Archive for Dairy Industry – Page 2

Cash cows? Emphasize animal care, not money

Dairy farming is a business. There, I said it.

Despite the storyline from groups opposed to animal agriculture that cows are exploited for the almighty dollar, there should be no shame for farmers in making money. Businesses aren’t businesses for very long if they don’t.

But, I will also say this: Dairy farming is so much more than a business. Farmers know this, of course. And, of all the unique aspects of farm life is the incredible responsibility of caring for animals. The health and comfort of those cows come first. Veterinarians, nutritionists, state-of-the-art facilities — everything centers on the animals’ well-being. The farm starts and ends with the cows.

Sometimes, though, farmers struggle to frame their conversations about cow care. In my communications role at DBA, I have heard farmers sometimes describe it this way to people unfamiliar with dairy farming: “We keep our cows happy and healthy because we rely on them for our livelihood. The happier they are, the more milk they produce, and more milk means more revenue.”

I cringe.

While the money part is accurate, it turns off the audience. What a customer with no connection to agriculture might hear is this: “We need to maximize profits, and that comes from maximizing the amount of milk each animal produces. If they help us, we’ll help them.”

The treatment of cows is an ethical issue — not a business decision — for the typical customer, who sees farm animals and companion pets through a similar lens, Stan Erwine of Dairy Management Inc. told me.

“As farmers, we need to remember we’re not talking to each other. We are talking to people who consume what we produce,” Erwine, vice president of farmer activation at DMI, said.

I’ve written before about how important it is for the dairy community to connect with non-ag folks on shared values. Proper care of animals is one of those values.

Customers want to know that dairy farmers are doing everything they can for the good of the cows because, first and foremost, it’s the humane thing to do. A nutritious diet, good medical care and healthy living conditions provide for this. It comes from respect farmers have for their animals and the goal of providing safe and wholesome milk.

Yes, making money by farming with cows is a good thing. Just make sure customers understand your greater motivations.

Source: DBA

Q&A: Dairy Crest chief executive Mark Allen on Saputo takeover

Last week, Dairy Crest shocked producers and investors alike by announcing a £975m takeover by Canadian dairy giant Saputo.

Industry commentator Chris Walkland said that the man at the helm of the UK dairy processor deserved a great deal of credit for achieving such a high value for the business. 

Farmers Weekly caught up with Dairy Crest chief executive Mark Allen to get his thoughts on the sale. 

Q. Hi Mark, this takeover is a big deal with a sizeable headline figure – what’s your take on it?

MA: We very much take this deal as a positive for everybody involved, whether that’s our shareholders, our stakeholders, our employees and the people you will be most interested in – our farmers. 

Q. What is going to change for your 330 dairy farmers?

MA: The key thing is that absolutely nothing changes overnight. Dairy Crest Direct, our producer organisation, will also remain unchanged. Saputo’s view is we have a great relationship with DCD so there is no need to change it. 

It’s not a legally binding guarantee but it is a strong verbal one. 

With this new investment we want to continue our growth strategy and we are looking to grow our business in the South West. 

For our employees, all of our factories will remain open and all of our jobs will stay. 

Q. Talking about growth, what plans does Dairy Crest have for expansion?

MA: We are looking to expand milk production. This will start with the current group and will expand into new producers if they are needed. 

Q. How do you see Saputo complementing Dairy Crest’s existing operations?

Saputo has a large existing international presence. It also has a very strong balance sheet. This means it can help us to grow Cathedral City as we look to grow our export presence in markets such as the US, China, Australasia but also European markets like Germany and Austria. 

Q. Was Brexit a worry for Saputo? It has invested a few weeks before the March Article 50 deadline.

MA: Saputo fully recognises the quality of our business and is taking a long-term view for the business, looking beyond Brexit to the next 10 to 20 years.

Q. Dairy Crest is waiting on planning approval for the Davidstow plant with the view of increasing production. Was the deal linked to this being successful?

MA: Absolutely not. The deal was not linked to planning permission being approved. 

Source: fwi.co.uk

Australian Dairy Farmer Heart-Broken at Herd Sale

Nathan McGann worked out it was going to cost him about $170000 to get his 150-cow milking herd through the next seven months to spring.

Best-case scenario he was looking at a $34000 shortfall; worst-case scenario he had no idea where the numbers would finish.

The Cohuna farmer made the business decision to sell his herd and, at the start of February, they boarded a semi and left for their new home at Maffra.

Mr McGann had spoken to his stock agent well before Christmas and had a buyer lined up but it was still an extremely stressful time and a hard decision.

‘‘It was purely economical but I am still sad and emotionally I am buggered,’’ he said.

‘‘I could no longer afford to be sentimental, I am running a business and financially it just didn’t work any more.’’

Mr McGann knew at the start of the season things were going to be tough.

He had dried his autumn calvers off early and was milking 90 spring cows to stretch the milking feed as far as he could.

‘‘I said to myself if it didn’t rain by a certain time the cows would have to go so I sold the lot. I have milked cows for 25 years and I had my favourites, but I had to sell them all and I do miss them.’’

Mr McGann still has his young stock but the way things are going, he is thinking they will probably go too.

But he still insists he is one of the lucky ones.

He can survive on off-farm income because he has another career as a nurse, but he worries about others in his community who aren’t so fortunate.

‘‘Five years ago there were 62 farms from Gunbower through to Cohuna that milked cows, now there are just 17 and more will go in the future.

‘‘In the last drought it was the 60-year-olds that got out, now it’s down to the 50-year-olds, all the young start-up farms and the 40-year-olds who are pulling the pin.

‘‘Lending has tightened up and land price is devaluing significantly. People are leaving the area which flows on to business, schools and the general community.’’

Source: countrynews.com.au

Severe Consequences for Dairy Industry if U.S. Fails to Confront EU Aggression on Common Food Names

A new study commissioned by the U.S. Dairy Export Council and the Consortium for Common Food Names forecasts severe consequences for U.S. cheese exports if the European Union (EU) is successful in further expanding restrictions on the use of generic terms such as parmesan, asiago and feta.

If the EU’s geographical indication (GI) initiatives were to be enforced on U.S. cheeses, the study conducted by Informa Agribusiness Consulting predicts the dairy industry could see a dramatic drop in demand for U.S. cheeses, with prices falling 14 percent and resulting revenue losses between $9.5 billion and $20.2 billion depending on consumers’ willingness to pay for recognizable cheese names.

“The European Union has repeatedly targeted the U.S.  dairy industry by undermining our ability to freely use generic cheese names in foreign markets,” said Tom Vilsack, chairman and CEO of the U.S. Dairy Export Council. “The United States must make it abundantly clear that attempts to restrict common names in our domestic market will be met with swift and forceful opposition.”

The impact of GI restrictions would not be limited to the U.S. cheese industry with grave effects on both the milk industry, through plummeting prices and shifting demand, and the broader U.S. economy. Informa’s study reveals potential jobs losses ranging from 108,000 up to 223,000 across the supply chain.

“Failing to confront the European Union’s aggression will have a serious impact on the United States’ ability to continue to expand exports, negating the important progress dairy has made towards securing The Next 5 percent,” Vilsack added. 

The Next 5 Percent is an industry initiative to increase U.S. dairy export volume from approximately 15 percent of the U.S. milk supply to 20 percent through a coordinated effort between USDEC and dairy suppliers that builds upon existing markets and cultivates new ones.

 

Source: U.S. DEC

How much longer can dairy farmers endure?

The question is simple: How much longer can the average dairy farmer endure the ongoing financial crisis that the majority of dairy farmers continue to live with?

Pennsylvania dairy farmers are being short-changed at least $550 million each year, and New York dairy farmers are facing a $650 million shortfall. It should make everyone anxious to do something to correct these criminal prices that dairy farmers face every day.

Our figures indicate that the total underpayment to all U.S. dairy farmers each year is approximately

$12 billion.

But wait, it gets much worse.

Using a multiplier of five, the total loss to our rural economy across the U.S. is approximately

$60 billion per year.

I receive calls all the time indicating how horrible the situation is on the average dairy farm.

I hear women crying; I’ve heard of suicides, and on and on it goes. I can’t believe members of Congress, other farm organizations, and even our dairy cooperatives are not receiving these kinds of calls.

We have petitioned the dairy division of the USDA to have milk hearings. These requests have been denied. We have urged Congress to have several hearings involving hundreds of dairy farmers. Unfortunately these attempts have been in vain.

Earlier in 2018, the U.S. House Agriculture Committee held a hearing in Washington, D.C. I was told all the spots were taken, and I was not allowed to testify. I drove to Washington and passed out the testimony to the members.

Dang, they did not lie. The two spots they had were taken by Dr. Dykes of IDFA, and Jim Mulhearn from National Milk Producers. Yes, there were two spots, but not one for a dairy farmer. What a sham.

Now we have thousands of petitions that we’re going to take to U.S. Secretary of Agriculture Sonny Perdue, urging him to have immediate hearings for dairy farmers and to take further action. On top of these problems, we are now receiving word that some dairy farmers shipping to a dairy co-op in the Northeast are receiving a 60-day notice to find a new market. What the devil is going to happen next?

We must ask, where are our agriculture leaders in Washington? In the Senate, where is Sen. Patrick Leahey, and where is our friend Sen. Bob Casey? And what has happened to good old Sen. Bernie Sanders? He was always going to fight for the dairy farmers. Where is Sen. Kirsten Gillibrand? I thought she was supposed to be the champion for dairy farmers. What has happened to her?

What about the chairman of the Senate’s Agriculture Committee, Sen. Pat Roberts? He promised me he would always stand up for dairy farmers.

Now we have Rep. Collin Peterson, chairman of the House agriculture committee. Pro-Ag recommended Peterson for the chairmanship. We believe that Peterson is a good man for dairy farmers, but he must divorce himself from some of the silly things that some of his members are advocating and concentrate on doing something more for the dairy farmers.

Time is running out, and with spring around the corner, and with nothing being done for dairy farmers, you may witness hundreds, maybe even thousands of dairy farmers being forced out of business.

With all these problems facing dairy farmers, it is having an adverse effect on our beef farmers.

These conditions, all these problems, will be something for our leaders to bear on their conscience.

Source: citizensvoice.com

Some dairy farmers optimistic about milk prices

Dairy farming can be a tough job and over the last few years farmers say it’s been even harder because of low milk prices, but now some are optimistic that prices will improve.

Dairy farmers work seven days a week, 365 days a year. It’s often a thankless job and over the last four years, they say it’s been especially difficult because milk prices have been low.

At the Vermont Dairy Producer Conference, the head of Dairy Farmers of America said he’s optimistic milk prices will improve. That’s good news for dairy farmers who are hopefully coming out of a long stretch of low milk prices

“There are a lot of sleepless nights,” said Stephanie Pope, who along with her husband run North Wind Acres farm in Shoreham.

They tend to about 150 cows daily on their property. However, the low milk prices have Pope wanting to be a part of the conversation surrounding regulations and policies that are imposed on dairy farmers.

“I just wish that the people making our laws would come ask us,” Pope said.

She wants them to ask about how they can support dairy farmers and she wants them to understand the policies they create have a direct impact on how dairy farmers operate.

Pope grew up on a dairy farm with her family about 15 minutes away in Bridport. She says dairy farming is in her blood, but it doesn’t come without its struggles.

“There’s not a lot of extra money, and you know as well as anybody, everything costs money,” she said.

Pope says paying for day-to-day operations like milking cows, feeding cows and cleaning the barn are part of the struggle, something all dairy farmers are struggling with.

When farmers get together, they talk about how they can save money while maintaining quality and herd health while also delivering the same level of production.

“So there are a lot of pointers on what works, and what we can do as farmers to advocate for ourselves,” Pope said.

Dairy farming is big business in Vermont. The industry directly supports 4,000 jobs in the state and indirectly supports additional 12,000 jobs.

Even with the past rough couple of years, Pope loves her job and starts the year with a fresh attitude.

“We want to stay in Vermont. We want to be here, you know. This is our home. So I’m optimistic that this year will turn around a little bit,” she said.

Pope says vendors she has worked with have been very understanding. And she and all the dairy farmers are doing the best they can during the tough times.

