec, in a wide array of projects from small investments in cow comfort equipment to large ones for automated milking systems.

 

Source: Canada NewsWire

Italian farmers spill milk in protest at low prices

Sardinian dairy farmers presented an ultimatum on Monday that if no solution is found to the crisis of falling prices for milk, the farmers will block polling stations across the island for the upcoming regional elections on February 24.

Meanwhile, consumer group Codacons said it would file a complaint calling for a probe into whether there is reason to believe market rigging is taking place in the milk industry.

Sardinian dairy farmers have been staging protests, which have included road blocks and the deliberate dumping of milk, against the fact that they are paid about 60 cents per litre of milk and they are demanding 70 cents net, as well as better protection for the DOP protected denomination of origin on milk and better control over imports.

Agriculture Minister Gian Marco Centinaio said he would be in Sardinia on Monday with Premier Giuseppe Conte to “reason together with the Sardinian farmers”.

“I am in complete agreement with them,” Centinaio said.

“The consortium isn’t doing its job to protect Sardinian farmers,” he said.

Crying over spilled milk? Italian farmers’ unusual protest over low dairy prices

Shepherds from the Italian island of Sardinia are spilling their milk to protest the recent fall in prices.

Videos showing farmers throwing their milk away went viral, while #iostoconnando, the name of the shepherd who initiated the movement on Wednesday, became a trending hashtag on Twitter and Instagram.

The footage was shared with a common motto: “I’d rather dump it than sell it for next to nothing”.

One of the videos featured 23-year old farmer Francesco Pintore (see the video player, above) patiently awaiting the arrival of a dairy truck, only to spill the milk.

“There is no milk for you, you’ve been going around in circles pointlessly, just like me. I do this for my mom [sic], my brothers and the good soul of my father, ” the young farmer said.

Current sheep milk prices have dropped to €0.60 per litre compared to €0.85 last year. The slide is linked to a fall in the price of the popular Pecorino Romano cheese, which absorbs about half of the Sardinian sheep milk production.

Farmers are demanding that prices be raised to €0.70 per litre at least.

Milk distributors have refused to make concessions so far but negotiations are on-going, according to local paper Unione Sarda.

On Wednesday, another video showed a lorry driver forced to stop and spill his milk on the road.

In recession-hit Italy, this method of protest has sparked criticism.

Gianluigi Crobu, a spokesman for the movement, has asked his fellow shepherds not to waste the milk but to find other ways of distributing it to the community instead.

Source: euronews.com

Preval daughter Diana reached a lifetime production of 200,000 kg

Exceptional cow Diana and Ewald Bestmann are happy about the congratulations of RSH

By the end of January there was a very special reason to celebrate in Schleswig-Holstein.

Preval daughter Diana owned by Ewald Bestmann from Grönwohld reached the magical lifetime production of 200,000 kg milk. Only one cow in Germany was able to do so before her. Diana’s pedigree includes some of the best German bulls with Preval x Bonatus xPatrick x Mohr. All of them stand for robustness and longevity. This can also be seen clearly in Diana. She was born in September 2001 and is currently in her 13th lactation. She already gave her owner eight cow calves that, for their part, have the first daughters in milk and, therefore, the herd of Bestmann includes 15 female progeny out of Diana.

Diana has a lactation average of 13,607 kg and she had her highest production in her 11th lactation with impressive 14,689 kg milk with 3.59 % fat and 3.31 % protein. Her last bull calf (s. Starjuwel) was born in May 2018.

Even one of her grandchildren, the six calver Jurus daughter Maja, already reached 100,000 kg.

We congratulate on such an efficient, exceptional cow that also has sufficient breeding power to pass this onto her progeny. Therefore, we wish lots of success with genetics made in Germany in future!

Source: GGI

U.S. Dairy Industry Supports Changes to Section 232 Process

The U.S. dairy industry today endorsed bipartisan, bicameral legislation to reform a powerful White House trade tool to ensure it is used as intended by Congress to respond to genuine national security threats. Rolling back current retaliatory tariffs and keeping others from forming in the future is the dairy industry’s top trade priority. America currently sends 16 percent of its dairy production overseas, and industry officials see a lot of room for expansion in the future.

The Trade Security Reform Act, sponsored by Reps. Ron Kind (D-WI) and Jackie Walorski (R-IN), and Sens. Rob Portman (R-OH) and Doug Jones (D-AL), aims to change the process by which the Administration imposes Section 232 tariffs. The Portman-Jones and Kind-Walorski bills tighten Section 232 rules to ensure it is only used for true national security purposes while taking into consideration a number of economic and security concerns. To do so, the legislation instructs the Department of Defense to investigate possible threats, and, when a legitimate threat is identified, asks the Department of Commerce to develop recommendations to respond. It also enhances the role Congress plays in the Section 232 process.

Section 232 was created by Congress to combat trade issues that pose a national security threat. In recent years, this process has been used to levy duties on imports of steel and aluminum from Mexico and other countries. In response, Mexico imposed retaliatory tariffs on a range of U.S. goods, including cheese. Those retaliatory tariffs have been a heavy weight on U.S. cheese exports to our largest export market. An economic study released by Informa Agribusiness Consulting estimates lost dairy exports of $1.1 billion over five years unless those tariffs are dropped. To date, the U.S. government has refused to remove the steel and aluminum tariffs and as such, Mexico has maintained its retaliatory tariffs.

“Dairy prices have steadily fallen since Mexico imposed its tariffs, harming farmers,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “Exports to our most important market are being threatened, hurting dairy businesses and the thousands of Americans they employ.”

“Agriculture is being hurt by retaliatory tariffs; the bill’s sponsors should be applauded for finding a common-sense process to a complex issue,” said Tom Vilsack, chairman and CEO of the U.S. Dairy Export Council. “It protects one of the president’s tools to combat threats to our national security while allowing for the full consideration of true safety and economic factors at play.”

 

Source: NMPF

Milk sales take a dive

It’s no secret that the fluid milk category has been struggling at retail for quite some time. However, sales of flavored milk and whole milk actually made some impressive gains in the not-too-distant past.

But the party appears to be over for those two subcategories — at least for now. Both flavored milk and whole milk lost ground in terms of dollar sales during the 52 weeks ending Dec. 2, 2018, according to data from Chicago-based market research firm IRI.

Part of the blame can be placed on the ever-growing popularity of dairy-alternative beverages. Nondairy milk sales grew a whopping 61% between 2012 and 2017, global market research firm Mintel noted.

The shift away from traditional dairy products such as cow’s milk toward plant-based alternatives is tied to increased concerns on the part of consumers related to health and animal welfare, the Packaged Facts division of Rockville, Md.-based MarketResearch.com noted in its 2017 report titled “Dairy and Dairy Alternative Beverage Trends in the U.S., 4th Edition.”

Flavored milk lost steam

The refrigerated flavored milk/eggnog/buttermilk subcategory saw dollar sales fall 1.5% (to $1.5 billion) during the 52-week timeframe; unit sales also declined by 1.5% (to 679.4 million). But several brands among the top 10 did post positive results.

Leading the pack here was the Hispanic Lala brand (Lala U.S. Inc.). The brand’s dollar sales rose 20.6%, while its unit sales increased 19.7%. Close behind was Hood (HP Hood LLC), which saw 15.5% and 10.4% gains in dollar and unit sales, respectively. Ultra-filtered, high-protein milk brand Fairlife (Fairlife LLC) also fared well. It saw a 9.7% gain in dollar sales and a 5.0% improvement in unit sales.

The biggest loser among the top 10 was TruMoo (Dean Foods). The brand’s dollar sales fell 8.4%; its unit sales declined by 7.5%.

Whole milk sales were flat

Although unit sales within the refrigerated whole milk subcategory actually jumped 1.7% (to 1.7 billion), dollar sales tumbled 0.9% (to $4.8 billion).

But Fairlife bucked the trend, posting impressive 52.1% and 45.0% dollar and unit sales gains, respectively. Hood Lactaid also had a strong performance among the top 10: Dollar sales were up 11.7%, and unit sales were up 9.7%.

But most of the remaining top 10 brands struggled. Posting the most significant declines were Hood, with dollar sales dropping 5.9% and unit sales falling 2.9%, and Prairie Farms (Prairie Farms Dairy), with dollar sales dropping 3.8% and unit sales falling 0.9%.

Reduced-fat milk posts steep decline

The most significant declines, however, took place in the skim/low-fat milk subcategory. The segment has been struggling since Americans started making a return to higher-fat products.

Only one top-10 brand — Fairlife — posted positive results for the 52 weeks in IRI’s reporting period. The brand saw dollar sales rise 34.8% and unit sales climb 28.7%.

Faring the worst among the top 10 brands was Hood. The brand’s dollar sales declined 12.6%, and its unit sales fell 11.5%. Hiland (Hiland Dairy Foods Co.) also realized double-digit declines. The brand’s dollar sales plummeted 11.1%, and its unit sales took an 8.8% dive. Close behind were DairyPure and Prairie Farms. Dollar sales for both brands took a 9.7% nosedive; DairyPure’s unit sales fell 7.9%, and Prairie Farms’ plunged 7.3%. 

 

Source: Dairy Foods

 

UK dairy producer numbers plummet by record levels

The number of farmers exiting dairy exploded from its already accelerated rate last month as the sector continues its long-term contraction. 

More dairy farmers quit the industry in February than in any month since March 2007, the latest Food Standards Association (FSA) figures suggest.

The numbers, which are produced in February, refer to the last three weeks of January and the first week of this month. 

In total, there where 106 fewer producers registered in England and Wales compared with previous months.

What dairy pros need to know about the USMCA

Ted Jacoby III is the president and CEO of T.C. Jacoby & Company. Prior to joining the firm in 1996, Jacoby worked in dairy plants specializing in fluid milk and cheese processing. He became manager of the company’s trading group in 2010 and moved into the role of president and CEO in December 2015. He holds a food science degree from Cornell University and an MBA from Washington University in St. Louis.

The wait is (kind of) over. Trade authorities in the U.S., Mexico and Canada have agreed to a trilateral free trade agreement that replaces NAFTA.

The finer points of automotive manufacturing earned most of the headlines during the protracted negotiation period, but dairy trade was another key sticking point. Here, we hope to offer some details and context to provide a clearer picture of how things will look once the deal is effective.

Or, more like if. The deal first must survive legislative review in three separate national capitals. As we discuss later, when it comes to lawmakers and politics, nothing is a done deal until it’s a done deal.

Opening Canadian markets

USMCA increases the duty-free volume of a wide range of American products allowed in Canada. According to data released by the U.S. Department of Agriculture, access is granted to:

  • 50,000 metric tons (MT) of additional fluid milk.
  • 12,500 MT of additional cheese.
  • 10,500 MT of additional cream.
  • 7,500 MT of additional skim milk powder.
  • 4,500 MT of additional butter and cream powder.
  • 1,380 MT of additional concentrated and condensed milk.
  • 4,135 MT of additional yogurt and buttermilk.
  • 520 MT of additional powdered buttermilk.
  • 2,760 MT of additional products of natural milk constituents.
  • 690 MT of additional ice cream and ice cream mixes.
  • 690 MT of additional other dairy.
  • 4,134 MT of additional whey (by year 10, the over-quota tariff on whey will be eliminated).

Tariffs on margarine are eliminated after five years.

Ted Jacoby III

Credit: Ted Jacoby III

The agreement creates a six-year ramp up to reach the levels listed above; smaller increases then kick in each year afterward for 13 years.

The Canadian dairy lobby isn’t happy about this. Stakeholders have lobbed stinging critiques at the government with phrases like “death by a thousand cuts,” comparing the terms of the agreement to a slow bleed.

An Ontario dairy farmer minced no words in an interviewwith the Canadian Broadcasting Corporation. “We’re a sixth-generation dairy farm, and we’re probably not going to survive this, so I guess it just sucks to be us,” she said.

It’s grim language, and it’s about what you’d expect to hear from an industry newly bound by freer markets after decades of protectionism.

But just because the agreement allows U.S. producers to sell (marginally) more product in Canada, it doesn’t mean Canadian buyers must buy it. And even if U.S. producers supply Canadian buyers at the full volume allowed under USMCA, it still only amounts to something like one extra truckload of milk a day.

And for Canadian dairy farmers, any business they lose as a result of the deal would likely be covered by compensation as promised by Prime Minister Justin Trudeau.

Elimination of Canadas Class 6 & 7

The thorniest issue with the U.S. and Canada’s dairy trade relationship was the creation of new Canadian milk classes for ultrafiltered milk. Prior to the introduction of the classes, plants in southern Canada relied on milk collected from Wisconsin, Michigan, New York and other northern states.

The new formulas priced Canadian milk below the world market price. Canadian processors logically switched to buying cheaper domestic product. The result was a sudden loss of business for dairy farmers in regions of the U.S. already plagued by an oversupply of milk.

The elimination of Canada’s Class 6 and Class 7 theoretically means the playing field is once again evened. We’ll see if that happens in practice. The new trade deal doesn’t account for the possibility that Canada may attempt to restrict its markets in some other way.

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Preserving our relationship with Mexico

As it pertains to dairy trade between the U.S. and Mexico, USMCA and the NAFTA it replaces are functionally identical. That’s a good thing, for the most part, because U.S. dairy exports to Mexico are worth $1.2 billion annually. It’s by far the most lucrative dairy trading relationship we have.

Canada, our second most valuable dairy trading partner, accounts for a little over half that value.

Even though duty-free dairy trade between Mexico and the U.S. is enshrined in the new trade deal, the U.S. needs to end its tariffs on steel and aluminum before Mexico agrees to end its retaliation so that the normal dairy trading relationship can resume.

It’s unclear if the language of the steel and aluminum tariffs permits the U.S. to selectively enforce them, or if rolling them back on Mexico can only occur if they’re rolled back for everyone else, too.

What happens next?

Since all heads of state have signed the agreement, it’s up to the national legislatures. According to this ratification timeline, it’s not likely that lawmakers in Mexico or Canada will upend the deal. That’s because Mexican law appears not to allowits Congressto change the text of the agreement — they just get to review it before taking an up-or-down vote. In Canada, Parliament will debate and vote on the deal, but those votes appear not to be legally binding. That power is left up to Prime Minister Trudeau and his Cabinet.

Things are a lot trickier in the U.S.

Starting Dec. 1, Congress had 105 days to identify changes in federal law that must be made to accommodate the provisions of the USMCA, then write an implementation bill. Because both the Senate and House will write their own versions of the bill, each chamber would then have 45 days to reconcile the two versions. An agreed-uponbill will then be sent to President Trump.

The problem is the implementation bill that emerges from the process may not be as much to Trump’s liking since it will be the result of a compromise between a newly-split Congress. Democrats assumed control of the House of Representatives Jan. 3.

The worst-case scenario is that Congress won’t agree and the USMCA will not go into effect at all. If that happens, we fall back on NAFTA, which has no expiration date.

Clearly, there’s a lot still up in the air

Source: fooddive.com

What’s the difference between cow’s milk yogurt and plant-based alternatives?

In this series, Dr. Greg Miller, Ph.D., FACN, answers questions received from the health and wellness community.

Question: What’s the difference between cow’s milk yogurt and plant-based alternatives?

Answer: The dairy case is brimming with so many varieties, flavors and types of yogurt, it can be hard to decide which ones to choose. Newer plant-based yogurt-like products are hitting store shelves, including ones made from almonds, coconuts, cashews, soy and hemp, adding to the confusion.

Here are some things to keep in mind:

  • Though cow’s milk yogurt and plant-based alternatives sit side-by-side in the dairy case, nutritionally they may not be the same. That’s because plant-based alternatives do not have a standard of identity like cow’s milk yogurt does.
  • Cow’s milk yogurt is naturally rich in certain nutrients, while plant-based alternatives are often fortified with these nutrients. For example, cow’s milk yogurt contains about 8 grams of protein per serving. Many plant-based alternatives contain 1 gram of protein per serving. Therefore, you will need to read food labels carefully, remembering that nutrient content may vary between brands.
  • The Dietary Guidelines for Americans recommend three servings of dairy foods per day as part of a healthy eating pattern, and plant-based yogurt alternatives made from many plant-based sources do not count towards a serving of dairy.
  • Cow’s milk yogurt with the voluntary “live and active cultures” seal indicates the presence of probiotic cultures (Lactobacillus bulgaricus and Streptococcus thermophilus). While cultures may also be used in plant-based alternatives, these vary by brand and may or may not be considered a probiotic.
  • People with an allergy to cow’s milk protein, vegans or others who choose not to eat dairy foods might choose plant-based alternatives fortified with at least as much calcium as a similar size of cow’s milk yogurt to support bone health. For example, 6 ounces of fat-free plain cow’s milk yogurt contains about 338 mg of calcium.
  • Healthy eating styles, which include low-fat and fat-free dairy foods, are linked to reduced risk of certain chronic diseases, such as cardiovascular disease and Type 2 diabetes in adults. Dairy consumption is also linked to improved bone health, especially in children and adolescents. Eating cow’s milk yogurt has been recognized by nutrition experts as a characteristic of a healthy diet and lifestyle.

 Overall, it’s important to keep in mind that no single food will make or break a diet. It is your overall eating pattern that matters for good health and well-being. 

 

Source: Dairy Good

Dairy Kicks Off 2019 With Price Improvement

Slowly but surely, global markets are moving into better balance.

For the last three years, the dairy market conversation has been dominated by global milk supply growth and European intervention stocks of milk powder. These twin factors put us in a buyers’ market and kept a lid on global prices. But we start this year under different circumstances, as we explain in USDEC’s latest issue of Global Dairy Market Outlook, a publication that assesses the state of global dairy trade, loaded with data and analysis.

GDMO square image

For the first time since the fourth quarter of 2016, most major suppliers won’t have much excess to export. And for the first time since early 2016, traders are operating in an environment without the overhang of intervention stocks.

As the world’s largest exporter, EU milk production always has an outsized impact. Weather has depressed production in Germany and France (-2.1 percent in October-November) and phosphate regulations have done the same in the Netherlands (-5.7 percent in September-December). Gains in Ireland and Poland haven’t been enough to compensate. EU-28 deliveries were down about 0.5 percent in the last five months of 2018. We look for output down 1.0 percent to 1.5 percent in the first quarter of the year and expect to see little to no growth for the full year.

The United States, Australia, Argentina and Uruguay also are seeing contraction in milk production growth.

GDMO chart2 (2)


Meanwhile, the European Commission unloaded 247,857 tons of SMP out of intervention in the last four months, a third of that in a single mid-January tender. Holdings are down to just 3,651 tons and the cupboard should be empty after this week’s tender.

Headwinds

As a result of this shift, commodity prices improved in December and early January. The rally is certainly welcome, but there are still headwinds that could limit further price gains during the first half of the year.

  • New Zealand is enjoying a record milk production season in 2018/19.
  • Pipeline holdings were rebuilt when prices were lower, which allows buyers to be less aggressive as prices improve.
  • SMP from intervention hasn’t all been consumed yet; it’s merely been moved further along the supply chain.
  • The North Hemisphere spring flush will start to build in the coming weeks.

When we get past the flush we could see further tightening, particularly if global demand remains good. Improved demand from China, Southeast Asia, North Africa and Mexico helped clear global supply in the latter part of 2018.

 

Source: U.S.D.E.C

Price fluctuations decrease in dairy market

Trade wars, climate change and shrinking reserves. Many factors determine what the dairy market will look like in 2019. Those factors create uncertainty. Yet the market is expected to develop positively.

In the European Union, the drought in 2018 resulted in reduced milk production over the course of the last months of the year. In the autumn of 2018, the European Commission reported an expected production growth of approximately 0.8%. It should, however, be mentioned that production showed a growth of slightly more than 2%.

The growth turned out to be lower, due to the drought that affected the market only after that. Also in the first 6 months of this year milk production is expected to show little or no growth. Last year’s dry summer has resulted in disappointing corn and grass yields in comparison with previous years. The European Commission estimates an expected increase of slightly less than 1%. This growth has to be realised in the second halve of the year, as the lack of roughage will limit milk production in important parts of Europe during the first months of the year.

Figure 1 – Price of skimmed milk powder is increasing (in $ per tonne).

Growth in EU

The European Commission expects a 4.5% growth compared to last year. This growth is largely the result of a growing world demand for European dairy products. This increase in demand for dairy products from the EU requires a growth in production. The European Commission expects a 0.6% growth in milk production in 2019, while also consumption within the EU will show a 0.7% rise. Current figures for 2019 show that demand is exceeding production. This offers hope of a good milk price within the European Union. The fact that intervention stocks of skimmed milk powder is as good as sold, reinforces the European market. Because of this, the skimmed milk powder market is less distorted, which has already led to higher product prices in the last weeks of 2018. The market price even passed the intervention level of € 1,689 per tonne. Even though the European Commission did not succeed in selling a product above this level, the fact that intervention stocks are sold does result in a better skimmed milk powder market (Figure 1). Also no further drop in butter prices is expected (Figure 2).

Figure 2 – No further drop in butter prices (in $ per tonne).

US trade wars

The policy of American president Donald Trump is creating uncertainty in world trade. This also has consequences for the global dairy market. First and foremost due to the exchange rate of the dollar. Currency markets are very sensitive and can contribute to the export position of the United States and other major players in the dairy market. Trump’s trade conflicts with China, Canada and Mexico don’t make the situation any clearer. These 3 countries are the main destination for American dairy. Yet, Trump’s actions do not appear to be hitting the United States too hard. In the third quarter of 2018 dairy export in total was 14% higher than it was a year before. This growth is mainly caused by an increased export of skimmed milk powder to Mexico and a strong position in the South-East Asian market. Despite the increase in total export, the US has also paid heavily. Cheese exports from America to Mexico has dropped by 11% in the third quarter of 2018. Dairy exports to China was hit hard in this period: a decline of 22%. How the United States will manifest itself in the dairy market this year remains uncertain. Dutch agrofood banker Rabobank expects the exchange rate of the American dollar and the availability of dairy products in the months ahead will determine the role of the US in the global dairy market in the next few years.