Source: wcax.com

The Trade War Impact on U.S. Dairy Farmers

Yahoo Finance’s Julie Hyman and Adam Shapiro join Wisconsin Dairy Farmer Chris Pollack to discuss the U.S.-China trade war impact on U.S. dairy farmers.

February snowstorms may have been the last straw for some struggling dairy farms

The Hoffman family in Chatfield, Minn., lost the barn roof, collapsed by the weight of the snow that fell in February.

It snowed and it snowed and it snowed, and while the storms raged across Olmsted County (Minnesota), the Hoffman family tended their dairy herd.

Until the barn roof caved in under the weight of all that snow.

The Hoffmans lost 13 cows in the collapse and soon it was clear that they had lost much, much more.

There was no way to repair or rebuild the barn in this weather. They would have to sell off their herd.

Dairy farming is hard work. The weather makes it harder. The economy makes it harder still.

Minnesota lost 10 percent of its dairy farms last year. Even before the storm, the state was bracing to lose just as many this year.

“Dairying is in my blood,” said Gary Hoffman, 73. Every morning of his working life, starting at age 14, he rose before 1 a.m. to feed the herd and start the day on his family’s North Creek Dairy in Chatfield.

“There’s been a cow-milk on this farm every day for 114 years,” he said.

Hoffman’s grandfather bought the farm in 1905 and until last week, there was every reason to think it would pass to Hoffman’s grandchildren one day.

But Minnesota dairy farmers have been crushed by low milk prices for more than four years. Now they’re being crushed under the weight of the snow on their barn roofs.

At least 19 dairy barns collapsed across southern and central Minnesota during the February storms, the Minnesota Milk Producers Association estimates.

“We do have a lot of decisions to make about the future, about what my two sons are going to do,” Hoffman said. “There’s got to be a profit in what we do, or else why do it?”

His sons, John and Corey, run the farm and before Tuesday, Hoffman said the family was “committed and in it for the long haul.”

A reporter for the Rochester Post-Bulletin covered the barn collapse and described the Hoffmans greeting individual cows in their herd of 450 by sight and by name.

“Hold on,” the paper said Corey Hoffman called out to one straying cow. She halted and trotted obediently back to the barn.

But Wednesday morning, after milking, they moved the herd out of the shattered barn, loaded the cows onto trailers and sent them off to auction.

It was some consolation that the cows went to a good home at another small dairy operation run by someone they know. But Gary Hoffman couldn’t bear to listen as they were auctioned off.

For the first time in a century, there were no cows to milk at North Creek Dairy.

This is more than one family’s sorrow. The farm had nine employees who have to find new work.

The Hoffmans plan to think long and hard about whether they want to get back into the dairy business.

Lucas Sjostrom, spokesman for the Minnesota Milk Producers Association, said 313 farms went out of business last year and the state is on track to lose another 10 percent this year. Thirty years ago, the state had about 12,000 licensed dairy herds. On Jan. 1 of this year, just under 2,800 were still in business.

There are no days off on a dairy. The cows don’t care if there’s a blizzard outside. They need to be fed and milked and tended. You don’t go into dairy farming unless you really, really love it, said Sarah Schmidt, who grew up on a dairy farm and now works as vice president of public relations for the AMPI dairy co-op in New Ulm.

As the blizzard shrieked across southern Minnesota, burying roads and piling 12-foot drifts around homes and barns, 90 percent of the co-op’s members were unable to deliver their milk. Since the cows still had to be milked, many farmers who ran out of storage had to simply dump the milk, and the day’s profits.

Dumping milk amounts to “literally pouring money down the drain,” Schmidt said.

In central Minnesota, Leah Kurth’s family needed snowmobiles to reach the skid loader they used to clear the way to their herd through 10-foot drifts. The barn roof is holding up, but in weather like this, “everything takes longer, the water freezes. Just moving around is tough,” said Kurth, whose family milks about 120 cows on their farm near Cosmos.

“If you can pay the bills right now, you’re doing well,” she said. “I can’t even imagine” the added financial stress of a barn collapse. “It’s probably a pretty easy tipping point.”

Families like the Hoffmans aren’t going through the hard times alone. As news of the calamity spread, neighbors rushed to the Hoffmans, Olmsted County’s 2018 farm family of the year, to offer food, beer and help.

The barn is too unstable and snow-covered to touch until the spring thaw, but the family gladly accepted the food and beer.

On Friday, as new snow began to fall, Hoffman’s son Corey headed out to push snow off the neighbors’ roofs and keep other farms safe.

Source: startribune.com

USDA Announces Relief For Dairy Farmers Is On Its Way

Secretary of Agriculture, Sonny Perdue announced Thursday at a hearing session with the Senate Agriculture Committee that a long anticipated program for dairy farmers will be available on June 17, 2019. Payments could go out in early July.

The Dairy Margin Coverage Program was part of the 2018 farm bill but was delayed by the longest government shutdown in history. Alan Bjerga with the National Milk Producers Federation said that while the program is getting a late start, struggling dairy farmers now know when help is coming and can plan accordingly.

“Even if the sign up is still several months away it’s all about managing your cash flow and your operation loans with your banker,” he said.

The Dairy Margin Coverage Program is an update to an existing program and is similar to insurance. Each year producers choose their level of coverage and receive a payment if dairy margins drop below that level. The program doesn’t guarantee a profit for producers but allows them to stay in operation when the cost of producing milk outweighs the profits.

According to the USDA, milk prices have continued to fall for the last three years.

 

Source: KUNC

Thanks to Decades of Government Meddling, U.S. Dairy Is Going Through a Crisis

This week Dean Foods, the nation’s largest dairy, reported steep quarterly losses. The Wall Street Journal notes the company is trying to sell its “struggling business” even as its share price sinks and the company cancels contracts with dairy farmers thanks to poor demand and a glut of dairy products.

It’s not just Dean Foods that’s listing. Dairy farmers around the country are in the same leaky boat. Many people agree that dairy farming in America has reached a crisis stage. How’d it get there?

The downturn in milk prices began after record highs in 2014. They’ve spiraled since. Milk prices are now at their lowest point in 50 years.

As Civil Eats reported last year, dairy farmers are losing money on every sale. “Many of them have been forced to shutter their operations due to a milk glut and its attendant low prices—as of this writing, $16.33 per hundredweight (in layperson’s terms, about 11.5 gallons), considerably less than the $22 it costs to produce.”

The number of dairy herds in Wisconsin has fallen by half in just 15 years. A staggering 700 dairy farms in the state closed just last year. Similarly dire data has emerged in New York, California, Ohio, and Vermont.

Overall, dairy consumption (including fluid milk, cheese, and butter) has plummeted over the past four decades. Per capita, Americans are drinking nearly 100 lbs. less fluid milk than they did in 1975. That figure is offset only slightly by increases in cheese consumption.

At face value, the crisis is the result of shrinking demand for dairy products. We’re simply seeing the market correcting itself. And market corrections are both natural and fine, if sometimes painful.

In December, retired dairy farmer Jim Goodman penned a piece in the Washington Post that described why he’d sold off his heard and left the business that had been in his family for more than 110 years. In the piece, Goodman described dairy farming as combining “hard work and possible economic suicide.”

Goodman blamed “[i]neffective government subsidies,” along with oversupply, falling prices, USDA organic regulations, and tariffs.

Goodman has a point. A closer look at the problem reveals that decades of meddling in the market by the U.S. Department of Agriculture (at the behest of Congress) is likely responsible for the scope of today’s crisis. While the USDA works really hard to make the dairy industry thrive, the agency’s actions ensure just the opposite.

Two of the USDA programs at the heart the problem are marketing orders (present in nearly every state) and checkoff programs. “USDA marketing orders set minimum dairy prices,” I note in my recent book, Biting the Hands that Feed Us, “while the checkoff program takes money from dairy farmers to promote milk and other dairy products.”

The USDA has known for decades about the problems that are created by price supports, including marketing orders. For example, a 1983 notice in the federal register discusses how USDA price supports for dairy “encourage oversupply.” Oversupply, of course, drives down the price of dairy products (unless those prices are guaranteed, in which case the supply simply mushrooms). That leads to calls for more support.

Such support includes massive government purchases of dairy products. Indeed, the USDA regularly buys up surplus dairy products that are overproduced due to the agency’s own policies. Just this month, for example, the USDA announced the agency was buying up surplus cheese “to encourage the continued domestic consumption of these products by diverting them from the normal channels of trade and commerce.”

Last year, the USDA bought $50 million worth of surplus milk and gave it to food banks. In 2016, I wrote a column focusing on U.S. government purchases of surplus dairy products, which were intended to address the same “combination of overproduction and low commodity prices” that we see today. The agency was busy buying 11 million lbs. of surplus cheese that year. That sounds impressive (impressively wasteful?) until you consider that at the time, more than 1.2 billion lbs. of surplus cheese were sitting around in U.S. warehouses.

If you’re a U.S. dairy producer today, the news is bad. But if the present is bleak for America’s dairy farmers, the future may be even worse.

CNBC reported last week on a new synthetic milk that’s “made in a lab using genetically engineered yeast programmed with DNA to produce the same proteins found in cow’s milk.” The lab-created, lactose- and cow-free milk, marketed by startup Perfect Day Foods, could be available to consumers within two years.

The one bright spot for U.S. dairy producers—cheese—could also soon sour. That’s because the European Union may tighten naming rules for various regional named cheeses, such as feta and Parmesan. According to a report in Feedstuffs, such action could serve to prohibit foreign imports of such cheeses, which could result in losses of up to $20 billion for U.S. dairy producers.

Many dairy farmers are going out of business. That will probably continue as demand shrinks and competition from nut milks, lab-made milks, and other alternatives continues to grow.

Decades of central planning have harmed America’s dairy farmers. But that needn’t continue. Congress and the USDA should end the price supports and other programs that helped produce the current crisis. Ending taxpayer support may seem counterintuitive. But it only appears that way because the bizarre and ineffective alternative—to keep using taxpayer money to encourage overproduction and, then, to buy up the resulting surplus milk and cheese—has become normalized.

Source: reason.com

Tough financial times means many Minnesota dairy producers are running out of options

While the U.S. economy is strong right now with steady growth, low unemployment, and little inflation, the farm economy is struggling.

The U.S. has lost 30% of its dairy farmers over the last decade. Sadly, more farmers are having to sell due to expensive loans or not making enough money. In fact, one farm family from Iowa sold their entire herd at auction Friday, because they believe there’s not enough money in milk production.

One of the Erhardt family’s cattle up for sale in Lanesboro

The Erhardt family sold about 250 Holsteins at the Lanesboro Auction Barn. Because this was such an emotional moment, they did not feel comfortable speaking with KTTC about the difficult decision they had to make on-camera.

However, KTTC did meet with Tom Hoscheit, a dairy farmer from Caledonia, about this major life decision. While he doesn’t know the Erhardt family, he knows others who have to make a similar sacrifice.

Tom Hoscheit has been a dairy farmer in Caledonia for 43 years

“It’s hard. It’s like a death in the family. You’re watching your livelihood, which you’ve spent years building up, just to watch it go through a sale. That’s very difficult. The guys that have gone through it expressed it to me like a death in the family,” he said.

Even though he only sold a few cattle from his herd on Friday, Hoscheit still faces difficult times, making 40% less income now than what he did four years ago.

President Trump signed the farm bill into law last December, which is providing $867 million in aid to U.S. farmers. However, some say the bill didn’t go far enough.

Source: kttc.com

Fonterra defends big pay deal to northern Victoria dairy farmers

Besieged dairy company Fonterra Australia has disputed its offer to pay northern Victoria suppliers $6.71 a kilogram of milk solids was a secret.

The Weekly Times revealed last week secret contracts we being offered to Fonterra’s large suppliers in the north of the state to stop them defecting to rival companies paying a higher price.

Fonterra also offered the contracts to former suppliers in a bid to woo them back to the company.

It came as Fonterra announced a final average farmgate milk price to most of its suppliers of $6.05 a kg MS.

In a newsletter to suppliers last week, Fonterra’s Matt Watt denied the discussions were secret, saying the company kept the Bonlac Supply Company’s board and its 15-member Forum Group of supplier representatives informed.

“I know not everyone agrees with or is happy with our offer in the north but this is a new landscape we are operating in and we need to be doing things differently so that we can pay a sustainable milk price to all farmers,” Mr Watt told suppliers.