Chinese demand remains

China remains an important export destination for dairy products. In 2019 the Chinese dairy import is expected to grow. In last year’s final quarterly report Rabobank speaks of an import growth of 11%. This is a 7% increase compared to previous forecasts. A moderate growth of Chinese milk production and a disappointing import in 2018 will probably lead to a substantial import growth this year. If Rabobank looks further ahead and says something about 2020, import growth is estimated at 4%. The fact that milk production in China lags behind expectations is largely due to the trade war with the United States. Chinese dairy farmers partially depend on American feed compounds. The trade war and the associated import tariffs drive up feed costs for dairy farmers. Rabobank estimates a 1% growth of milk production. That is less than previous estimates. Additionally there have been some modifications in the Chinese Statistical Year book. Between 2006 and 2017 milk production has been revised downwards by 15%. This shows the consumption was less than expected and there was a greater dependence on imports from other countries.

New Zealand

New Zealand is still one of the major dairy exporters. Up until November 2018 milk production in New Zealand is well above the previous season (June – May). From June till November 4.4% more milk was produced in comparison to the previous season. Milk production in New Zealand is expected to show another increase this season (Figure 3). Currently New Zealand is one of the most important producers on the global market.

Figure 3 – Good weather conditions increases milk output in New Zealand (in x 1,000 tonne / month).

Russia aims at own production

The Russian import ban on most major players in the dairy market, increases the pressure on domestic milk production. The predictions for 2019 are that a production growth of 1% will be realised. This increase will primarily be the result of a major efficiency boost and genetic improvements, because while more milk is needed, the size of the dairy herd is slowly declining. It is clear that Russian milk production will increase in the years ahead. Significant investments are made in the construction of large dairy farms. Last year the government announced their plans to build 800 large dairy farms. The objective of the Russian government is to eventually become self-sufficient. Although Russia has no strong economic growth, Russian consumers have increasingly greater spending power. This will lead to an increase in consumption of healthy dairy products, according to the forecasts of Hexa Research, and American research firm. In the near future, the Russian growth is not a restraining factor to the global dairy market. Many exporting countries have demonstrated that the Russian market is closed to them. By circuitous routes products do find their way into Russia, but these volumes are nothing compared to total export volumes. On the other hand it will take time before the Russians will be able to enter the global market with dairy products.

Positive undertone

Generally speaking the outlook for the dairy market is positive. Although the market will not show extremely high prices, in the months to come the market will have a firm ground on which basic dairy can support a good milk price. The only aspect the dairy market has little impact on are weather forecasts. They can slightly change production, but in general the dairy market has a strong position.

Dairy prices remain within narrower bandwidth

Consistent with last year, the dairy market shows few severe fluctuations similar to the previous period. This is what dairy market analyst Mark Voorbergen expects. “Prices will move, but within a narrower bandwidth.” Mr Voorbergen does not expect the basic dairy supply to significantly increase or decline this year. “I see no movements that indicate extra large volumes will enter the market from any region,” he says. Driving forces in the global market are currently New Zealand and Ireland. “They are the cornerstones of the dairy supply,” Mr Voorbergen believes. He is not impressed with milk production in the other export countries. China will play a role in the vision on the market in 2019. According to Mr Voorbergen the Chinese dairy farming sector is struggling due to the trade war with the United States. “Import duties on soy and other raw materials drive up feed costs. China’s dairy production and demand do show growth but not as strong as previous years. Also import requirements from China increase, even though this increase will be moderate compared to previous years.” For dairy exporters from the United States trade barriers are currently a killjoy. A large amount of cheddar is being kept in storage, while it was intended for neighbouring country Mexico. As long as the new trade agreement with Mexico remains unsigned, all they can do is wait. “For the product’s price this is not a positive development,” Mr Voorbergen says. “The more time passes before the agreement is signed, the greater the odds are that prices will drop.” All in all Mr Voorbergen thinks the market for butter, milk powders and cheese have a solid foundation and are likely to improve in the months ahead. “I don’t expect large fluctuations,” Mr Voorbergen shares. “The only thing we can’t influence, are weather conditions. They can play a significant role in pushing up prices.”

 

Source: Dairy Global

NMPF, IDFA Support Legislation Allowing Whole Milk in School Meals

The National Milk Producers Federation (NMPF) and the International Dairy Foods Association (IDFA) welcome the introduction of legislation sponsored by Reps. Glenn Thompson (R-PA) and Collin Peterson (D-MN), chairman of the House Agriculture Committee, allowing whole milk in school nutrition programs.

The Whole Milk for Healthy Kids Act of 2019 (H.R. 832) has eight other co-sponsors, including Rep. Mike Conaway (R-TX), ranking Republican on the House Agriculture Committee.

Adding whole milk to school menus reflects research showing that such products benefit children and gives school administrators one more tool with which to develop healthy eating habits.

“Whole milk provides yet another way for children to receive dairy’s nutritional benefits as part of a healthy eating pattern,” said Jim Mulhern, president and CEO of NMPF. “This bill encourages the proper nutrition they need to lead healthy lives.”

“We thank Rep. Thompson for his leadership and Chairman Peterson for being an original co-sponsor on this bill to allow schools more flexibility to offer the same types of milk that children and teens enjoy at home. Providing expanded milk options will help ensure that students get the nutrients that milk uniquely provides, including calcium, vitamin D and potassium,” said Michael Dykes, D.V.M., president and CEO of IDFA.

 

Source: NMPF

Bega and Saputo step up

Bega Cheese and Saputo Dairy Australia-Warrnambool Cheese and Butter have announced milk price increases.

Saputo-WCB announced on Thursday it was stepping up its farmgate milk price by seven cents/kilogram for butterfat and 14c/kg for protein, lifting the amount it would pay farmers to $6.05c kilogram/MS.

The payment will be made with January 2019 proceeds, during February 2019

That’s up from $5.95c kg/MS.

“This payment is retrospective and applies to all qualifying milk supplied by current WCB and SDA suppliers from 1 July 1, 2018,” a Saputo Dairy Australia spokesman said.

Saputo also lifted its price in its NSW–Sydney market region by

8 cents/kg butterfat and 12 cents/kg protein.

This increases the average farmgate milk price for the 2018/19 season suppliers in the NSW–Sydney Market Region to 52.7 cents per litre, up from 52 cents per litre.

The Saputo spokesman said while world markets had seen some improvement recently due mainly to easing growth in milk production and a reduction in skim milk powder stockpiles in the European Union, prices declined across dairy commodities during the first half.

“As such, this price increase reflects our acknowledgement that farm conditions remain challenging for our suppliers and any sustained market recovery is still ahead.”

“We will continue to monitor the market and review the milk price again in April 2019, in accordance with our quarterly review process.”

Bega announced on Wednesday a milk price increase of 14c/kg milk solids.

Executive chairman Barry Irvin said the increase would equate to farmers receiving an additional $0.096c/kg for butterfat and $0.192c/kg for protein, as a loyalty payment from July 1 last year.

It would be applied as an increase for milk supplied from February 1 to June 30, this year.

 

Source: The Australian Dairyfarmer

Federal government provides $2.7M in funding to Dairy Farmers of Canada

The federal government has committed more than $2 million to support the Dairy Farmers of Canada (DFC) in order to enhance public trust in dairy production.

Agriculture and Agri-Food Minister Lawrence MacAulay was at Ferme Geranik in St. Albert, Ont. recently to announce an investment of up to $2.7 million.

“Our government is pleased to support Canada’s dairy farmers in their efforts to demonstrate that their products meet the highest standards for quality and safety and are produced responsibly and sustainably. Building consumer confidence and trust helps ensure the growth and sustainability of Canada’s dairy sector,” said MacAulay.

The DFC has a quality assurance program called proAction. This and the pursuit of an industry environmental sustainability strategy will be the areas where the funding will be used.

The investment will help DFC further develop and implement proAction, pursue stakeholder engagement, initiate an industry environmental sustainability strategy and implement a plan to communicate with stakeholders, customers and consumers on DFC’s quality assurance and sustainability activities.

“Dairy farmers across Canada are committed to the highest standards in regard to sustainable production. As such, our proAction program has been instrumental in demonstrating farmers’ responsible stewardship in producing milk that is of the highest quality,” said Pierre Lampron, president of Dairy Farmers of Canada. “This funding will allow for ongoing improvement of proAction and will ensure that the industry meets the expectations of consumers for decades to come.”

 

Source: Truro News

As Dairy Farms Head Into 5th Year Of Low Milk Prices, Support Builds For Supply Management

Farmers stand for the Pledge of Allegiance at their annual banquet at the 2019 Vermont Farm Show. John Dillon / VPR

After four years of low milk prices — which has led to the loss of dozens of Vermont dairy farms — experts say to expect little improvement in 2019. As the downward spiral continues, policymakers are increasingly looking for ways to control the milk supply to stop the price freefall.

Douglas DiMento works for the Agri-Mark dairy cooperative, the largest in New England. He told farmers gathered Thursday at the Vermont Farm Show that the price situation is likely to improve, but only because fewer farmers will be making milk.

“We do expect prices to increase later this year, but most of that increase will come in the second half of the year,” DiMento said. “Unfortunately, a lot of the increase is going to come on the backs of farmers going out of business throughout the U.S. It’s been a tough four years, and we’re looking like it’s going to be another tough fifth year in a row for farmers.”

“It’s been a tough four years, and we’re looking like it’s going to be another tough fifth year in a row for farmers.” — Douglas DiMento, Agri-Mark

Vermont had 796 dairy farms in 2017 and 702 in the last quarter of 2018, according to numbers provided by the state.

The serious attrition in farm numbers has been the focus of work at the Vermont Milk Commission, a state body charged with improving the dairy economy.

The commission said in a new report that some form of supply management system is needed to curb the chronic overproduction that has depressed milk prices for years. 

The report recommends a “growth management plan” that would include a two-tiered pricing system that would pay farmers less above predetermined production limits. 

“What’s the signal to stop making milk? The signals aren’t there,” said Diane Bothfeld, the director of administrative services at the Vermont Agency of Agriculture, Food and Markets. “Potentially in this program, your base gets the going rate. And if you’re over that, you get a much lower rate, much lower.”

“What’s the signal to stop making milk? The signals aren’t there. … We’re overproducing for what we have markets for.” — Diane Bothfeld, Vermont Agency of Agriculture

Bothfeld served as adviser to the Vermont Milk Commission. Her message to farmers Thursday was that the industry has to find some way to control its own production. She described herself as a reluctant convert to the idea of supply management.

“We’re overproducing for what we have markets for,” she said.

To underscore her point, she pointed to the latest federal data that shows 1.4 billion pounds of dairy products are stored around the country. 

“November the year before, it was 1.2 billion. This isn’t going away,” Bothfeld said. “We’ve got too much product. It puts downward pressure on prices and makes it hard for the prices to recover. We can try exporting it, we can try eating it, but we’ve got too much. I have never been an advocate of supply management. I don’t see any other way out of these prices. So I have been converted.”

Bothfeld said any supply management program needs to implemented nationally if it’s going to work, but she acknowledged it will be a tough fight in Congress.

And that is the challenge, said Bill Rowell who owns Green Mountain Dairy, a large farm operation in Sheldon.

Rowell has long advocated for supply management. He said overproduction is both a regional issue, and a national problem.

“This is a detriment to all of our farms and the rural communities across the country,” Rowell said.

“This [overproduction] is a detriment to all of our farms and the rural communities across the country.” — Bill Rowell, Sheldon dairy farmer

According to Rowell, half the nation’s milk comes from just 1,200 of the country’s 45,000 dairy farms.

“And [those farms] are not really in the East — they’re in the upper Midwest, the West, and the Southwest,” he said. “So Congress needs to pay attention.”

The milk commission report laid out some broad parameters for lawmakers to consider, including a governance board made up of dairy farmers that would work in conjunction with the U.S. Department of Agriculture.

The program would also need a methodology to establish base production levels and would need to develop rules to deal with the the merging of farm operations and other changes in business structures.

Source: digital.vpr.net

Dairy Industry Struggles in a Sea of Plant-Based Milks

Fernand Gagne, with his granddaughter, started his career in the dairy industry and now owns Gagne Maple in Swanton, Vt.©Russell French Photography

There are many plant-based milks to sort through in the dairy aisle. Similarly, there are many reports on the dairy industry itself that require a closer look.

Is the industry declining?

Dairy farmers are seeking stable products, like plant-based milks, while struggling to survive in a volatile economy.

Historically, milk prices have been low compared to what small farmers pay for production, one of the incentives to produce cheese as well, according to Milk! A 10,000-Year Food Fracas, a 2018 book by Mark Kurlansky.

In 1942, the average cow produced under 5,000 pounds of milk in a lifetime, and that average has increased to 21,000 pounds, according to the book, with farmers overfeeding protein to their cows to increase output.

All of this has happened as dairy milk consumption has declined. Americans drank 149 pounds of dairy milk per capita in 2017, down from 247 pounds in 1975, according to USDA data. There is too much dairy milk.

Over the past five years, dairy companies who have invested in milk alternatives, by planting almond trees or buying brands, for example, have shown returns above standalone dairy, according to a Rabobank report. Even large dairy companies like Hood are producing their own oat milk to meet consumer tastes. It makes sense for farmers too.

“A lot of small dairy companies from upstate New York to the Midwest now do an almond or soy milk — and probably if this really takes off, oat,” Christopher Ross, vice president of marketing for Hood, said.

Other small dairy farmers are producing maple to stay afloat.

Coombs Family Farms is a seventh-generation organic maple brand in the U.S. Coombs purchases maple from about 3,000 farmers, serving as their outlet to the marketplace and sees increased maple production as a good thing, Arnold Coombs, owner of the company, said.

“There’s not much else to do in springtime up here. It’s always been good second crop for dairy farmers,” Coombs said. “There’s money in maple, and it brings more stability to the annual cash flow.”

The best weather for maple is low 20s at night and 40 degrees during day, he said. Since many dairy farmers don’t spend much time in the fields in that type of weather, maple is a great crop for them.

The process is labor intensive. Forty gallons of sap creates only 1 gallon of maple. The raw sap looks like water when it leaves the tree and spoils very quickly, he said.

The farm bill approved an important update for the maple industry. Along with honey, agave and other syrup companies, maple makers no longer have to state “includes X g Added Sugars,” on their labels, since their products do not have added sugars. The bill also extended grants for maple research and promotion.

With a bustling CBD market, hemp could be the next alternative crop for dairy farmers, Coombs said.

“They are under a lot of stress and trying to figure out other ways,” he said.

Source: forbes.com

Dairy Producers Fret Over China’s Shrinking Newborn Population

A customer shops for milk powder in a supermarket in Nantong, East China’s Jiangsu Province, in November 2017. Photo: IC

Chinese dairy producers may face problems in 2019 as the number of births in the country is expected to keep dropping while more foreign rivals enter the market amid government moves to encourage imports, ramping up pressure on domestic players.

In the latest sign of demographic pressures on China’s dairy industry, US investment bank Goldman Sachs cut the price target on Inner Mongolia Yili Industrial Group from 29 yuan ($4.28) to 28.3 yuan a share and that of Mengniu Dairy from $HK24.5 ($3.12) to $HK24.2.

It also trimmed the target on milk powder manufacturer H&H Group from $HK66.2 to $HK65.1.

China’s newborn population is estimated to have fallen 7 – 13 percent year-on-year to between 15 million and 16 million in 2018, according to a report issued by Gaohua Securities in January. In 2017, 17.23 million newborns were added to China’s population, according to the National Bureau of Statistics.

The decline has prompted Goldman Sachs to estimate that sales of baby formula this year will be flat with last year or perhaps post a 0.5 percent slight increase, financial news website caixin.com reported over the weekend. Sales are estimated to drop 2 percent year-on-year in 2020.

This year “will see the end of the ‘golden era’ for China’s dairy industry, which has boomed since 2014,” Song Liang, a Beijing-based expert on the dairy industry, told the Global Times on Sunday.

Also, domestic prices are relatively higher than those of foreign brands both in terms of raw materials and processing costs, so local producers are losing competitiveness amid government policies to encourage imports, Song added.

The processing cost for milk products in the US and Europe is about 4,000 yuan a ton, but in China it is 7,000 – 8,000 yuan a ton, according to Song.

Despite the slowing domestic economy, industry analysts point out that Chinese consumers are still willing to pay hefty prices for high-end infant formulas.

“Maybe Chinese milk producers should think about how to take advantage of their geographic proximity to conquer the high-end market,” Song said.

Source: Global Times

Dairy report says U.S. exports to Japan endangered

A study released today by the U.S. Dairy Export Council projects new trade agreements between Japan and other countries will put U.S. dairy exports at a competitive disadvantage, resulting in lost sales of $5.4 billion over 21 years.

The Japanese dairy market, the fourth largest export destination for U.S. dairy exports, is expected to continue to grow in years to come, but new trade agreements between Japan and Australia, New Zealand and the European Union will give the advantage to competitors, according to the study conducted by Tokyo-based Meros Consulting.

However, “without swift and effective action by the U.S. to secure a strong trade treaty with Japan that exceeds Japan’s agreements with Australia, New Zealand and the European Union, the U.S. could see its market share drop in half over the next decade,” the study says.

Australia and New Zealand have the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in place with Japan already and as of this Friday, Europe’s agreement with Japan will take effect too, the U.S. Dairy Eport Council noted. Without a strong U.S.-Japan trade treaty, competitors will seize a cumulative $1.3 billion in dairy sales over the next decade that would otherwise have been supplied from the U.S., a toll that climbs to $5.4 billion once CPTPP and the Japan-EU agreements are fully implemented, USDEC added.

“These agreements will give our competition a significant economic advantage that will enable them to increase their market share in Japan, costing the U.S. dairy industry billions of dollars in lost sales,” said Tom Vilsack, USDEC’s president and CEO.

“U.S. dairy farmers and processors strongly support the administration’s launch of trade talks with Japan. We hope this report provides fresh ammunition to our negotiators about why a strong U.S.-Japan agreement is so important for American agriculture.”

“U.S. dairy farmers are facing economic hardships, and expanding opportunities overseas is the best way to counter that,” said National Milk Producers Federation President and CEO Jim Mulhern. “A trade deal with Japan that significantly expands dairy access would make 2019 a brighter year.”

 

Source: The Fence Post

Experts predict another challenging year for dairy farmers

Brickstead Dairy in Greenleaf was awarded the 2017 Wisconsin Leopold Conservation Award, December 8, 2017. (WLUK)

Experts are predicting another challenging year for dairy farmers following four straight years of low farm milk prices.

Mark Stephenson, director of Dairy Policy Analysis at the University of Wisconsin in Madison, says he expects prices to be better this year than in 2018, but not by a lot.

One plus is that the new farm bill includes an improved insurance program to help farmers during times of low prices but that program has been delayed by the partial government shutdown. While the shutdown is over, the Farm Services Agency still needs to write the rules for the program before the payments start. Experts expect the payments to be retroactive.

“Vermont dairy farmer Walter Bothfeld says, “It helps but it’s almost too little too late.”

Source: fox11online.com

Study Shows Trade Agreements by Competitors will Threaten U.S. Dairy Exports to Japan

A study released today by the U.S. Dairy Export Council projects new trade agreements between Japan and other countries will put U.S. dairy exports at a competitive disadvantage, resulting in lost U.S. sales of $5.4 billion over 21 years.

The Japanese dairy market, the fourth largest export destination for U.S. dairy exports, is expected to continue to grow in years to come. With a level playing field, the U.S. could roughly double its market share, according to the study conducted by Tokyo-based Meros Consulting.

However, without swift and effective action by the U.S. to secure a strong trade treaty with Japan that meets or exceeds Japan’s agreements with Australia, New Zealand and the European Union, the U.S. could see its market share drop in half over the next decade. 

Australia and New Zealand have the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in place with Japan already and as of this Friday, Europe’s agreement with Japan will take effect too. Without a strong U.S.-Japan trade treaty, competitors will seize a cumulative $1.3 billion in dairy sales over the next decade that would otherwise have been supplied from the U.S., a toll that climbs to $5.4billion once CPTPP and the Japan-EU agreements are fully implemented. 

“These agreements will give our competition a significant economic advantage that will enable them to increase their market share in Japan, costing the U.S. dairy industry billions of dollars in lost sales,” said Tom Vilsack, USDEC’s President and CEO. “U.S. dairy farmers and processors strongly support the Administration’s launch of trade talks with Japan. We hope this report provides fresh ammunition to our negotiators about why a strong U.S.-Japan agreement is so important for American agriculture.”

“U.S. dairy farmers are facing economic hardships, and expanding opportunities overseas is the best way to counter that,” said National Milk Producers Federation (NMPF) President and CEO Jim Mulhern. “A trade deal with Japan that significantly expands dairy access would make 2019 a brighter year.”   

 

Source: U.S. DEC

Tough to maintain US dairy farms now

We’re moving into the New Year and I have been reflecting on the changes in farming in this area over the many years since I grew up in North Bloomfield. Dramatic changes have taken place in the dairy industry and in growing grain.