Fonterra managing director Rene Dedoncker told The Weekly Times this week the company held discussions with the BSC board and Forum members between September and Christmas last year.

“It was very open and there was a lot of dialogue,” Mr Dedoncker said.

“We got feedback. We then went into launch mode.

“It was supported by all the BSC from the perspective of being the right thing to do to protect milk in the north.”

But a source said forum members were not made known of the contracts until January this year and they were sworn to confidentiality.

The disclosure by The Weekly Times of the contracts has rankled the United Dairyfarmers of Victoria and Fonterra suppliers not offered the lucrative contracts.

UDV board members met Mr Dedoncker at the Australian Dairy Conference in Canberra last week to discuss the issue.

UDV president Paul Mumford said he was concerned there was “so much stress in the north that dairy farmers may not take appropriate business advice” in accepting the contracts.

Mr Mumford said some dairy farmers might put themselves further in debt in order to gain “carrots dangling in front of them”.

“I also want to see every farmer being treated fairly and evenly,” he said.

Poowong dairy farmer Jim Forbes said Fonterra’s price deal for northern farmers was “unconscionable, unethical and unprincipled”.

Mr Forbes, who milks just over 100 cows, said his milk price this season was $5.65 a kg milk solids.

“That means more than a $1 differential (between his payments and those offered to northern milk producers),” he said.

Source: The Weekly Times

Dean Foods Plunges on Skepticism Buyers Will Line Up for Milk

A gallon of Dean foods Co. Dairy Pure brand Fat Free Milk. Photographer: Gaia Squ

Dean Foods Co.’s shares plunged amid skepticism that the struggling dairy giant would find a buyer.

The company said Tuesday that it’s undergoing a review and contemplating a sale, but there are “no strategic buyers who would be interested in owning a shrinking milk business,” Ken Goldman, an analyst at JPMorgan Chase & Co., said in a report Wednesday.

“If Dean Foods does happen to find a buyer (unlikely, in our view), the stock will probably be purchased at a discount to the current price,” Goldman wrote. “Dean is a levered company with a fast-deteriorating business and numerous out-of-date production facilities.”

Shares fell 16 percent to $3.81 at 9:52 a.m. in New York.

Source: bloomberg.com

USDA pressed to act quickly on dairy, conservation provisions

Advocates for dairy farmers pressed USDA officials at a farm bill listening session to move quickly to get payments to financially strapped producers, while other groups urged the department to put a priority on removing barriers to cover crops and scheduling signups for major conservation programs.

“With dairy farmers going out of business daily in the upper Midwest, it’s really critical you prioritize the signup for this program and get it up and running as soon as possible,” Steve Etka, coordinator of the Midwest Dairy Coalition, said of the farm bill’s Dairy Margin Coverage program.

The 2018 farm bill overhauled the former Margin Protection Program, renaming it DMC and raising the maximum coverage level from $8 to $9.50 per hundredweight for the first 5 million pounds of production. Producers can also get rebates for a portion of the premiums they paid for MPP.

Etka was among about 50 representatives of various organizations who provided comments to the Farm Service Agency, Risk Management Agency and Natural Resources Conservation Service on Tuesday on how the farm bill should be implemented. Major commodity groups didn’t appear at the meeting with the exception of the National Cotton Council and the National Milk Producers Federation.

The agency officials offered introductory remarks but offered few details on how the implementation process is proceeding and didn’t respond to the comments.

FSA Administrator Richard Fordyce said his agency had completed its side-by-side comparisons of the new law with the 2014 farm bill and was bringing teams of field staff to work on individual provisions.

“It’s highly critical that we understand how these policies affect producers, affect their communities,” said RMA Administrator Martin Barbre, arguing the economic health of some local communities depends on whether farmers can get adequate crop insurance.

Some speakers raised concerns about the adequacy of the workforces at FSA and NRCS to implement the programs, and Bill Northey, undersecretary for farm production and conservation, acknowledged the concern. “We are struggling to be able to get fully staffed in all of our offices,” he said. He stopped short of saying whether the staff shortage would impede farmer services or farm bill implementation.

None of the changes in the farm bill were presented as more urgent than Dairy Margin Coverage.

Paul Bleiberg of the National Milk Producers Federation urged FSA officials to consider using multiple ways to contact farmers to let them know about the DMC program. The agency should “cast as wide a net as possible,” Bleiberg said.

Producers specifically need to know as soon as possible about the rebate option, he said. Producers can get a cash refund of half of the MPP premiums they paid or they can elect to take a 75 percent credit to offset the DMC fees that they will owe.

He said the cash assistance is critical to some farmers. “There may be producers who are hanging on right now but three or four months from now they may not be able to hang on any longer,” he said.

Northey said in a recent Agri-Pulse interview that he is aware dairy producers need the DMC implemented urgently.

Here is a look at other issues raised at the listening session: 

Conservation programs – Wildlife groups urged FSA to schedule a general signup for the Conservation Reserve Program before fiscal 2019 ends Sept. 30. About 22.5 million acres are currently enrolled in CRP, 1.5 million acres below the legal cap this year, and contracts enrolling another 1.6 million acres are scheduled to expire Sept. 30. 

“We risk being as much as 3 million acres under the cap without having a FY19 signup,” said Aviva Glaser, director of agriculture policy for the National Wildlife Federation. 

Going forward, FSA should seek to keep CRP enrollment as close as possible to the limits set by the 2018 farm bill, which raises the cap to 27 million acres by 2023, said Kellis Moss, director of public policy for Ducks Unlimited. 

Erik Kamrath of the Union of Concerned Scientists said NRCS should ensure that the Conservation Stewardship Program is promoted as vigorously to farmers as the Environmental Quality Incentives Programs. EQIP subsidizes the cost of equipment and practices, while CSP provides annual payments to producers who undertake conservation practices. 

NRCS should “encourage farmers to use EQIP as a stepping stone for CSP funding,” said Kamrath.

Cover crops – Representatives of conservation groups and the National Sustainable Agriculture Coalition urged RMA officials to provide as much flexibility as possible to farmers as to when they have to terminate cover crops and still maintain crop insurance coverage. 

Lara Bryant of the Natural Resources Defense Council said her group would be providing RMA written examples of farmers who have had problems with RMA’s existing cover crop policy. She said a grower in western Iowa said that farmers there should be allowed to grow their rye cover longer.

Ferd Hoefner, senior strategic adviser to the National Sustainable Agriculture Coalition, said more broadly that no farmers should lose crop insurance if they are following practices approved by NRCS.

Minority farmers – The farm bill includes provisions intended to assist people, often African Americans in the South, who own “heirs’ property,” land handed down in a family without clear title, making it hard for them to get loans and government assistance. Under the bill, the property owners can qualify for a USDA farm number that will allow them to get crop insurance, farm loans and disaster assistance. 

The farm bill “will allow farmers to create more viability on their farms and become more economically sustainable,” said Monica Range, director of land retention and advocacy for the Federation of Southern Cooperatives.

Other speakers, including Juli Obudzinski of the National Sustainable Agriculture Coalition, urged FSA to impose stricter reporting requirements on lenders who receive USDA guarantees to show how well they are reaching underserved communities.

 

Source: Agri-Pulse

Minimum price for farmers is needed to save Australian dairy industry

Our dairy farmers are giving up in increasing numbers, and who can blame them?

It’s not as if they haven’t fought hard. They have.

But they’ve been engaged in a Samson and Goliath battle they cannot win.

They need help and they need it now. If we don’t act we face the very real prospect our drinking milk will come from imported milk powder.

Those who sincerely think our farming families can be saved by the voluntary actions of the big retailers are mistaken.

Any retail levy is bound to be temporary, will lose value over time and many farmers won’t benefit from it.

The last thing we want is for consumers to boycott our supermarkets. That will only hurt the dairy farmers who supply them.

Only government can address the market failure that is driving our farmers to the wall.

The dairy industry is big and complex. It’s our third biggest agriculture sector, creating up to 50,000 Australian jobs and generating $13.7 billion. It produces a wide range of products and supplies both domestic and export markets.

Any government intervention must be mindful of the sector’s diversity and trade exposure.

Labor is acutely aware of this. That’s why we will have the Australian Competition and Consumer Commission test, assess and shape our minimum farm gate milk price proposal.

Having said that, we expect the ACCC to tell us not why it’s all too hard but rather, how we best get the job done for farmers.

Most Australians are protected by a minimum wage and our dairy farmers should be too.

A minimum farm gate price will provide that protection.

Dairy farers produce a staple, perishable product.

Indeed, fresh drinking milk is arguably a product of necessity.

The Minimum Farm Gate Milk Price will be different in every dairy region because every region is different.

Once the independent and expert body assesses the average cost of producing milk in a given region, it will declare the minimum price farmers can be paid.

Of course, the minimum price will be above production costs.

Of course farmers will continue to bargain for the highest price they can secure. But they can budget ahead knowing that their revenue will be at least the floor price.

That guaranteed income should in turn deliver the certainty and confidence needed to plan and to invest in productivity-lifting innovation and infrastructure.

 

Source: The Weekly Times

 

Severe Consequences for Dairy Industry if U.S. Fails to Confront EU Aggression on Common Food Names

A new study commissioned by the U.S. Dairy Export Council and the Consortium for Common Food Names forecasts severe consequences for U.S. cheese exports if the European Union (EU) is successful in further expanding restrictions on the use of generic terms such as parmesan, asiago and feta.

If the EU’s geographical indication (GI) initiatives were to be enforced on U.S. cheeses, the study conducted by Informa Agribusiness Consulting predicts the dairy industry could see a dramatic drop in demand for U.S. cheeses, with prices falling 14 percent and resulting revenue losses between $9.5 billion and $20.2 billion depending on consumers’ willingness to pay for recognizable cheese names.

“The European Union has repeatedly targeted the U.S. dairy industry by undermining our ability to freely use generic cheese names in foreign markets,” said Tom Vilsack, chairman and CEO of the U.S. Dairy Export Council. “The United States must make it abundantly clear that attempts to restrict common names in our domestic market will be met with swift and forceful opposition.”

The impact of GI restrictions would not be limited to the U.S. cheese industry with grave effects on both the milk industry, through plummeting prices and shifting demand, and the broader U.S. economy. Informa’s study reveals potential jobs losses ranging from 108,000 up to 223,000 across the supply chain.

“Failing to confront the European Union’s aggression will have a serious impact on the United States’ ability to continue to expand exports, negating the important progress dairy has made towards securing The Next 5 percent,” Vilsack added.

The Next 5 Percent is an industry initiative to increase U.S. dairy export volume from approximately 15 percent of the U.S. milk supply to 20 percent through a coordinated effort between USDEC and dairy suppliers that builds upon existing markets and cultivates new ones.

About USDEC: The U.S. Dairy Export Council (USDEC) is a non-profit, independent membership organization that represents the global trade interests of U.S. dairy producers, proprietary processors and cooperatives, ingredient suppliers and export traders. Its mission is to enhance U.S. global competitiveness and assist the U.S. industry to increase its global dairy ingredient sales and exports of U.S. dairy products. USDEC accomplishes this through programs in market development that build global demand for U.S. dairy products, resolve market access barriers and advance industry trade policy goals. USDEC is supported by staff across the United States and overseas in Mexico, South America, Asia, Middle East and Europe. See www.usdec.org.

Trends: Dairy Cow Decline Continues as 2018 Comes to a Close

The dairy cow herd declined 3,000 head from November to December, the fourth consecutive month to register reductions. The dairy cow population in December was down 49,000 head from a year earlier at 9.351 million head. Milk cow productivity in December reversed a trend in moderating output that was seen in October and November, however, as milk per cow in December was up 21 pounds from the prior December. This compares with per cow output in October and November that was only up 16 pounds per cow from year earlier performance. Milk production in December was up half a percent from December 2017. For the entire year, milk production was up 0.9% from 2017.