As I have written in the past, 50 to 60 years ago roads in the rural areas were lined with dairy farms, mostly small herds of 15 to 50 cows. These cows were housed in small stanchion barns with a silo attached on the side or end.

Much of the milk was being sent to market in 10-gallon milk cans, with bulk tanks just starting to become popular. In the barn, pipelines were being used on a few farms, with better cooling being done in the milk house through mechanical rather than water cooling.

Take a look around and you will see that a dramatic change has taken place.

First, there are just a fraction of the dairy farms still in business today. With milk prices continuing to be below cost of production, we will probably lose more farms in the future. One of the most recent ones was the Polchin Family herd up in Cherry Valley, Ashtabula County.

The Polchins had received a letter from the processor that was taking their milk telling them they no longer wanted it after a certain date. Polchins searched for a buyer but there was no demand for their milk, so they made the decision to sell their registered herd of Holsteins.

It was not an easy decision for them since dairy farming had been a big part of their lives for many years.

Milk prices going into 2019 do not look good. There is just plain too much milk in this country and without a strong export market, prices won’t increase to levels needed for profitable dairy farming.

Actions taken by our federal government, such as tariffs and discontinuing trade agreements, have had a negative effect on the dairy export market. Right now, USDA is sitting on about 1.4 billion pounds of cheese, the largest in history. Until that surplus is disposed of, it will depress milk prices because cheese is one of the products that support the milk price.

According to the USDA, China has just now started to buy substantial amounts of our agricultural products as well as manufactured and other products. How long this will continue is not known because China is an erratic and uncertain market.

Other factors not related to exports affect the milk price. For example, when you walk into the grocery store, you may see the dairy case full of products that are labeled “milk.” It may be an almond, coconut or other plant-based beverage, but it is not real cow’s milk and is an inferior product. But some people buy it thinking it is equal nutritionally to milk, but it is not.

Regulations have been passed requiring these beverages to be label something other than milk but they have not been enforced. A recent survey found that 61 percent of consumers want FDA to enforce regulations that require plant-based beverages to be labeled other than milk.

Considering the outlook for better milk prices, what is the future for dairy farming in this area? While we have seen many local dairy farms hang on in spite of low prices, this can’t continue forever. Across Ohio and in many states, dairy farms keep going out of business.

This may continue until the amount of milk and the demand are in balance and that may take some time. The future is not as bright as those still in the business would like. Let’s hope prices get at least good enough for them to stay in business.

Source: tribtoday.com

Big Island Dairy’s closure presents hardship for Oahu dairy

The impending closure of Big Island Dairy is complicating the operations of a small dairy on another island.

Naked Cow Dairy in Waianae is the only dairy on the island of Oahu. It produces gourmet butter and artisan cheese with milk from its small herd. When their cows aren’t milking, they rely on shipments from Big Island Dairy.

Citing financial and regulatory reasons, Big Island Dairy will cease operations by the end of April. As part of a settlement with a community group and an environmental organization, the dairy must stop milking cows by end of February. Kupale Ookala and the Center for Food Safety filed a lawsuit against Big Island Dairy in 2017, alleging violations of the federal Clean Water Act.

Residents have long complained about releases of manure-laden water from the dairy into the nearby gulches that run through or next to the community.

Naked Cow Dairy is now rushing to raise $200,000 to purchase about 50 cows from the closing dairy, Hawaii News Now reported.

“We’re going to have to do it on our own somehow, otherwise we won’t exist,” said Naked Cow Dairy owner Monique van der Stroom. “Somehow we’ll figure it out, but this is an opportunity, a sad opportunity, but an opportunity for us to actually grow and take on some of the milk that we’re losing.”

Other cows from Big Island Dairy have already been sold. A group that rescued animals during last year’s Kilauea eruption bought 61 bottle-fed calves. Those animals now have homes at animal sanctuaries and private properties across the Big Island. The Hawaii Lava Flow Animal Rescue Network hopes to raise money to buy another group of cows.

 

Source: The Wichita Eagle

U.S. Dairy Farmers Say Billions of Exports at Risk

The U.S. dairy industry stands to lose billions of dollars over the next two decades if trade agreements with Japan, one of the biggest buyers, don’t materialize, according to a U.S. Dairy Export Council report released Wednesday.

The Japanese are gobbling up more cheesy pizzas and proteins like whey, at the same time that its own dairy industry is seeing a decline. Exporters are aggressively competing to supply that growing demand, and the European Union has a leg up on the U.S. due to a trade agreement that went into affect at the end of last year. Other major exporting countries are set to benefit from the Trans-Pacific Partnership, a pact from which the U.S. withdrew.

The U.S. saw record dairy exports in 2018, said former Agriculture Secretary Tom Vilsack, who now heads the Dairy Export Council. But if nothing else changes, in a decade, half of the U.S.’ Japanese business will be wrested away by competitors. Two decades from now in 2038, American dairies will have lost $5.4 billion.

It’s not just Japan that U.S. dairy farmers are worried about. Trade spats with their No. 1 cheese customer, Mexico, and with China have led to lost sales. The pile of tariffs may begin to erode farmers’ support for the administration.

‘Very Patient’

“We have momentum that can be either significantly supercharged or we can have further depression on prices by limiting our capacity to export,” Vilsack said by telephone. “Dairy farmers have been very patient, but at some time they need to see some positive light at the end of the tunnel. They need to see some success.”

There are several reasons why Japanese people are eating more dairy. The economy is growing, so people are buying higher-end products. There’s an interest in easy-to-prepare foods, like pizza, and wellness is big, so sports associations are touting whey protein, Vilsack said. Meanwhile, Japanese dairy farmers are aging and younger farmers aren’t replacing them, so production is in decline.

Japan is the second biggest cheese importer, and if the U.S. could negotiate market access equal to its rivals, it could supply 24 percent of the the country’s cheese by 2027, up from 13 percent in 2017, according to the report.

American dairy farmers have been struggling with a years-long slide in milk prices. Many aren’t making it. In Wisconsin alone, more than 600 dairies left the industry last year.

“If competitors have a 10 to 20 percent advantage, it doesn’t make a difference how good your product is,” Vilsack said.

 
 
Source: Bloomberg

New Zealand dairy cattle numbers drop for the second year

The number of dairy cattle in New Zealand has dipped for the second year, while beef cattle numbers increased strongly in 2018, the country’s statistics department Stats NZ said on Thursday.

Provisional figures from the 2018 agricultural production census showed dairy cattle numbers fell 1 percent to 6.4 million in June 2018, Stats NZ said.

“This followed a similar small dip in 2017, though overall dairy cattle numbers have been relatively steady since 2012,” agricultural production statistics manager Stuart Pitts said in a statement.

Total dairy cattle were at their highest level in 2014 at 6.7 million, Pitts said.

Dairy products are a huge export for New Zealand. The value of milk powder, butter, and cheese exports for the year ended June 2018 was 14.1 billion NZ dollars (9.5 billion U.S. dollars), statistics showed.

Beef cattle numbers rose for the second year in a row, up 5 percent to 3.8 million in 2018, Pitts said.

Total sheep numbers eased again in 2018, down 1 percent to 27.3 million, he said, adding sheep numbers have fallen in 10 of the past 12 years, in total down about 12.8 million from about 40.1 million in 2006.

“New Zealand now has 5.6 sheep for every person, after peaking at 22 sheep for every person in 1982,” Pitts said.

A large fall in sheep and beef cattle numbers since 1990 means overall stock units have fallen in the past 28 years, despite a rise in dairy cattle numbers, he said.

The Ministry for Primary Industries’ latest report showed that about 52,000 dairy cattle have been culled as part of the response to the cattle disease Mycoplasma bovis.

Source: xinhuanet.com

Rhode Island dairy farms vanishing amid crash in milk prices

There are no days off for Edwin “Scooter” LaPrise and his family at their 12-acre dairy farm, EMMA Acres.

They rise by 5:30 a.m., 365 days a year, rain or shine. “Sometimes we have breakfast before coming down, sometimes we don’t; it depends on the day,” said Maggie LaPrise, Scooter’s 19-year-old daughter. “Then we get chores started. We milk the cows first, then go feed the calves, clean all the barns and feed everyone.”

Morning chores are usually done by 9 a.m. Then in the afternoon, around 4 p.m., the whole cycle starts up again.

For Scooter, it’s a way of life. “You can’t get farming out of you,” he told WPRI 12 on a recent visit to the Exeter farm. “I mean, once it’s in you, you’re there.”

The LaPrise family’s routine was once the most common type of agriculture in Rhode Island. But today, it’s vanishing.

In 1964, the federal Census of Agriculture found 420 dairy farms in Rhode Island, many of them small operations to sustain an individual farm family. Now, a half-century later, there are just 11 in the whole state — nine cow dairies and two goat dairies. (One of the nine cow dairies only produces cheese and yogurt.)

“The number of dairy farmers going out of business is a scary thought, to be honest,” said Ken Ayars, longtime chief of the Division of Agriculture at the R.I. Department of Environmental Management. He estimates Rhode Island is losing an average of one dairy farm annually. Just last year, the Cottrell Homestead off Route 138 in South Kingstown sold its cows after 118 years of operation.

“Dairy has been struggling for a long period of time. … It’s a big concern of ours,” Ayars said. “We’ll do whatever we can to keep them viable.”

LaPrise said the biggest current challenge is the national price of wholesale milk, which has been down for more than four years. It costs him about $22 to produce roughly 90 gallons of milk, but he’s only paid $16.50 to $17.50. He and his wife, who bought the property in 1990, work off the farm to make ends meet: she is a registered nurse, while he runs a trucking company.

“Every day, you can walk down through the barn and say, yup, I’m losing $5 a day on her, $5 a day on her,” LaPrise said.

In addition to the oversupply of milk, consumption has dropped considerably as more people consume non-dairy alternatives made from almonds, coconuts or oats. Another recent setback has been the ongoing U.S. trade war: the National Milk Producers Federation estimates tariffs have cost dairies more than $1 billion. There are local challenges, too, such as the high cost of land and energy in Rhode Island.

Nationwide, the strain on dairy farmers has become so severe that some have taken their own lives.

“The despair is palpable; suicide is a fact of life, though many farm suicides are listed as accidents,” Jim Goodman, a Wisconsin farmer who is leaving the dairy business after 40 years, wrote in The Washington Post last month. “A farmer I knew for many years came home from town, folded his good clothes for the last time and killed himself. I saw no warning, though maybe others did.”

Ayars said one of his biggest concerns is succession — recruiting another generation to take over local dairy farms when the current proprietors retire.

“Dairy farming is the most year-round, intensive type of agriculture that exists,” he said. “Cows are milked twice a day minimally. It’s hard to break away from the farm. There are not a lot of young people that want to live that lifestyle, to be honest.”

The disappearance of dairy has occurred despite a broader revival in agriculture across Rhode Island, where the number of farms jumped from about 850 in 2002 to more than 1,200 in 2012. In fact, some former dairy farms have converted to other crops.