No state showed a sharp decline in milk cows from November to December. Pennsylvania cow numbers fell 4,000 head but New York offset some of that reduction with a 2,000 head increase. Texas continued to expand it dairy cow population with a 3,000 head increase in December. This amounts to a 27,000 cow increase from twelve months earlier, a 5% increase. Colorado was the only other state to show a similar percentage increase from a year earlier. The two states with the largest dairy cow populations, California and Wisconsin, reduced cow numbers by less than one percent over the course of 2018. The smaller dairy cow herd at the start of 2019 points to the possibility of less milk production during the first three months of 2019 than a year ago. The half percent increase in milk cow productivity during the last quarter of 2018 matched up with a half percent decline in milk cows should result in milk production during the current quarter that is similar to the first quarter of 2018. LMIC is currently forecasting an increase of 0.2%. Dairy cow slaughter has remained larger than a year ago in the first few weeks of 2019, however, suggesting that a normal seasonal increase in the dairy herd during the first three months of the year may not occur. If this is the case, milk production during the January-March quarter could be less than a year ago.

The milk demand side of the market was a disappointment for much of 2018, but fluid milk product sales during the last quarter of the year were not down as much from the year prior as in the spring and summer quarters. Fluid milk product sales, on a volume basis, were down 0.9 percent from a year earlier during the October-December quarter. This compares with declines of 3% during the spring and summer quarters. Fluid milk product sales for all of 2018 were down 2% from 2017, similar to the decline that was seen from 2016 to 2017.

Source: Livestock Marketing Information Center

US Dairies Looking North for Milk Pricing Solution

The new year hasn’t started quite so happy for U.S. dairy operators, as they enter a fifth year of significantly low prices paid for their milk.

But some in the industry say the solution to the American problem may lie to the north, and on Tuesday a few dairy operators attending the World Ag Expo here heard about Canada’s milk-pricing system from a Canadian dairy operator, Ralph Dietrich.

He was one of a group of Canadian dairy representatives invited to speak in recent weeks in California and other states about their pricing system.

“You have to have a fair [milk] price for farmers, and the key word is ‘fair,’” he told the audience during his seminar put on by the California Dairy Campaign.

And key to that in Canada has been a supply-management system in which a determination is made annually on how much Canadian milk is needed, resulting in quotas on how much milk each dairy in the country may produce.

If too much is produced, by law that excess milk can be processed into products that can be stored long term, including powdered milk., cheese and butter. But if that surplus gets too high, dairies can face fees and not getting paid for their milk, along with the possibilities of having to dump excess milk and selling cows.

This system first was developed in the mid 1960s, when Canadian dairies were facing low milk pricing issues like those U.S. have been facing for more than four years, Dietrich noted.

Over most of that that time, dairies have been paid less than what it cost them to produce their milk.

That has resulted in large numbers of dairies here shutting down or being sold, particularly here California, the nation’s primary milk-producing state.

In fact, milk and milk products were the state’s top agricultural product produced based on sales in 2017 – the latest figure available – totaling more than $6.56 billion.

A big part of the U.S. problem is too much milk is being produced here, pushing down prices, said Dietrich, noting that his country’s system – adopted nationally there in the 1980s – offers better cash flow to dairies and ensures they can make profits on their milk.

“It’s meant to give the farmers a fair rate of return.”

In addition, Dietrich said, a big part of the Canadian system involves strongly enforcing trade agreements to ensure only the amount of milk from foreign countries specified in those agreements comes into Canada.

The CDC hosted the Ag Expo to rally support among dairy producers to support the Sustainable Milk Inventory System Act, federal legislation the Turlock-based trade group representing dairy operators developed with the California Farmers Union to create a U.S. milk pricing system similar to Canada’s “as a long-term solution to the serious structural problems faced by the United States dairy industry. SMISA was designed to allow for regional cost and supply differences and to allow farmers to control those regional requirements,” states literature passed out during the meeting.

At least in California, dairy operators already succeeded in altering their milk pricing system, changing from prices set monthly by the state to one set by the federal government that took effect Nov. 1 – a move intended to slightly raise the prices dairies here get for their milk, though it still falls short of getting dairies here paid enough to break even.

CDC Vice President Mark McAfee, who spoke after Dietrich, noted there were dairy operators from Canada in the Ag Expo audience with herds of 200 or fewer cows making a profit, while here, small dairies have been hardest hit by pricing issues, leaving larger ones with thousands of head still struggling to survive.

And the problem doesn’t just affect dairies, as the losses of dairies can hurt the communities and businesses around them.

As such, McAfee said he was disturbed only 11 people showed up for the Ag

Expo meeting, four of them Canadian dairy people and a few more journalists. Organizers noted much bigger attendances at other recent meetings with Canadian dairymen in Hanford and Elk Grove and attributed the low turnout Tuesday to a seminar on improving dairy profitability occurring next door at the same time, which was much better attended.

For his part, McAfee said he had not yet spoken with a dairy operator who doesn’t support going to a pricing system similar to Canada’s, but few of them seem willing to voice those opinions to their dairy cooperatives.

“It’s really sad we don’t have more dairymen here,” he said. “If we don’t hang together, we are going to hang individually.”

But not all in the industry are supporting the CDC’s legislative effort, which would include regional quotas on U.S. milk production.

Andre Mikhalevsky, CEO of California Dairies Inc., California’s top milk processor, raised concerns that quotas on U.S. dairies could hurt the ability to meet the milk demand from foreign markets.

Instead, he suggested a system in which dairy operators regularly get market signals “so people can look at their production based on what’s going on with international prices” and adjust their production up or down accordingly, rather than having federally-imposed quotas.

He said 15-18 percent of U.S. milk products goes to foreign markets, and losses of some of those buyers would further reduce the prices dairies here are paid for their milk.

But in its literature, the CDC notes that in its proposed bill, “Milk requested for use in export by processors would be included in regional dairy supply demand.”

Organizers of Tuesday’s presentation said they hoped for a bigger audience at a second presentation by Dietrich scheduled for the next day at the Tulare County Agricultural Commissioner’s office, across the street from the International Agri Center, where the World Ag Expo was held.

 

Source: The Business Journal

$1 milk in the firing line in Australia

Supermarket discounted milk was in the firing line at the Australian Dairy Conference in Canberra on Thursday.

And it wasn’t farmers firing the bullets.

Chiefs from leading processors – all of which supply private-label products to supermarkets – said $1 milk and $6 cheese fundamentally undermined the value of dairy.

Saputo chairman Lino Saputo Jr, who supplies Coles with its $1 a litre milk in Victoria and NSW, said processors needed to demand the real value for dairy products when negotiating with retailers.

“I go back to the days when MG (Murray Goulburn) was running the business and they signed a contract with a large retailer for $1 milk,” he said.

“It’s hard to say this, but it doesn’t make any f*** sense.”

He applauded the move by Woolworths last week to lift its price to $1.10/l but said it still was not enough.

“$1.10 still doesn’t make sense when you can buy water at $3 a litre, when you can buy soda pop at $4 a litre or those Powerades or Gatorades at $5 a litre,” he said.

“It doesn’t make sense with all the work that’s going behind to produce milk, to process that milk to then sell it for $1 a litre.”

The processors said supermarket pricing influenced the farmgate price for milk.

Norco chairman Greg McNamara said the Australian Competition and Consumer Commission got its findings wrong in its 2018 dairy inquiry.

The ACCC’s Dairy Inquiry Final Report said it found no evidence that supermarket pricing, including $1/l milk, had a direct impact on farmgate prices.

“Importantly, we found that contracts for the supply of private label milk allow processors to pass the farmgate price paid to farmers through to the wholesale prices they charge to retailers,” the ACCC report said.

“This means that processors do not have an incentive to reduce farmgate prices as a result of the lower wholesale prices they receive for private label milk, as the farmgate prices are passed through to the supermarkets.”

But Mr McNamara said that was wrong.

“Fundamentally the pricing mechanism and how we discuss with retailers and set pricing, their outcome was, in my view, flawed,” he said.

Mr Saputo, when asked about the current contracts providing an opportunity for more money to come back to processors for farmers, said he would “love to see that”.

Bega Cheese chief executive Paul van Heerwaarden said supermarket private label products had changed farmgate prices.

There was no longer a domestic-market farmgate price and lower export-commodity-market farmgate price.

Mr van Heerwaarden said more than half of the key dairy products – milk, cheese and butter – sold in Australian supermarkets was private label.

“And without speaking too much out of school, the baseline dairy products that go into them, whether it’s butter or milk or indeed cheese are commodity prices,” he said.

“There’s not the returns in there that there used to be.”

Mr van Heerwaarden said the supermarket label products were driven by commodity prices.

“And a lot of those products are being imported today – whether it’s from New Zealand or elsewhere,” he said.

Milk in cheap cheese and butter was valued even lower than the discounted fresh milk.

“And if we think about 10 litres of milk going into a kilogram of cheese, and a block of cheese selling for 6 bucks, that’s 60 cents a litre,” Mr van Heerwaarden said.

Mr McNamara, whose company supplies Coles with $1/l milk in south-east Queensland, said the discounted product was now also having a big impact on sales to cafes and small businesses.

More operators of franchise cafes were buying discounted milk in bulk directly from the supermarkets, rather than at a higher price through the route trade.

All agreed that the processors needed to lead the discussion with retailers about the value of milk.

“I think the single biggest issue the industry faces from my perspective when we talk about what some retailers have done in a levy and asking people to put donations in tins, I think it just devalues everything we as farmers do,” Mr McNamara said.

“We do not want a generation of welfare recipients.

“We want a generation of farmers that are business-savvy, that spend the money in the right spots and we’ve just got to help retailers actually come to that conclusion.”

Mr Saputo said the company would honour its existing contracts with retailers.

“But as those contracts expire, we like to sit at the table with those retailers and renegotiate the terms and contracts that make it mutually beneficial as opposed to one-sided,” he said.

“I think in some cases some of the contracts are one-sided.”

Mr van Heerwaarden said there was a big need for processors to properly have conversations with the retailers.

“This is the value chain we should be creating,” he said.

 

Source: The Australian Dairyfarmer

Why are Italy’s dairy farmers dumping milk in the streets?

Protesting dairy farmers in Sardinia have been throwing milk onto motorways, blocking roads and attacking delivery trucks in an ongoing protest over milk prices, which they say are now as low as in the 1970s.

If you’re driving in Sardinia this month, you’ll need to watch out for angry farmers pouring litres of milk onto cars from motorway overpasses.

Protesting dairy farmers have been dumping out milk on roads and squares in Sardinia and disrupting delivery routes in widespread protests over milk prices over the last two weeks.

Yesterday a milk delivery truck driver was stopped and forced out of his vehicle by a gang of masked and reportedly armed protesters, who then spilled the liquid cargo all over the road.

Videos showing farmers throwing their milk into the streets have been shared on social media, with 23-year-old farmer Francesco Pintore telling media that they’d “rather dump it than sell it for next to nothing”.

The protests have now been going on for two weeks, with farmers  threatening to block ports and airports.

Protestors had also threatened to disrupt regional elections on February 24, but yesterday the poll went ahead as planned.

The protests are over the price of milk in Italy, which farmers say are now so low that they can’t make a living.

Current sheep milk prices have dropped to €0.60 per litre, compared to €0.85 last year. 

The drop is linked to a fall in the price of the popular Pecorino Romano cheese, which about half of all Sardinian sheeps’ milk is used for.

Pecorino Romano cheese. Photo: Depositphotos.

Dairy farmers are demanding that milk prices be raised to a minimum of €0.70 per litre.

The Italian government is now preparing to allocate 10 million euros to alleviating the crisis, local media reports.

There has been widespread criticism of this method of protest in crisis-hit Italy, where more than five millon people live below the poverty line.

Gianluigi Crobu, a spokesman for the protest movement, asked fellow dairy farmers not to waste the milk but to find ways of distributing it to local communities instead.

Source: thelocal.it

Australian fresh milk holdings buys Coomboona Dairy

Coomboona Dairy has been acquired by Australian Fresh Milk Holdings (AFMH), making the company the largest dairy producer in the country.

As part of the acquisition, processor Freedom Foods contributed $4.6 million in equity funding in return for a 10 per cent stake in the dairy, near Undera in Northern Victoria

Freedom Foods said the purchase would expand production in a renowned dairy farming region.

“Providing the opportunity to leverage its integrated approach to deliver sustainable production of high quality milk, supporting a range of value-added product opportunities,” the company said.

AFMH currently operates a fully integrated dairy farming operation, Moxey Farms, located in the Lachlan Valley, 340 km west of Sydney.

With the acquisition of the Coomboona Dairy operation, current AFMH operations are forecast to produce more than 150 million litres in 2019.

AFMH is a strategic partnership owned by the Moxey and Perich families and other shareholders including Freedom Foods Group, which has a 10 per cent equity shareholding in AFMH.

Freedom Foods is now utilising a growing proportion of the dairy milk output from both Moxey Farms and Coomboona Dairy for its Australia’s Own Kid’s Milk and other dairy product formats.

Progress is continuing on Freedom Foods’ nutritional and UHT investments in Shepparton with processing at both facilities expected to commence this month.

 

Source: Benalla Ensign

Canada’s Saputo to buy major U.K. dairy firm

Quebec firm to pay $1.7 billion for Dairy Crest

A major British dairy company is poised to become the property of one of Canada’s biggest dairy processors in a $1.7 billion all-cash deal.

Saputo Inc. announced Friday it has an agreement in place with Dairy Crest Group — the maker of Cathedral City cheese and Country Life butter among other major U.K. dairy brands — to buy up all its shares for £6.20 (C$10.63) each.

For Saputo, which markets its products in about 40 countries, the acquisition would be its first in the U.K. — and in Europe, for that matter — offering the Canadian company a platform for growth into those markets.

Dairy Crest’s board plans to unanimously recommend to shareholders that they vote in favour of the deal, Saputo said, noting it already has “irrevocable undertakings” from Dairy Crest’s shareholding board members for their votes.

Subject to shareholder and court approval and the usual closing conditions, Saputo said it expects to close the deal in the second calendar quarter of this year.

Based at Esher, southwest of London, Dairy Crest dates back to 1933 and the depression-era formation of Britain’s Milk Marketing Board, which spun off its milk processing business into a separate division under the Dairy Crest name in 1980.

The Dairy Crest division became a separate publicly traded company in 1996 and sold off its dairies business in 2015 to focus on making branded foods and value-added ingredients.

For its part, Saputo said this deal will allow it to “expand its international presence and enter the U.K. market by acquiring and investing in a well-established and successful industry player with a solid asset base and an experienced management team.”

“Dairy Crest is an attractive platform for Saputo and fits well within our growth strategy,” CEO Lino Saputo Jr. said in a Dairy Crest release.

“We believe that under Saputo ownership, Dairy Crest will be able to accelerate its long-term growth and business development potential and provide benefits to Dairy Crest’s employees and stakeholders.”

Dairy Crest chairman Stephen Alexander, in the same release, said the deal “should enable Dairy Crest to benefit from Saputo’s global expertise and strong financial position to fulfil and accelerate its growth ambitions.”

In its recent third-quarter update, Dairy Crest noted “significant uncertainty” around Britain’s impending “Brexit” from the European Union, adding that “the impact of a potentially disorderly exit is hard to predict.”

The British company noted its supply chain and customer base are primarily in the U.K., but added “we are taking steps to reduce our exposure, including accelerating the purchase of ingredients and packaging materials.”

Montreal-based, publicly-traded Saputo ranks among the world’s top 10 dairy processors and is the world’s largest cheesemaker. It’s also the top fluid milk and cream processor in Canada, Australia’s biggest dairy processor and Argentina’s second largest, and one of the top three cheese producers in the U.S.

Saputo, whose brands include Dairyland, Armstrong, Milk2Go/Lait’s Go and Neilson, among others, has been expanding largely through acquisitions in recent years.

Its most recently completed deals include U.S. cheesemaker F+A Dairy Products in November, Ontario cheese and yogurt maker Shepherd Gourmet in June and Australian dairy co-operative Murray Goulburn in April.

 

Source: Manitoba Co-Operator

Drought and low milk prices push Australian dairy farmers to the brink

Some who rely on irrigation to survive are selling up, while others cut herds and take big financial hits

When the dairy farmer Shane Hickey calculated his hourly rate of pay at just $2.46 last year it prompted a wave of outrage and sympathy. Consumers vowed to change their purchasing habits to support small, independently processed milk instead of the $1-a-litre offerings in the major supermarkets.

But among other farmers, the conversation was very different. “I got quite a few phone calls from farmers asking me how I made $2.46,” Hickey said.

“They were quizzing me … One guy was losing $500 a day, $15,000 a month. Another guy just up the road, they’re losing $10,000 a month.”

The Australian dairy industry was already in crisis when drought struck key production regions in Victoria and New South Wales in 2018. Now farmers like Hickey say they are barely hanging on.

He has reduced the number of cattle on his 200-acre property at Kyogle in the northern rivers region of New South Wales from its peak carrying capacity of 150 to 85.

It’s a situation repeated across the country. You can’t run a dairy farm without water — it takes 1,000 litres of water to make one litre of milk — and there is little to be had.

This is the latest in a string of setbacks that have faced the Australian dairy industry in the past decade. The number of dairy farms in Australia has fallen from 7,511 in 2010 to just 5,669.

Most of those problems can be traced back to 2014, when a combination of the lifting of quotas for European milk producers and sanctions against one of their biggest markets, Russia, over the downing of MH17 created an oversupply that led to a downturn in the global milk solids price.

Milk solids are the dried powder of fats and proteins that remain once all the water has been evaporated. Milk is usually about 12% solids, and milk prices are based on milk solids.

In Australia, Coles and Woolworths took advantage of that oversupply to bargain down the wholesale price of milk for their own-brand products, which they had begun selling for $1 a litre in 2011.

In April 2016 the major processors Murray Goulburn and Fonterra stepped down their milk supply contracts mid-season after overestimating the global market that saw the companies facing shortfalls of up to $200m. The price offered to farmers was reduced by about $0.80 a kilogram of milk solids for Murray Goulburn and $0.60 for Fonterra and the cut was applied retrospectively, meaning that for the last two months of the contract, payments to farmers were cut by almost two-thirds. The sudden drop in cashflow drove some farms out of business..

Decades of industry advice to Australian farmers was to invest more and produce more when bills were mounting in the hope that greater efficiencies would improve the bottom line. At the same time, farmers were urged to reduce debt to reduce their exposure.

When the drought is on, they can do neither.

“Chasing that efficiency that we all got told was how we were supposed to make our money, because we weren’t going to get more money for our milk, has actually increased our cost base and added more risk into our business,” dairy farmer Phil Ryan said.

A report by the Australian Competition Consumer Commission last year blamed the farm-gate price on “power asymmetries” between supermarkets and processors, and processors and consumers, but said it “did not obtain any evidence that supermarket pricing, including $1 per litre milk, has a direct impact on farm-gate prices”.

This is because farmers are paid the same milk price whether it ends up in $1 milk or not, with prices set by processors such as Murray Goulburn.

On Monday Woolworths announced that it was increasing the retail price of its own-brand milk by 10c a litre on two- and three-litre bottles, with the increase to be passed on to the farmer. About 450 farmers are expected to receive a price increase, which will work out at less than 10c per litre produced.

The agriculture minister, David Littleproud, had been pushing the idea of a temporary levy for drought-affected farmers since September and welcomed the news, calling on Coles and the German supermarket chain Aldi to follow suit.

But the government response many farmers remember is that of the prime minister, Scott Morrison, who said: “I want to ensure we can ensure the sustainability and viability of our dairy sector, but not doing that at a cost to mums and dads pouring milk on their cornflakes.”

Ryan runs a 200-cow operation near Bega on the NSW south coast, supplying Bega Cheese. He is now just above 50c a litre at the farm gate, roughly the same as it is costing him to produce. He says it’s not fair to put the burden of reducing the cost of living on farmers who cannot pay their own bills.

Ten cents a litre or 20 cents a litre isn’t going to break most household budgets, he said. “If [Morrison] genuinely doesn’t think that Australian families can afford that then there’s a much bigger problem than the dairy industry. It’s an issue for raising minimum wages.”

Ryan worked in IT in Sydney until 2007 and is preparing to take a second job to support his operation if the drought does not break in the next 12 months. The mental health toll is high. Half of the farmers Ryan knows admit to dealing with depression and anxiety. Many more bottle it up.

“Six out of 65 farms locally have sold in the last 12 months,” he said. “I was speaking with another local farmer just the other day, we are both saying we don’t know whether we will survive … we have got four-month-old bills that we can’t pay.”

Rabobank’s senior dairy analyst, Michael Harvey, says the milk price in Australia is likely to increase next financial year in response to a shortage on global milk markets, which will provide “some comfort” to drought-affected farmers.

The global commodities price is expected to settle at $6 a kilo of milk solids over the medium term.

“You need to plan your business and structure your business for that being an average milk price going forward and if you can make money at that then you have got a sustainable future,” Harvey said.

There is growing demand for dairy products, particularly in China, but the market favours those with the lowest cost of production. Some high-value products, such as baby formula, which is bought by the boxful from Australian retail shelves and shipped directly to China through informal channels, require additional ingredients that cannot be sourced in Australia even if the domestic milk production increases.

Australian farmers are able to be globally competitive if they can rely on rain-fed pasture growth rather than grain or hay feeding. Those conditions, once considered normal, are becoming less frequent due to climate change.

Farms that rely on irrigation, such as those near the Murray River in northern Victoria, are less viable, and many have already been listed for sale.

Labor’s agriculture spokesman, Joel Fitzgibbon, has said he will ask the ACCC to investigate introducing a floor price for milk to ensure farmers can cover their costs. Littleproud says the idea is unworkable without a quota system, which would undo the deregulation of the dairy industry after two decades.

The chief executive of the advocacy group Australian Dairy Farmers, David Inall, met Fitzgibbon to discuss the proposal this week. He said farmers are increasingly worried that farm-gate prices don’t cover production costs and encouraged them to “work with Dairy Australia on strategies to keep their cost of production low while also capitalising on export and other opportunities”.

Some Australian farmers advocate the return to a highly regulated quota system, like the Canadian model. The Canadian academic Bruce Muirhead describes the current Australian system as “completely unsustainable” and based on neoliberal agricultural philosophies about the uncapped power of investment and technology to achieve greater efficiencies

Or, as Hickey puts it: “Farmers were fed a big load of shit.”

“They were told to get bigger, get economies of scale, buy all this equipment that’s really expensive to maintain … get all these expensive commodities in to make your cows produce more milk.

“Now the commodities have disappeared, hay is through the roof, all your soy bean meals are nonexistent, so all these farmers that have listened to the experts are screwed.”

 

Source: The Guardian

Australian dairy farmer’s online campaign to end $1 milk draws attention

A DAIRY farmer’s online campaign urging Coles and Aldi to abandon their cheap milk prices is gathering speed.

Fifth-generation dairy farmer from Kingaroy, Damien Tessmann, started the campaign to get Coles and Aldi to end $1-per-litre milk prices “through the power of social media”.

After Woolworths ended its $1 milk prices last week, there has been a strong call for the other big supermarkets to follow suit.

Kingaroy dairy farmer, Damien Tessmann, has started an online campaign urging Coles and Aldi to end $1-per-litre milk. Picture: contributed

Mr Tessman started the Facebook group C’mon Coles, where he shared a video calling for other dairy farmers to share their stories, and urged consumers to boycott Coles and Aldi.

Across all media platforms, the video has been viewed hundreds of thousands of times.

“I think it’s one of these things where it’s important to be grassroots and farmer driven,” Mr Tessmann said.

“I want to do something to communicate with consumers and to make sure they vote with their wallets.

“It really is that David-and-Goliath battle.

“It’s (the response) really been overwhelming and it’s really about keeping that pressure on. I think people really do want to help farmers, I don’t buy into that city/country divide.”

The Likes on the C’mon Coles Facebook page have been growing organically, according to Mr Tessmann.

“It’s started off here in Kingaroy and I often look at (Facebook) notifications of where people are coming from. There was one this morning from Western Australia.

“It’s really great that we’ve got this far from just a farmer posting a video.”

Mr Tessmann and a group of other dairy farmers took a cow and stood outside Aldi in Kenmore, talking to consumers.

Damien Tessmann, Susan McDonald, Craig Brook, and Brad Teese with Dianne the jersey cow outside Aldi in Kenmore. Picture: contributed

“All demographics had positive things to say about the dairy industry and our cause,” he said.

“It really warms my heart that consumers in metropolitan Australia want to help us out.”

Mr Tessmann has been in the dairy industry all his life.

“It’s something that consumes you,” he said.