Even for the Rhode Island dairy industry, it’s not all bad news. Ayars pointed to family-owned Wright’s Dairy Farm in North Smithfield, which just completed a renovation of its on-site store.

“You have a retail environment happening right at the farm, processing happens at the farm, everything’s more or less self-contained,” he said. “Those are the types of dairy environments where we find much more chance of a long-term future. When you’re not able to tap into it, that’s much more of a challenge.”

Another boost has come from Rhody Fresh, a brand of locally produced milk that’s now sold in more than 100 area supermarkets. The Rhode Island Dairy Farmers Cooperative launched Rhody Fresh in 2004 with grants of $21,000 from DEM and $30,000 from The Rhode Island Foundation. The group also got a $125,000 loan from the state’s Small Business Loan Fund.

“It really took off pretty rapidly,” Ayars said. “They were able to pay the loan back faster than the terms required.”

Four of the state’s eight remaining milk-producing cow dairies are part of Rhody Fresh: EMMA Acres, Escobar’s Highland Farm in Portsmouth, Elmrock Farm in Ashaway and Breene Hollow Farm in West Greenwich. The farmers wind up with more of the proceeds from their milk by selling it themselves rather than to a large out-of-state processing company.

Ayars said Rhody Fresh is a clear success story. “If it wasn’t for that, I wouldn’t be talking about eight or nine dairy farmers,” he said. “We’d probably be talking about far less than that.”

LaPrise said Rhody Fresh has helped, but he’s frustrated that it gets undercut on price by other brands, especially at large national chains. “They sell it for less than it costs us to make it,” he said. “That’s really hurt.” He urged Rhode Islanders to buy milk from Rhody Fresh, Wright’s or other local producers. “At least the money that you’re spending stays here,” he said.

LaPrise said he would also like to see the state legalize the sale of raw milk, which is allowed in Massachusetts and Connecticut and appeals to consumers who don’t want it pasteurized. But bills to do that have died repeatedly at the State House.

In 2017, the Senate created a legislative commission to study the state’s policy on raw milk and report back by Jan. 2, 2018. But a spokesperson confirmed no one was ever actually appointed to the commission, so it never got off the ground. (The commission’s prime sponsor, former state Sen. Nick Kettle, has since resigned.)

State Sen. Sue Sosnowski, a South Kingstown Democrat and an influential voice on agricultural issues, said she’s open to allowing raw milk but has heard testimony for and against in the past. “If Scooter LaPrise would come to me and say he would testify, I would be right on it,” she said, though she added that the state would need to establish clear rules.

Sosnowski says the state has taken other steps to help dairy farmers, including exemptions from sales tax and turning their acreage into conservation land to lower property taxes. She suggested the state’s public colleges should switch to buying Rhody Fresh milk for students to give the industry a further boost.

Massachusetts and Connecticut have other programs to help dairy farmers that Rhode Island does not, including tax credits and price supports, according to LaPrise. Ayars said the new farm bill, which President Trump signed late last year, includes additional supports for dairy farmers that he hopes will “provide a safety net for the industry.”

In the meantime, LaPrise is taking a page out of Wright’s book at EMMA Acres. The family is currently building a small store they hope to have open in the spring that will sell milk and cheese as well as fruits and vegetables.  “Hopefully,” he said, “it will catch on and we can help support the farm by selling a little finished product.”

Maggie, his daughter, acknowledges the idea of taking over the farm makes her anxious. “It can’t really sustain supporting a family,” she said. “They can barely support themselves, these cows. So it stresses me out a little bit thinking about my future.”

“But as of right now,” she said, “my future is going to be on the farm.”

Source: wpri.com

How dairy company Synlait went from a wobbly start to sharemarket darling in 10 years

Synlait Milk chairman Graeme Milne. Photo / Christine Cornege

Synlait Milk didn’t get to be a sharemarket sweetheart by doing U-turns, but its chairman Graeme Milne remembers exactly where he did one on the Hamilton-Auckland highway 10 years ago.

It was 2009 and Synlait was in a corner.

The new dairy ingredients exporter had made a loss in its first year and had too much debt. It was under pressure from its banks and the global financial crisis (GFC) had paralysed debt markets.

But a golden opportunity in China was going begging. A food-safety scandal the previous year, when infant formula was poisoned with melamine, had fired huge demand for baby milk from safe producers like New Zealand.

“To get into the infant formula market – the most sensitive of all markets – takes years and years of trust to be built in the supply chain. But now the environment had changed and it looked like we could enter the infant formula market much faster than we’d otherwise have been able to,” recalls Milne from his home at Tamahere, near Hamilton.

Synlait needed equity to build a second, specialised drier for infant formula – and fast.

But after the GFC, “debt was a bad word”.

So Synlait, owned by Japanese company Mitsui, with 20 per cent, and a clutch of small private investors, decided to try to list, “even though the environment was terrible”, says Milne.

“We were too fresh, too young, too new, but we needed to do something. And the banks were pushing us. We went for the big bang, tried to raise $150 million. It was a really bad time – the company wasn’t launching it off a strong platform. We only had one year of results and one dryer operating.

“But we couldn’t give up.”

Long story short, Canterbury-based Synlait got its $150m in bids but not enough competition to reach the desired share price.

“The share price would’ve been too low and our existing shareholders would’ve been diluted away. So we made the very difficult decision not to accept the offers, to pull the IPO. John [Penno, then managing director] had flown up from Christchurch to our investment bankers and I was on my way to Auckland to sign the papers.

“I did a U-turn on the motorway and came home.”

Within six months, global market sentiment began stabilising and “early investors were getting brave and coming back to the market”, Milne recalls.

Time for Synlait to go back to the private placement market for equity. This time there was strong interest from several companies and the upshot was that China’s Bright Foods paid $82m for a nearly 51 per cent stake.

“We were willing to sell control … to get enough equity into the company and to get to a situation where our shareholders weren’t diluted too much and sufficient funds to build the next dryer,” says the Opotiki-born, Hawke’s Bay-reared Milne.

“We built the second infant formula dryer and got ourselves into the bulk infant formula market. That went successfully so we built a third dryer and now we’re building a fourth.”

And Synlait has since listed successfully – on the NZX in 2013 when Bright’s stake diluted to 39 per cent, and on the ASX in 2016.

Last year it was the best performing stock on the NZX and Synlait’s market capitalisation today is nudging $2 billion.

The company has been growing at 15-20 per cent a year since 2013, has moved from packaged bulk infant formula powder to consumer canned production, has a partnership with another sharemarket darling, a2 Milk – a 17 per cent shareholder – and is about to enter what it calls the “everyday” dairy market, producing homebrand milk and cream for supermarket chain Foodstuffs in the South Island.

The $125m plant being built at Synlait’s main site at Dunsandel, in Canterbury, to handle the move into the consumer dairy market can also make long-life cream, liquid infant formula and drinking yoghurts. Milne implies that Synlait is eyeing the North Island market but won’t elaborate.

Meanwhile, the company will make its North Island debut this year as a raw milk processor at Pokeno in the Waikato, and it has inked a deal to buy the South Island’s Talbot Forest Cheese company for up to $40m in August. Its environmental protection and sustainability initiatives lead the $17b dairy industry.

Synlait has made spectacular progress look easy. But Milne, chairman since the company’s earliest days and probably in his last term, shares the U-turn story because he knows better.

Getting this far has involved sleepless nights, difficult decisions, a lot of hard work building export customer and investor relationships, analysing markets, acquiring talent and building teams, and at times, dollops of courage.

As Milne recalls, when the genesis of Synlait Milk emerged in 2006-07 from a small group of separately-owned dairy farms, and contractors were engaged to build the first dairy factory, “we had nothing except a corner of one of the farms where we said we were going to build”.

“We didn’t have a pilot plant, we just built a commercial plant. So we didn’t have any samples from a pilot plant to say [to potential export customers] this is what the product will be like. We were going into a crowded market.”

But they had the dynamic and visionary John Penno, co-founder of the original Synlait Farms Ltd, founder of Synlait Milk and until last year, its managing director. He remains a director.

Penno did a fantastic job of meshing farmers, investors and the banks in those very early days when “everything was contingent on everything else”, says Milne, an experienced chief executive and director in a range of sectors, but with a solid pedigree in global dairy markets. He met Penno on a dairy industry advisory board and was asked for his ideas on making a dairy manufacturing debut.

Milne obliged with “one page of bullet points” and was asked to explain it to the fledgling Synlait board. “Next thing I was chairman”.

He’s kept a low profile – long his business style.

“Profile is for the company – for the benefit of the company and John was bloody good at that. I think the CEO is the front of the company.”

In 2019, Synlait is entering a new stage in its life. Now headed by ex-Fonterra senior executive Leon Clements as chief executive, it is still a growing company but “now it’s more about execution and building on the strategy”, says Milne.

No dividend has been paid yet, and is unlikely to be anytime soon.

“There are no immediate plans to pay a dividend. Like I say we are a growth company. I start every AGM pretty much saying that. The last AGM was the first I never got asked the question.”

“In September [2016] we raised $100m in a rights issue to make sure we had the platform for investing further. We have $500m of investment ahead. [We want] more equity, less debt. Our history is a bit too leveraged, and personally, I like to run companies conservatively.

“When you pay a dividend it doesn’t make the company worth more – it makes it worth less. Paying a dividend or not is not a positive or a negative. It’s other people’s money and you need to treat it responsibly.

“How I judge it is, if we have good ideas that we think will bring a great return on investment, we’ll keep the money and invest it for you. If we haven’t, we’ll give it to you.”

Milne says Synlait can handle the projected investment in new plant and infrastructure in the next two or three years without needing to raise more equity.

“If another thing came around the corner we thought worth doing in the immediate future, we are comfortable funding that with debt and earnings. There’s a lot of cash coming into the company.”

At the time of the rights issue, Synlait’s share price was $3.62. It has climbed as high as $13 and yesterday was trading around $9.90.

Milne says the stock moves around because it is held in big blocks and relatively thinly traded. It is sensitive to sentiment about China’s economy and export registration and approvals.

“We don’t have an opinion on the share price,” says Milne. “I say to the team, we run the company – not the share price. We run the top and bottom line of the company and the strategy, the sharemarket makes up its mind about what the share price is.”

As for Synlait being the best performing stock on the NZX last year, “I certainly don’t use those sort of statistics internally in the company”.

“We are building a company. It’s young and we are relatively exposed to infant formula, but we’re not just an infant formula company. We are building … in other categories and making sure we do that well so if there is a threat in one area, we have others. We want multiple sites in multiple sectors. But we don’t want to do too many things, we are a dairy company, but we do want to do things we can be very good at.

“We are not a yield stock and I tell shareholders that.”

Milne says that from day one he cautioned Synlait against entering the own-brand, fast-moving consumer goods market – and in 10 years the company hasn’t been tempted.