“When you’re on the land in a particular industry, you become really passionate about it.

“Dairy farmers are renowned for being on the shy side, so it’s great to see farmers getting passionate and involved and that’s what’s keeping me going.”

The C’mon Coles Facebook page has received 1600 Likes so far.

Kilcoy dairy farmer, Ashley Harrison, has also gotten behind the campaign and shared a video on the page.

But Mr Tessmann said other diary farmers had been hesitant.

“There has been some reluctance from Norco suppliers,” he said.

“It’s horrible that they think there will be a backlash from Coles if they openly jump on this campaign.

“That’s been the feedback from half a dozen farmers.

“I think that’s really sad about the state of the dairy industry.”

Mr Tessman said the next step in the campaign was to keep the momentum going.

“It’s about keeping that pressure on, but it all comes down to consumers. They’re our biggest weapon in this battle.

“It’s been a deafening silence from Coles. We’ve been tagging them in all our posts.

“Woolworths responded and said ‘thank you for your support and we understand how important the dairy industry is’.

“Coles can’t even return a tweet to say ‘this is what we’re doing’.”

Source: weeklytimesnow.com.au

Feed a cow, milk a cow, sell the milk – An Idaho Dairyman’s Story

Feed a cow, milk a cow, sell the milk. It all seems so easy.

Today the average person is 2 or 3 generations removed from the farm. The average person drives by a farm, watches a commercial on television, or hears a comment from someone “that knows” and it all seems so easy.

Ask a dairyman how easy it is. Usually, he won’t say much. He might agree with you half-heartedly because he thinks most people are only interested in cute little fluffy calves, big-eyed cows and a Farmall tractor.

He won’t tell you that milking a cow 365 days a year includes Christmas, your birthday, and Super Bowl Sunday. He won’t tell you that milking a cow 365 days also means milking 365 nights and if he hires people to milk the cows it means scheduling, managing, and all the things that come with having employees.

Feeding cows is an everyday job. Cows have to be fed whether it’s 110 degrees outside or minus 10. Someone has to feed them even if the feed wagon is broke down, the tractor won’t start, or the wind blows the feed away as quick as it can be put down.

Maybe he’ll tell about milk prices, break-even points, or feed costs but he won’t dwell on it. Why bother? He can do very little about the prices he’s given other than try to make the most quality milk he can and feed the most efficient feed ration. Dairies are called “price –takers”. They don’t decide what price they will pay or what they will get paid. They are at the mercy of national and international markets and politics. Dairymen are long-term optimistic people. They have to be. They think bad times will always give way to good times and the good times will last longer than they ever have before.

Dairymen won’t tell you about the times things don’t go right. He won’t relive the morning the first thing he saw was the fresh cow from the night before lying dead in the corral, or the tank of milk he had to dump because someone milked a cow with antibiotics into it, or the cold morning none of the equipment started. He won’t tell you how many times his heart has been in his throat, how many bottles of Tums he goes through in a week, or how many sleepless nights he’s had.

Then, there are those people, the advocates. The people that want to fix agriculture but they don’t seem to understand agriculture or the importance of it. They have taken it upon themselves to make the world a better place by regulating, restricting, and inspecting farms so dairymen won’t do things they never have and never would. To a typical dairyman it’s just more expenses and someone looking over his shoulder.

With all that, why would anyone stay in the dairy business?

The dairyman won’t talk about that either. That’s because it’s hard to explain in words.

There is just something about dairying when things go right. There is something about seeing cows file into a barn, be milked and walk out when it is done right. There is something about newborn calves that never gets old. There is something about seeing every cow lined up at the manger eating as the sun comes up in the morning. There is just something about working with an animal, partnering with nature, as best as you can. Sometimes it all works out. That is when it is all worthwhile and almost easy.

– John W. Wright of Wright, Inc. Dairy in Wendell, Idaho

Source: dairywest.com

Woolworths to stop selling $1 milk in win for dairy farmers

Woolworths has announced it will stop selling $1 per litre milk for good, in a move described as a “game changer” by the dairy industry.

The supermarket chain will start charging consumers $1.10 per litre from tomorrow, with the extra money going directly to farmers.

Woolworths Group chief executive Brad Banducci said the corporation believed in the long-term sustainability of the dairy industry.

“In our consultation with industry bodies… we’ve heard the outlook will continue to be extremely tough for dairy farmers,” he said.

“This is affecting milk production and farm viability, which is devastating for farmers and the regional communities in which they live.”

The decision follows an east coast trial of drought relief milk sales, which saw 50 per cent of consumers willing to pay more to help farmers.

Mr Banducci acknowledged the 10 cent increase was less than inflation, but would not rule out a further price rise in the future.

“There’s a fine line between lifting the price and supporting our dairy farmers and also focusing on affordability for our customers, so this felt like the right first, safe step.”

Australian Dairy Farmers Association CEO David Inall called the supermarket’s move a “game changer”.

“It is reassuring that Woolworths has committed to deliver the full 10 cent increase back to those farmers who supplied the milk.”

Dubbo dairy farmer Erika Chesworth said Woolworth’s decision puts dairy farmers over a psychological hurdle.

“We’re hopeful that this is the beginning of us being returned to being completely valued by Australian society,” she said.

“Of course we’d love it to be $2 a litre, but today we’re just really happy that we’re on the path to returning where we belong in society.”

The NSW Farmers Association said it was a big win for dairy farmers, who had been fighting against discount milk since 2011.

It said other retailers should follow Woolworths’ example.

 

Source: ABC News

Tough financial times means many dairy producers are running out of options

While the U.S. economy is strong right now with steady growth, low unemployment, and little inflation, the farm economy is struggling.

The U.S. has lost 30% of its dairy farmers over the last decade. Sadly, more farmers are having to sell due to expensive loans or not making enough money. In fact, one farm family from Iowa sold their entire herd at auction Friday, because they believe there’s not enough money in milk production.

One of the Erhardt family’s cattle up for sale in Lanesboro

The Erhardt family sold about 250 Holsteins at the Lanesboro Auction Barn. Because this was such an emotional moment, they did not feel comfortable speaking with KTTC about the difficult decision they had to make on-camera.

However, KTTC did meet with Tom Hoscheit, a dairy farmer from Caledonia, about this major life decision. While he doesn’t know the Erhardt family, he knows others who have to make a similar sacrifice.

Tom Hoscheit has been a dairy farmer in Caledonia for 43 years

“It’s hard. It’s like a death in the family. You’re watching your livelihood, which you’ve spent years building up, just to watch it go through a sale. That’s very difficult. The guys that have gone through it expressed it to me like a death in the family,” he said.

Even though he only sold a few cattle from his herd on Friday, Hoscheit still faces difficult times, making 40% less income now than what he did four years ago.

President Trump signed the farm bill into law last December, which is providing $867 million in aid to U.S. farmers. However, some say the bill didn’t go far enough.

Source: kttc.com

US Milk Production Rises, Cattle Numbers Drop in December According to USDA

USDA recently released the December milk production numbers seeing a rise of 0.9% totaling 17.1 billion pounds. Production per cow averaged 1,966 pounds, up 23 pounds from same time last year. The number of cows totaled 8.72 million head, 21,000 less than December of 2017 and down 2,000 from  November. You can read the full milk production report here.

Dairy farmers are in crisis – and it could change Wisconsin forever

Chuck and Sue Spaulding have partnered with their daughter and her husband to run S & S Dairy. Mark Hoffman/Milwaukee Journal Sentinel

There was a time when the soft glow of barn lights dotted Wisconsin’s rural landscape like stars in a constellation, connecting families who labored into the night milking cows, feeding calves and finishing chores.

Hundreds of those barns are dark now, the cows gone, the hum of milking machines silenced. 

“All of our neighbors are done,” said Sue Spaulding, a dairy farmer near Shell Lake, in Washburn County.

She and her husband, Chuck, soldier on, milking about 60 cows on their 300-acre farm that Chuck bought when he was only 17. 

Seven years ago, the Spauldings borrowed heavily to modernize their barn and position things for the future. 

“It looked good on paper,” Sue said.

 

But in late 2014, farm milk prices started to plummet. The downturn, fueled by overproduction and failing export markets, has lasted more than four years and has wiped out dairy farms from Maine to California. 

The price farmers receive for their milk has fallen nearly 40 percent. 

“This downward cycle has been brutal,” said Kevin Schoessow, a University of Wisconsin-Extension agent in Washburn County. 

Wisconsin lost almost 700 dairy farms in 2018, an unprecedented rate of nearly two a day. Most were small operations unable to survive farm milk prices that, adjusted for inflation, were among the lowest in a half-century.

As of Feb. 1, Wisconsin had 8,046 dairy herds, down 40 percent from 10 years earlier, according to state Department of Agriculture data. 

Remaining dairy farmers have burned through their farm equity and credit to remain in business. Often, at least one family member works an off-farm job to put groceries on the table or pay for health insurance. Some work double shifts, farming during the day then heading to a local factory for the night. It’s exhausting, but it keeps families in agriculture and preserves a cherished way of life. 

Much of Wisconsin’s $88 billion farm economy hangs in the balance. Hundreds of towns across the state depend on the money that dairy farmers spend at equipment dealerships, feed mills, hardware stores, cafes and scores of other businesses. 

Each dollar of net farm income results in an additional 60 cents of economic activity, according to University of Wisconsin research. 

This spring, though, farmers face crucial decisions. Some are running out of feed for their cattle. Do they seek operating loans to plant crops for livestock rations? Or do they quit and cut their losses that can add up to thousands of dollars a month? 

Often the fate of their livelihood isn’t in their hands.

“Banks are wary of taking on more risk,” said Michael Slattery, an economist for Wisconsin Farmers Union, a trade group based in Chippewa Falls. 

Nearly every dollar the Spauldings have earned from their milk the last few years has gone toward their debts and farm insurance, leaving them with little income except for Chuck’s Social Security check and selling some livestock and hay.  

Their milk checks, after deductions are taken out, come imprinted: “Void.”

A check from the dairy cooperative is voided because the bank has first dibs on money from the milk sold by S & S Dairy, Sue and Chuck Spaulding's farm in Shell Lake.

 
A check from the dairy cooperative is voided because the bank has first dibs on money from the milk sold by S & S Dairy, Sue and Chuck Spaulding’s farm in Shell Lake.

Mark Hoffman / Milwaukee Journal Sentinel

“It’s been such a struggle just to keep things going,” Sue said. “We have managed, but now it is getting hard to pay even our basic everyday bills. I don’t know how much longer we can do this.”

As Sue spoke, she faced a $900 electric bill due in only four days. The barn needs repairs and there’s farm equipment that should have been replaced long ago. 

“We are running out of resources,” she said. “It’s hard to sit here and watch things fall apart.”

How Wisconsin became ‘America’s Dairyland’

Wisconsin didn’t start out as a dairy state.

In the mid-1800s, one-sixth of the wheat grown in the United States came from Wisconsin. White settlers from the East Coast didn’t need much initial investment and found the crop easy to manage. 

But varying yields, rising competition from neighboring states and an insect infestation forced wheat farmers to consider alternatives. Dairy farming emerged in the latter half of the century as a better fit for the state’s terrain and climate.

By the turn of the 20th century, 90 percent of Wisconsin farms had dairy cows, and by World War I the state led the nation in butter and cheese production. It held the milk production title until 1993 when that recognition went to California. 

Wisconsin, though, remains No. 1 in terms of connecting dairy with its cultural identity.

For nearly 80 years, “America’s Dairyland” has been imprinted on the state’s license plates. And for the last four decades, foam Cheesehead wedges have been a staple at sporting events and in tourist shops. Dairy contributes more to Wisconsin’s economy than citrus does to Florida or potatoes to Idaho, and more than a quarter of the nation’s cheese comes out of the state.

For all the pride Wisconsin takes in its heritage, some national consumer trends have been headed in a different direction. Sales of milk as a beverage have fallen steadily since the 1970s, with fewer parents encouraging their children to drink milk than ever before. Soy milk and almond milk — which dairy farmers point out aren’t real milk — and scores of sports drinks have flooded the beverage market. 

Follow four Wisconsin farms

Amid years of sagging milk prices, Wisconsin dairy farms face a grim future. Meet the operators of four farms across the state we are following this year.

And although consumption of cheese, yogurt and butter have all increased, they’ve not always kept pace with runaway production. Today, for instance, U.S. commercial and government cheese stockpiles are at about 1 billion pounds — the highest level in a century. 

At the same time, foreign markets for American dairy products have shrunk in response to tariffs that President Donald Trump placed on foreign steel and aluminum. Cheese shipments to China have fallen almost 65 percent, according to industry figures, and exports to Mexico are down more than 10 percent. 

Mexico and Canada have targeted rural America as a way to punish Trump, and the economic harm could be felt for years to come, said Laurie Fischer, CEO of the American Dairy Coalition.

“This should have changed in November when Trump declared success with his newly rechristened U.S.-Canada-Mexico Trade Agreement replacing NAFTA,” Fischer said.

“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 (ratify) the pact or lift retaliatory tariffs, impacting dairy products and other items.”

Wisconsin farmers are getting about $10 million in payments from Trump’s farm bailout program announced late last year. It was designed to help producers of milk, pork, soybeans, corn and other commodities who have seen prices tumble in trade battles.

A 55-cow dairy farm would receive a one-time payment of $725 from the bailout but stood to lose between $36,000 and $48,000 in income last year from low milk prices, according to the Wisconsin Farmers Union. A 290-cow dairy would get $4,905 but would lose several hundred thousand dollars. 

Further, dairy farmers have only been getting about 25 percent of the average retail price for cheese, the lowest portion since 2012, according to Fischer. 

“There’s no magic bullet on the horizon,” she said. “A shakeout will continue in the dairy sector until markets stabilize and supply and demand realign. Until then, dairy professionals at all levels are working on a day-by-day, if not hour-by-hour, basis to keep their operations afloat.”

Farmers hurt from being too productive

The prices farmers receive for their unprocessed, unpasteurized milk are largely determined by the forces of supply and demand, and government programs.

Minimum prices are set by the U.S. Department of Agriculture using complicated formulas based on the wholesale market value of various dairy products such as cheese, butter and whey.

Many farmers see themselves as pawns in an agricultural system stacked against them. Faced with few options to control the price for what they produce, they ramp up production and hope markets don’t buckle under the strain. 

Most dairy farmers don’t even know what they’ll be paid for their milk until 30 days after it’s hauled off the farm. 

“Every time we see the price go up a little it makes us very hopeful. And then when it drops … everybody goes back to feeling pretty awful,” Fischer said. 

In 2012, Wisconsin Gov. Scott Walker announced an incentive program to produce, as a state, 30 billion pounds of milk a year by 2020 — a 15 percent increase. The state offered farmers grants for business planning, facility engineering and animal nutrition. The program, “Grow Wisconsin Dairy 30×20,” required them to put up their own money as well.

Despite record production every year since 2002, Walker urged farmers to step it up even more. “The reality,” he said, “is the growth is not fast enough for the opportunities that are here before us.”

Dairy farmers not only met the challenge, they reached 30 billion pounds in 2016 — four years ahead of schedule.

By then, however, the market had turned and many dairy farmers were having trouble breaking even on their new investments. 

Some felt duped by the agribusiness system. 

“The more surplus farmers produce, the lower the price of agricultural commodities for food processors,” said Kara O’Connor, government relations director for the Wisconsin Farmers Union. 

“All of the most powerful players in the industry, except the farmer, benefit from overproduction.”

The amount farmers are paid for their milk varies monthly based on the USDA price, individual contracts, quality and other factors. Some farmers say they’ve been getting around $15 for every hundred pounds of milk they produce, roughly 12 gallons. Their costs: $20 or higher. 

These are like prices from 40 years ago, said Dennis Rosen, who recently quit milking cows at his St. Croix County farm.

Back then, there were 39 dairy farms within 20 miles of Rosen’s home. Of those farms, only three are left. 

“We used to live in a very vibrant area of family agriculture,” he said.

With collapsed prices of milk, grain and other commodities, many farmers have lost money for months at a time. At some point, the losses become unsustainable. 

“Just ask any of the 36 dairy farmers who are no longer farming in my neck of the woods today,” Rosen said. 

Some farmers have flushed milk down the barn drain because they couldn’t find a processing plant to take it. 

That happened in January at Laura Binder’s 70-cow dairy farm near Marshfield.

“We no longer have a dairy plant to ship to, so we are dumping our milk,” Laura said. “What a waste of money.”

Farm auctions have become an all too common occurrence in her area. 

“Honestly, I don’t think it’s going to get any better,” she said. “I just think it’s going to keep going down until all that’s left are mega-size farms. There won’t be any place for little farms.”

Some farmers have shot calves because the newborn animals had no market value and were considered too expensive to raise for beef. 

In December, an Iowa farmer posted Facebook photos of calves he’d killed, trying to make a point of how desperate things were. Shortly afterward his milk cooperative, Prairie Farms, dropped him as a member, according to Steven Potter, the farmer’s brother in Preston, Iowa. 

“I don’t know what he was thinking,” Potter said.

More Wisconsin farmers are calling Farm Aid crisis line

The stress farmers have endured in trying to keep everything together has been overwhelming, especially on farms passed down for generations. Nobody wants to be the one to close the gates. 

“It feels like you’ve failed,” said Schoessow, the UW-Extension agent. 

Joe Schroeder answers the crisis line for Farm Aid, a group launched during the farm crisis of the mid-1980s and known for its annual concerts organized by Willie Nelson, John Mellencamp, Neil Young and Dave Matthews.

Schroeder has talked with farmers in the darkest periods of their lives. He’s kept some from committing suicide; he’s convinced others to get guns out of their house to avoid rash decisions.

These days, from his base in Cambridge, Mass., he’s getting more calls from Wisconsin dairy farmers whose lives have gone off the rails.

“They’re often the farmers who have the fewest options, the toughest ones to help,” Schroeder said.

Jeff Ditzenberger has been in their shoes. One summer night he walked into an abandoned house near his farm in Green County, lit a fire, and waited to die.

Following months of mental health issues, and unable to get help from a rural health system lacking resources, he planned his own death that August evening in 1992. 

“Take the worst day, the worst feeling you’ve ever had … multiply that by a hundred. Add 10. Then you kind of get it,” he said.

Jeff Ditzenberger has become a lifeline for other farmers who've contemplated suicide.

 
Jeff Ditzenberger has become a lifeline for other farmers who’ve contemplated suicide.

Mark Hoffman/Milwaukee Journal Sentinel

The flames crept up the walls, and the house filled with smoke.

“You get a sense of morbid peace,” he said, “because it’s like you won’t be a burden or a disappointment to anybody anymore.”

At the last moment he changed his mind and hurried out of the burning building. 

“Thankfully, I failed miserably” at suicide, he said.

He’s since started a mental health support group for men, and he’s spoken with many farmers struggling with stress, depression and thoughts of ending their lives.

“I have caught more of my friends in the middle of their suicide plots than I care to mention,” Ditzenberger said. “Suicide doesn’t give a sh–  what your occupation is. It’s just wicked.”

Agency looks for ways to help farmers

The Wisconsin Farm Center, part of the state Department of Agriculture, Trade and Consumer Protection, has been getting about 200 calls a month on its toll-free crisis line.

The Farm Center offers farmers a wide range of free services including mediation with creditors. It also offers vouchers that farmers and their families can use to get counseling.

The staff has decades of experience in agriculture.

“They understand what people are going through, and they’re really good listeners,” said Farm Center Director Kathy Schmitt.

The agency looks for ways to keep farms in business or find an exit strategy. 

“We will come right to your kitchen table, or if you want to meet at a McDonald’s we will do that too. It’s whatever you feel comfortable with,” Schmitt said. “Some creditors will accept reduced amounts. And even if we can’t come to an agreement, being able to talk it through with them is good for the relationship.”

Federal court data shows that western Wisconsin had the highest number of Chapter 12 farm bankruptcies in the nation in 2017. And that’s only a glimpse into the dairy crisis since Chapter 12 is a relatively rare tool used in farm closures.

It allows farmers to “cram down” secured debt such as land mortgages to a more affordable level.

“But one of the big problems is that it cannot be used by farmers whose debt exceeds $4,153,150. That sounds like a big number, but in the dairy farming world where equipment, machinery, feed and operating expenses are very high, it is not,” said Elizabeth Rich, an attorney from Plymouth and president of the Farm-to-Consumer Legal Defense Fund Foundation. 

“Fifth- and sixth-generation dairy farmers are losing their farms; many are killing themselves. We can and must do better,” she said.

First stress, then stroke 

The Spauldings were one of those families who turned to the Wisconsin Farm Center in January.

The question was whether time was too short, and the problems too severe.

In October 2017, Chuck had a stroke.

He was out raking hay, then put the tractor away and headed into the house for a glass of water. His hands were numb that day, but he figured it was from the vibrations of steering the tractor.

Then he dropped the glass. He was on the kitchen floor trying to clean up the mess, “talking mumbo jumbo,” as Sue recalls.

She called her son-in-law to come over right away.

“We drove so fast to the hospital we had the cops chasing us,” Sue said.

Chuck was flown to Eau Claire for treatment. The stroke left him paralyzed. He couldn’t talk, and for a while he couldn’t remember his wife’s name.

Then, back home for a day, he had a brain hemorrhage.

Another emergency medical flight, this time to a hospital in Marshfield.

Now, after about a year of physical therapy, he’s able to work on the farm again but not like before. His right side is weak; he can manage driving a tractor but not a car.

Still, “he is a true miracle,” Sue said.

Chuck remains hopeful that milk prices will turn around, Sue said, like they did after previous slumps that lasted a year or two. But this one is much worse in that it’s dragged on for such a long time. 

“It’s almost like there’s hope, but then there isn’t,” Sue said. 

Adding another layer of stress, the Spauldings briefly lost their milk buyer — a blow that could have spelled the end of their dairy operation.

She and Chuck sought a loan from their local bank to keep the farm afloat until money starts coming in from the new milk buyer.

“I am scared. If we lose the farm, we lose our home, too,” Sue said. “We just remain in survival mode.”

Sue Spaulding is shown with a 3-week-old calf, Hope, which had some health issues. It died a few days later.

 
Sue Spaulding is shown with a 3-week-old calf, Hope, which had some health issues. It died a few days later.

Mark Hoffman / Milwaukee Journal Sentinel

Dairy farms are too productive 

Though dairy farms of every size are struggling, some remain profitable if their operating costs are low enough to handle fallen milk prices or they have enough income from other sources. 

Very large dairy farms, which can have anywhere from 1,000 to 8,000 cows or more, benefit from economies of scale — meaning they can negotiate lower prices for necessities such as animal feed and are better financed to weather a downturn. 

“The big dairies almost seem to be in perennial expansion mode,” said Hans Breitenmoser Jr., who has a 430-cow farm in Lincoln County.

“There are farms pumping out a ferocious amount of milk, whereas a generation ago if farms fell by the wayside, production also went down,” he said.

The current slump, now in its fifth year, has lasted long enough that farmers are questioning whether it’s become the new normal in dairy. 

“I will be perfectly honest, I am scared about that,” Breitenmoser said.

Dairy farms are so productive these days, partly from improved cow genetics, they can quickly flood markets.

“We are very good at what we do,” Breitenmoser said.

Further, farmers who have invested heavily in their milking operation can’t afford to just turn off the spigot. Instead, as profit margins shrink, they try to squeeze out ever-higher amounts of milk to cover their costs — even if it adds to the overall surplus. 

Some farmers say the U.S. needs a milk supply management system, like Canada has, that imposes production quotas and protects farmers’ income. 

Critics of Canada’s system say it has resulted in trade barriers to U.S. dairy products. 

“But whether the answer is a system similar to Canada’s supply management program or something completely different, we can’t just sit back and continue down the same current path without trying to find something that actually works for farmers,” Brad Rach, dairy director for the National Farmers Organization, wrote in a blog.  

Too little, too late?

Even quitting can be challenging.

Twenty years ago, a farmer could hold a farm closure auction and other farmers in the area would come and buy almost everything. There aren’t as many buyers now, said Jim Goodman, a former organic dairy farmer from Wonewoc and president of the group Family Farm Defenders.

Banks have applied more pressure, and not just in Wisconsin. 

“Three young farmers in foreclosure that I know of and herds being liquidated,” a country lawyer in New York state said in a recent email to Goodman.