“Some people say you should capture as much of the value chain as possible and that’s true depending on what sector you’re in. But you’ve also got to cut your cloth and if you’re going to do things, you have to do them really well. We’ve done technical development of the product and we’ve done that well, so now we’re replicating that in the local market.

“I’m not saying we will never get into our own brand, but if we do it won’t be in sectors that compete with our own existing customers.

“There’s a desire to get into other parallel dairy-related sectors so that we can de-risk the company and at the same time work with branded partners. There’s profit to be made and we think we can do it well.

“If you’re entering a sector with existing players you have to be pretty damn sure you can do well and prosper. We did a lot of analysis.”

Looking ahead, Milne says he indicated last year that he doubted he would seek re-election in three years, but had agreed to stay on for the chief executive transition.

“There’s a general understanding [in governance] that if you’re there forever you can’t be independent. It’ll be a hard thing because Synlait is a nice company.”

Meanwhile, there will be a “comprehensive” external review of the board this year.

External board reviews are regular at Synlait but this one will look at bit deeper, he says.

“There’s an age and stage thing with everybody. We don’t want everyone shifting at once.”

Milne told the market Synlait should post a “substantial” increase in profit for the 2019 financial year but that the scale of the rise won’t be in the same league as last year’s 89 per cent.

Risk areas ahead include diversifying into new sectors as Synlait broadens into the crowded sports and adult nutrition sectors, and speed wobbles, he says.

“In a fast-growing company it’s easy not to service your employees as well as you should. Systems can get behind, there’s temporary accommodation and you could can easily disappoint staff.”

Within the next year, Synlait’s staff is expected to swell to nearly 900. Ten years ago it had about four.

“With anything over 10 to 15 per cent annual growth you have challenges – we have been growing at 15 to 20 per cent for a long time.”

Graeme Milne
• Former chief executive: NZ Dairy Group, Bonlac Australia, BayMilk, Richmond Meats. Former Dairy Board senior executive. Former chairman, Waikato District Health Board.
• Current chairman: Synlait Milk, TerraCare NZ, PF Olsen, Nyriad.
• On the management boards of Proform Plastics and Rimani Farms management.
• Director: Alliance Group, NZ Pharmaceuticals, Waikato University council.

Source: nzherald.co.nz

The US government’s dairy conundrum

The United States’ dairy surplus has reached a record high, rounding out at 1.4 billion pounds of cheese. Reports attempting to quantify this astonishing amount have deferred to metrics like “enough to wrap around the U.S. Capitol.” Suffice to say, nobody’s suggesting we could consume it all.

The nation eating this much cheese is not only mind-boggling: It’s growing less and less likely. According to U.S. Department of Agriculture data, Americans have cut their milk consumption down from 35 pounds to an average of 15 per person annually. The excess is turned into cheese for storage and longevity (and the enjoyment of delicious cheese products). At the same time, government subsidies have continued to support dairy production, buying up surplus to keep prices steady. That leaves us with more cheese than anyone, even the experts, knows what to do with.

“What has changed — and changed fairly noticeably and fairly recently — is people are turning away from processed cheese,” Cornell University agriculture economist Andrew Novakovic said in an interview with NPR. “It’s the same as it is for everything else: If you’ve got too much of something, the price has to go down until consumption rises.”

In the past, the U.S. government has supported dairy farmers through various programs and agencies, accumulating a staggering surplus with policies unique to this industry. What it’s done with that surplus has changed the American welfare state and diet forever.

Early direct promotion

The dairy industry has always had a close relationship with the USDA, from the formation of the country’s most powerful dairy lobby, the National Dairy Council, to initial attempts at regulation. As Pacific Standard recently reported:

After milk was first fortified with Vitamin D in the 1930s, the federal government’s inaugural public-health nutrition campaign promoted it as a miracle cure, a rite of passage, and, later, a means to support the troops in World Wars I and II, as outlined in anthropologist Andrea Wiley’s book Re-Imagining Milk. (Drink your milk and your vitamins: American efficiency in action.)

The federal government’s price supports, which maintain a minimum price for milk, grew out of what the New York Times describes as an “outgrowth of a Depression-era commitment” to a commodity that nutritionists once hailed as a “perfect food.” (This support is in addition to the $20 billion a year the government now spends on farm subsidies, according to the Cato Institute.) At the outset, these policies were intended to help a struggling industry. But as milk production surpassed demand, the government focused largely on attempts to control the boom and bust of the dairy industry’s glut — with little success.

Policymakers have left many of these supports in place. As a result, dairy legislation enacted in the 1930s remains largely unchanged, according to economists Eric Erba and Andrew Novakovic. Consumer demand, however, has not: Milk consumption has declined steadily since the 1970s, guided largely by new studies linking dairy to increased risk of health problems. Cheese has fared only slightly better.

Government cheese

Over the years, the government has gravitated toward one method of unloading dairy surplus: giving it to the poor.

In 1949, the Agricultural Act first gave the Commodity Credit Corporation, a government-owned agency created to stabilize farm incomes, authority to purchase dairy products. The corporation’s stockpile grew over the years — amassing 500 million pounds worth $4 billion across 35 warehouses — and so did public outrage. “Probably the cheapest and most practical thing would be to dump it in the ocean,” a USDA official told the told the Washington Post in 1981.

To clear out the CCC’s surplus under the Reagan administration, the USDA created the Temporary Emergency Food Assistance Program, which “helps supplement the diets of low-income Americans.” At the time, that help took the form of “government cheese,” which was distributed to poor seniors en masse. According to History, the five-pound blocks of cheese were neon orange and sometimes moldy, with a taste like Velveeta.

Today, the government unloads its surplus through several public benefit programs. Thanks to decades of USDA policy, milk is firmly embedded in the federal dietary guidelines, school lunches, the Supplemental Nutrition Assistance Program, and the Supplemental Nutrition Program for Women, Infants, and Children.

But it’s still not enough to manage the surplus. In 2016, farmers poured out tens of millions of gallons of excess milk onto fields and into pools of manure, the Wall Street Journal reported. And the buyouts continue: That same year, the USDA announced a new plan to purchase $20 million of cheddar cheese to deal with the then-record surplus, “while assisting food banks and other food assistance recipients” — the latest of many bailouts for the industry. In 2018, the USDA said it would also buy more fresh fluid milk to distribute to the Emergency Food Assistance Program, unrelated to the buyouts.

Fast food companies

Americans can only eat so much cheese (35 pounds a year, according to USDA data). But while marketing surplus directly to consumers has its limits, company partnerships have had greater success.

To help sell its surplus in the 1990s, the National Dairy Promotion Board created Dairy Management Incorporated, a semi-public marketing branch of the USDA funded through government “checkoff” fees from dairy producers. This agency gave us the “Got Milk?” campaign and a host of popular fast food menu items, including Domino’s seven-cheese pizzas and Taco Bell’s very cheesy Quesalupa. A 2017 Bloomberg Businessweek investigation called the group of chemists and nutritionists the “Illuminati of cheese.” “The checkoff [program] puts DMI’s agents inside Burger King, Domino’s, McDonald’s, Pizza Hut, and Wendy’s, where they’re privy to each restaurant chain’s most closely guarded trade secrets,” writes Clint Rainey.

For a federal agency dedicated to improving overall nutrition and providing dietary guidance, these partnerships may seem like a contradiction — with good reason, experts say. DMI’s efforts “impose health costs on Americans generally, but disproportionately harm low-income African Americans and Latinos who live in urban centers dominated by fast food restaurants,” argues legal scholar and food oppression expert Andrea Freeman in a 2013 report.

All the Taco Bells in the nation cannot solve the record-breaking surplus. In recent years, producers have turned their focus to foreign markets, in the hopes that the government can pass this glut onto other countries. But as Novakovic points out, the demand worldwide is not for processed American cheese. It’s for the “specialty, European-style” variety (and perhaps, the occasional Quesalupa).

Source: theweek.com

McKinsey & Company Study Provides Winning Growth Formula for Dairy

Groundbreaking Research Captures Four Strategies for Success in Domestic, International Markets

Modest growth forecasts, shifting consumer tastes and increased domestic competition mean dairy executives will need to look for new models at home and abroad to capture growth, according to new research from McKinsey & Company released today at Dairy Forum 2019 in Orlando, Fla. In a presentation to nearly 1,000 dairy executives from across the country, McKinsey consultants concluded that future growth in the competitive dairy landscape will require a bold outlook and a winning combination of new strategies.

Today’s presentation, “Resilience and Growth: Perspectives from McKinsey & Company,” revealed independent research that McKinsey conducted last fall, in partnership with the International Dairy Foods Association. It captures insights from in-depth interviews with 30 CEOs of international dairy companies and findings from a survey of more than 1,000 American households to chart the consumer preferences that are shaping the domestic dairy market.

“The success of our industry lies in our ability to partner together to move dairy forward. Sharing these findings at IDFA’s Dairy Forum, the industry’s largest gathering, provided an excellent capstone to our deep discussion of dairy’s future,” said Michael Dykes, D.V.M., IDFA president and CEO. “This is just the start of the way we’ll use these findings to transform our industry for continued prosperity.”

“With the right mix of scale and innovation, the industry can use these data-driven strategies to transform opportunities into advantages, secure new pockets of U.S. market growth and prepare for long-term success in international markets,” said Roberto Uchoa de Paula, senior partner at McKinsey and presenter at Dairy Forum 2019.

Uchoa de Paula, along with Ludovic Meilhac, partner, and Christina Adams, associate partner, told Dairy Forum attendees that U.S. dairy manufacturers have the option of chasing international opportunities or competing for share in their home market, which is increasingly competitive and slow growing.

Based on the research, the consultants believe U.S. dairy companies should consider four strategic responses – innovating to capture domestic growth, revamping the supply chain to serve a new type of demand, exporting to markets with high projected dairy deficits and attractive trade agreement groundwork, and investing directly in deficit markets to maximize long-term success– to create a winning growth formula for dairy.

Dairy companies are better positioned to compete in the domestic dairy environment, the consultants said, if they adopt a strategy that combines innovation that supports a diverse range of consumer preferences along with a revamped supply chain to serve new types of demand.

Dairy companies can meet these new demands by strategically responding to six major factors shaping the market: Consumers’ desire to explore new or different brands and experiences, the growing volume of consumer data and highly personalized microsegments, the proliferation of smaller brands, consumers’ focus on health and wellness, the shifting retail landscape and rising commercial costs.

Tactics that comprise a winning strategy, the consultants said, include a focus on identifying growth spaces through analytics, making quick and small investments instead of big bets and investing in new supply chain capabilities.

However, even the most impressive innovators will be hard pressed to gain major growth at home, the consultants said. Their findings revealed that globally focused companies have increased their revenues significantly from 2007 to 2018, while those active in local markets have seen their revenues fall. Dairy’s future is global, the consultants stressed, and the greatest gains lie in markets beyond American borders, primarily in Africa and Asia.

U.S. dairy companies with an international presence will need to pursue a two-pronged strategy to expand their global footprint, the consultants said. Dairy companies must first adopt a strong defensive strategy to maintain their footholds abroad, proactively managing risk with a robust tool kit of financial and demand-hedging tools. Companies must also play offense, capturing growth not only by focusing on growing exports, but also by devising a long-term strategy for developing capital, talent and products.

When defensive risk management and proactive investment are combined, the consultants said, companies can unlock a positive cycle of global growth.

McKinsey & Company will soon release a white paper, “A winning growth formula for dairy,” that highlights the research findings and suggested responses in more detail. Interested parties may contact Heather Soubra, IDFA chief of staff, at hsoubra@idfa.org to request a copy.

 

Source: IDFA

CWT Assists with 3 million Pounds of Dairy Product Export Sales

Cooperatives Working Together (CWT) member cooperatives accepted 15 offers of export assistance from CWT that helped them capture sales contracts for 2.932 million pounds (2,020 metric tons) of Cheddar, Monterey Jack and Gouda cheese, and 83,776 pounds (38 metric tons) of butter to customers in Asia, Central America, the Middle East, and Oceania. The product will be delivered during the period from January through July 2019.

CWT-assisted member cooperative export sales for the first two weeks of 2019 total 7.385 million pounds of American-type cheeses, 537,928 pounds of butter (82% milkfat) and 1.124 million pounds of whole milk powder to 13 countries in six regions. These sales are the equivalent of 88.5 million pounds of milk on a milkfat basis.

Assisting CWT members through the Export Assistance program positively affects all U.S. dairy farmers and all dairy cooperatives by strengthening and maintaining the value of dairy products that directly impact their milk price. It does this by helping member cooperatives gain and maintain world market share for U.S dairy products. As a result, the program has significantly expanded the total demand for U.S. dairy products and the demand for U.S. farm milk that produces those products.

The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT pays export assistance to the bidders only when export and delivery of the product is verified by required documentation.

Branded milk could offer brighter future for UK dairy industry

“The white stuff is knackered,” pronounced dairy market analyst Chris Walkland, on the state of margins in the UK liquid milk market.

“We need to grow the size of the cake,” added Mr Walkland, who is an advocate of increasing milk retail prices to raise farmgate returns for dairy farmers.

Mr Walkland said that margins were believed to be only about 1% for milk processors on liquid milk, so growing producer milk cheques would require shoppers paying more at the till.

British consumers would be willing to pay more for milk, according to a 2016 YouGov survey.

The study, undertaken in conjunction with AHDB Consumer Insights, found that 80% of shoppers would be willing to spend more to provide producers with a fairer return, with 19% indicating they would happily pay more than 20p extra for four pints of milk.

Consumers have also shown their willingness to pay higher prices for milk, through Morrisons’ Milk for Farmers, which returns a 10p/litre premium to Morrisons’ Arla dairy farmer-suppliers.

Since October 2015, shoppers have purchased nearly 1bn litres of Milk for Farmers, returning an extra £12m to farmers’ pockets.

Milk in decline

The commoditisation of milk and its retail in “no frills” plastic containers in supermarkets is stifling excitement and innovation in dairy, according to journalist and Nuffield scholar, Tom Levitt.

“The market for milk is evolving, not disappearing, but milk has lost its monopoly,” says Mr Levitt, who undertook a two-year study of branded milk across seven countries.

“The problem is, held back by low margins in milk. the sector had been slow to adapt to the trends and desires of a new generation of consumers.”

He said that consumers were turned-off by red, blue and green plastic cartons of milk and the ugly metal trollies.

Some businesses had adapted to capitalise on the fact that 80% of UK consumers regularly bought milk, he says.

“People are willing to pay more for branded and innovative milk products.”

Mr Levitt pointed to the recent boom in popularity of kefir – a fermented dairy product half way between milk and yoghurt.

A 250ml bottle of branded kefir retails at a minimum of £1, a mark-up over standard liquid milk of more than 700% and already sells 16m bottles a year.

“[Kefir’s] biggest consumer base is slimming women, exactly the consumer that we are told is most likely to be avoiding dairy,” he added.

The only sustainable future for the industry is to turn milk into a more valuable and attractive product that consumers will be willing to spend more money on, warned Mr Levitt.

Target market

Generation Z – those aged between three and 23 – are the group that the industry needs to target, according to new Arla UK chief executive Ash Amirahmadi.

“This group aren’t necessarily against dairy, they are just more excited by plant-based at the moment.

“We just need to give them a reason to find dairy more exciting.”

Mr Amirahmadi said Arla’s future consumer strategy would be based around increasing the size of the pie through innovation of dairy products, urging other processors to follow Arla’s lead.

“We have to innovate products around milk. Milk is not just milk.”

“We have to modernise the category and appeal to young women. If we can do this, we will appeal to anyone out there.

“Lots of dairy companies need to produce products that consumers want to pay more money for.”

The Arla UK boss said that consumers need to be reminded that dairy is food in its own right, rather than an accompaniment to the likes of tea and cereal.

Branded milk in practice

Going it alone and launching an independent dairy brand has come with a whole series of challenges, but allowed Nemi milk to maintain full control of its brand direction, says Nemi director Andrew Henderson.

The brand, which retails at £1.49 for a two-litre bottle, is busy growing its UK liquid milk alongside developing its presence in global markets and already exports to the Middle East.

“We were offered a partnership with a major processor in the early days, but they wanted to own the brand.

“We didn’t want to end up like Innocent Smoothies selling themselves [to Coca-Cola] so we turned them down and have done things ourselves.”

Mr Henderson, a dairy nutritionist by trade, says this has allowed him to develop his selenium-enriched milk within his own ethics and, crucially, retained the power to pay his dairy farmer suppliers a fair return.

“We have never paid less than 30p/litre for any Nemi milk throughout the past two-and-a-half years,” he says.

Trying to enter a market dominated by the UK’s two largest processors has its challenges, adds Mr Henderson, citing the need for substantial start-up capital and access to existing transport logistics as his two biggest headaches.

“You need to know who your customers are and how you are going to get the milk to them. Logistics are crucial.”

Who is getting milk branding right?

Our Cow Molly

Sheffield-based dairy Our Cow Molly was launched in response to diminishing returns of the UK dairy processor market.

The brand prides itself on the freshness of its milk, with shorter supply chains meaning milk is on shelf in hours rather than days. The brand currently supplies several local coffee shops and in 2016 struck a deal to supply the Co-op in the town’s stores.

Fairlife milk

US dairy farmers Sue and Mike McCloskey created Fairlife to add value to their milk and highlight its nutritional and welfare benefits. In 2012, Fairlife went into a distribution partnership with Coca-Cola.

The product has 50% more protein, 30% more calcium and 50% less sugar than ordinary milk. The brand adds value by offering full traceability of its milk as well as interacting with consumers online and in person. Its farm has been branded as “the Disneyland” of agricultural tourism.

The brand retails at almost twice the price of regular milk at £2.20/litre.

C’est qui le patron? [Who is the boss?]

A French milk brand that has, since 2015, expanded into a number of other products, including pizza and apple juice, having sold more than 50m litres of milk.

The brand established a “fair price” for farmers by holding a consumer survey, where shoppers could choose how much they valued milk and therefore would be willing to pay farmers for it.

They chose €0.39/litre (35p/litre), which was 26% more than the average price. The brand, just 18 months old, is now in most major French supermarkets.

 

Source: Farmers Weekly

Fonterra’s big problem of needing to be right

OPINION: Apparently, there’s been a big shake-up at Fonterra.

The old executives are gone, and some even older executives got promoted. Farmers fired some of the directors and re-elected some other, old directors again. They also made an old director the new chairman.

The problem with Fonterra is they only employ the best, most intelligent, educated and competent people.

These people are high achievers and they are used to being successful.

You don’t see Fonterra executives in the wild very often. Occasionally we get a glimpse of one doing a radio or television interview.

Looking at them, it’s like there’s someone holding a gun against their back. About to pull the trigger if the executive makes a wrong move or worse, an admission they may have made a bad decision once in their unblemished lives.

Each word is carefully considered, just the right amount of professionalism and corporate speak. All the time making sure they don’t actually say anything, to ensure they won’t say something wrong.

Being wrong to these types of people is a very bad thing indeed.

These high-achieving people tend to succeed in life because they are so damn talented.

They just do things better than the rest of us.

It’s great to have these people on your team, but too many have some downsides. Intelligent and competent people are used to being right and being right has always worked for them.

The problem with being right is it also means your mind is closed. You’re not open to new ideas if you believe you are right.

Being right is based upon knowledge and experience. Knowledge is drawn from the past which makes it easily provable and safe.

Experience is built from the solutions that were used to solve the problems of the past.

The problem with people who have experience is they rely on it. They overrate its relevance.

They try to shoehorn the solutions of the past into solving the problems of the future.

Knowledge and experience are technically out of date.

Of course, knowledge and experience are valuable and critical to success. But we should be aware that knowledge is the opposite of originality, and experience is the opposite of creativity.

If you’re scoring 10 on knowledge and experience, that leaves no room for originality and creativity.

Fonterra employs an army of PR agents to communicate to the public and even their own farmers.

Being right is very important to these people, they need to control the message so nothing can go wrong.

But if you don’t mind being wrong, suddenly anything is possible.

You don’t need to be infallible anymore. You can just tell the truth. In this environment, there are so many more options, so many more possibilities.

Of course, there’s no way of knowing what’s going to happen. Things could get wild really quickly. But there’s a good chance something amazing will happen, too.

This is where smart, competent people come in handy. They create order from the chaos and make it all work, which makes them tolerable.

Anything that is amazing, new, fresh and exciting is still hidden from view. These things haven’t been discovered yet.

The discovery of amazing things requires originality and creativity to uncover them. It also requires that you must be wrong more than you are right. It’s risky being wrong. Many people avoid risk at all costs.

People who won’t take risks are trying to preserve what they have.

Fonterra is owned by 10,000 risk-averse dairy farmers.The last thing they want is “wild”, “new” and “amazing”. They’re trying to preserve their land, their wealth, their way of doing things and their way of life.

Fonterra HQ is filled with high achievers all preserving their careers, high pay packets and self-worth.

These stakeholders have a lot to lose and people with a lot to lose don’t take risks.

The irony is, this aversion to risk is likely to be the riskiest approach to take in today’s world.

Successful inter-generational companies are not afraid to reinvent themselves, even when it means cannibalising their existing business.

Kodak and Fuji Film were two identical companies who approached the future differently. Only one exists today.

The least risky thing to do is to let go of the past and the old ways of doing things and embrace the freshness of the new world.

Dairy has a big part to play, it just has to be done differently.

Fonterra should start hiring some people who are going to cause a ruckus.

Glen Herud is founder of Happy Cow Milk Company.

 

Source: Stuff

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