“Young, unseasoned people in shell shock. Feed companies suing farmers for past-due feed bills. … There is a crying need for emergency help right now to get through the winter or there is going to be another round of sell-offs.”

Last fall, Goodman called it quits after more than 40 years of milking cows on his third-generation family farm. He sold off his 45-cow herd, whose lineage could be traced back more than a century.

“If there was light at the end of the tunnel, and you could say things would be looking up by the summer, that would be one thing. But nobody has an idea that’s going to happen,” he said.

One positive note in the recent farm bill passed by Congress and signed into law by Trump is an improved income insurance plan  — partially funded by the government and from premiums paid by farmers  — to help when the gap between milk prices and cattle feed prices widens to a certain point. 

Still, it’s no substitute for a strong marketplace. 

“The farmers I know would rather receive fair prices for their products at the farm gate than having to live with the stress of volatile markets and the unknowns of whether emergency relief and insurance will kick in,” said O’Connor with the Wisconsin Farmers Union. 

Even if milk prices improve this year, it could be too little, too late, for many farmers who have “simply run out of financial and emotional strength to continue,” said Peter Hardin, publisher of The Milkweed, a dairy industry publication in Brooklyn, Wisconsin.

“You can tell people that things are going to get better, but until they see it in their milk checks they won’t — and shouldn’t — believe it,” Hardin said. “The only comparable example now is the Great Depression.”

Spaulding family runs S & S Dairy in Shell Lake

Sue and Chuck Spaulding have partnered with their daughter and her husband to run the farm, S & S Dairy, in Shell Lake.

Mark Hoffman, Milwaukee Journal Sentinel

Trying to hang on

The Spauldings say they’ll hang on for as long as they possibly can. 

“Chuck has worked his whole life for this place,” Sue said, and he wants to give it another year before deciding whether to sell the cows. 

They raised seven children on the farm, through a blended family from previous marriages, and they’ve been through some lean years.

“But we were always able to put food on the table, have clothes for the kids, and live a good life,” Sue said. “Now, I’m glad we don’t have little kids.”

The Spauldings’ youngest daughter and son-in-law, Christy and Jeremy Spexet, also rely on the farm for their livelihood. They live in a mobile home nearby and put in long hours to keep the milking operation going. 

“We are lucky to have them,” Sue said.

But Chuck and Sue cannot afford to pay them much. In a nod to both desperation and technology, Sue started a GoFundMe campaign to get some help from the public. Other farmers have done the same.

“We set a $30,000 goal for our campaign because we didn’t want to scare people away,” Sue said. “But we probably owe about a quarter of a million dollars.”

“I feel bad for reaching out because I know there are a lot of other people worse off. But at this point even a $10 donation feels like $100,” she said.

She and Chuck would like the farm to be their legacy, a place for their family to carry on traditions. A lot of other farmers wanted that too, but it wasn’t meant to be.

“It’s heartbreaking,” Sue said.

Chuck Spaulding moves his 1964 John Deere tractor into a shed while doing chores on their farm in Shell Lake.

 
Chuck Spaulding moves his 1964 John Deere tractor into a shed while doing chores on their farm in Shell Lake.

Mark Hoffman/Milwaukee Journal Sentinel

Anger at a broken system

Danielle Endvick, from Chippewa County, said her dream of becoming a dairy farmer died when her father’s farm shut down. 

“From the time I was a young girl, trailing dad out to the barn to feed calves, I remember boldly declaring my plans for my future: ‘I’m going to be a farmer, too,’” she said.

“My world revolved around our dairy farm. I woke early to help dad with morning chores and headed straight back to the barn when the school bus dropped me off after school. Some of my best memories were those chore times spent with dad, ambling along beneath the whitewashed barn beams.”

She also remembers the farm slipping away from her father as, month after month, the milk checks kept getting smaller. 

“Another price drop … Dad had become a regular at our small-town bank. He was a sound farm manager and worked full time at the local feed mill for the insurance and extra paycheck. But with milk prices on an ever dipping-and-diving roller coaster, our chances of digging out looked slim,” she said.

A few years after she left the farm, her father sold the herd. As she saw dairy farms falling apart in the current crisis, she wrote a remembrance of that time not long ago.

“I remember the dreary day spent following the cattle broker as he walked through the barn, eyeing up the cows I’d raised from calves, as he turned over in his mind which would bring the prettiest penny. And I remember all too well that emotional last milking, where dad and I again found ourselves gathered around the bulk tank, this time with my infant son, Blake, who slept peacefully in a corner of the milk house.”

“When the cattle trailer backed up beside the milk house, our big Brown Swiss, Brownie, was among the first to load. I paused to scratch her head one last time before nudging her across the gutter and out the door. One by one the cows filed out, closing a chapter on the farm.”

Later, Endvick relived the pain as she watched her uncle’s cows head out the door of his barn one last time. 

“Two farms erased from Wisconsin’s dairy industry,” she said. “Two among thousands lost these past few years.”

In 2015, Endvick realized her dream of having her own farm, now named Runamuck Ranch, where she and her husband, Jesse, raise beef cattle, goats and chickens.

But they’re not milking cows. 

“Some days I’m thankful for the foresight dad had. A lifetime in the dairy industry told him that we were on a runaway train that was only headed for heartache,” Endvick said.

“Other days I’m angry that I didn’t try to fight it out and do what I love, no matter how hard the struggle. But … as I see fear stirring in my friends who are dairy farming, I’m angry at a system that has been broken for so many years.”

Source: jsonline.com

Why more expensive milk won’t help Australian farmers much

The supermarket giant Woolworths this week broke ranks and announced it was going to stop selling A$1 per litre milk. It will now charge A$1.10, or A$2.20 for two litres.

Chief executive Brad Banducci made it clear that there was more to the decision than straightforward economics:

We’ve heard the outlook will continue to be extremely tough for dairy farmers… This is affecting milk production and farm viability, which is devastating for farmers and the regional communities in which they live.

The Labor Party has been threatening to impose a minimum farm-gate price.

Will what Woolworths is doing help farmers? Only a bit.

Milk prices are internationally set

The so-called “milk wars” began on Australia Day 2011 when Coles announced it was cutting milk prices to A$1 a litre.

Woolworths and Aldi followed suit.

The milk market does not just consist of dairy farmers, supermarkets and customers. There are also the processors – companies such as the ASX-listed Murray Goulburn, Parmalat, Lion and Fonterra – that stand between farmers and supermarkets. Then there is the international market for dairy products like butter, cheese and milk powder.

The biggest determinant of farm gate prices in Australia is not what the major supermarkets do, but world dairy prices.

The Department of Agriculture says 37% of Australian milk production is exported.

Add to that the roughly 35% that goes into locally consumed butter, cheese and milk powder that is subject to competition from imports. You can quickly see the prices of nearly three-quarters of the milk produced in Australia are set globally.

Dairy Australia has a higher estimate. Because even fresh milk is subject to foreign competition, it believes 90% of the annual movement in farm-gate prices comes from changes in international prices.

Those changes are beyond the effective control of Australian farmers and regulators.

Many of them are the result of changes in the exchange rate.

International prices are generally set in US dollars. That means a rising Australian dollar can cut the return to Australian farmers, while a falling Australian dollar can enhance it.

Farmers have been angry at Coles and Woolworths for squeezing prices. Protest rally in Melbourne, 2016.Mal Fairclough/AAP

Processors get the cream

It is tempting to think an increase in retail prices, like the Woolworths 10 cents, would help farmers. But it normally wouldn’t, much.

Someone between the cow and the customer would get the 10 cents, but not necessarily the farmer.

When the Australian Competition and Consumer Commission examined the dairy industry last year it:

did not obtain any evidence that supermarket pricing, including $1 per litre milk, has a direct impact on farm-gate prices

Further, farmers’ lack of bargaining power means they are unlikely to benefit from an increase in the retail (or wholesale) prices of private label milk or other dairy products

Even if processors were to receive higher wholesale prices from sales to supermarkets, this does not mean the processors will pay farmers any more than they have to.

This time it will be different. Woolworths says “every cent of the increase will end up with Australian dairy farmers”. The processors have guaranteed it.

Normally there would be no guarantee that an increase in the wholesale price would flow through to farmers. The processors could pocket it, and the inefficient ones could use it to stay in business, to the long-term detriment of customers.

Consumers are at one end of the line…

Banducci said Woolworths was “acutely aware of the budgetary pressures facing many of our customers and have not taken this decision lightly”.

He is right to recognise it will hurt customers.

It won’t, mind you, hurt customers who buy branded milk like a2 – whose marketing success under chief executive Jayne Hrdlicka has pushed the value of the company to A$10 billion, making it bigger than Lendlease, Medibank Private, the AMP and Coca-Cola Amatil. Not bad for a company that didn’t exist at the turn of the century.

Instead it will hurt customers who can afford it the least. For a typical family of four with average milk consumption, the extra 10 cents a litre works out at about A$40 a year.

…and farmers at the other

Dairy farming is difficult, and much of Australia is less than ideally suited to it. Farmers have to contend with volatile prices, drought and isolation.

They are the least powerful players in the “value chain” that runs from cows to customers via importers, processors and supermarkets.

Neither government intervention nor higher retail prices can do much to help them.

Source: theconversation.com

Fonterra offers secret contracts to dairy farmers in northern Victoria

Fonterra Australia is offering big dairy suppliers in its northern region about $6.75 a kg of milk solids, just days after it announced a final 2018-19 price for most suppliers of $6.05 a kg.

Secret contracts are being pitched to dairy farmers producing at least one million litres of milk annually, but suppliers must commit to deliver at least 83,000 litres every month through to June next year.

Labelled “North Fresh”, the confidential contracts are being pitched to stop an exodus of its big suppliers moving to competitors Parmalat and Australian Consolidated Milk, which are paying dairy farmers much higher prices than Fonterra’s 2018-19 average farmgate price of $6.05/kg MS.

Fonterra is offering the big payment hike to its larger northern region suppliers to stop them defecting to other dairy companies but is also trying to woo former suppliers to return.

Contracts must be signed by the end of this month, and would be backpaid to July last year.

The contracts bind the suppliers to Fonterra for a contracted minimum monthly amount of milk until the end of next season at the $6.75 a kg price.

It is not clear what price Fonterra will pay for milk exceeding the contracted monthly minimum but the United Dairyfarmers of Victoria has been told it is $5.70/kg MS.

Fonterra would not clarify what price excess milk would be paid at.

Some farmers will receive backpay of about $50,000 a year upon signing up this month.

Over a full year, it will add at least $75,000 to contracting farmers’ pockets.

The Weekly Times understands Fonterra is also offering the higher payment to suppliers who fall short of the one-million-litre minimum production requirement, but is encouraging them to buy more dairy cows and get them in calf by April to qualify for this year’s backpay offer.

One Fonterra supplier, who did not wish to be named, said that was encouraging desperate farmers to “make crass decisions” in order to pay their bills.

“It is dangling a pot of gold in front of them but locking people into debt,” the farmer said.

“It is unconscionable conduct.”

HAVE YOUR SAY: Is Fonterra’s payment system fair? Comment below.

The North Fresh offer comes as Fonterra cut the final farmgate price to most of its suppliers from $6.20/kg MS at the start of the season to $6.10/kg MS in October and $6.05/kg last week.

In a letter to suppliers on February 11 announcing its final season price would be $6.05/kg, Fonterra Australia managing director Rene Dedoncker said “to ensure we have a sustainable business, our milk price needs to reflect what can be earned in the market”.

UDV vice-president John Keely said the Fonterra offer created a two-tier system, similar to that which operated in Queensland and northern NSW, which was not popular among those states’ dairy farmers.

“This is not good for the industry,” Mr Keely said.

“There is no incentive to produce milk above the contracted minimum.

“It all seems very reactionary to them losing milk (to other dairy processors in northern Victoria).

“They have lost a lot of milk, especially to Parmalat.”

The Fonterra supplier said it was “unfair” to offer the extra payments to its farmers in one part of the state and not in others, particularly after announcing its final payment for the season.

“They dropped the closing price from $6.10/kg MS to $6.05/kg,” the supplier said.

“We will not get another step-up for the rest of the season, no matter what the GDT (Global Dairy Trade) does.

“All the money will go towards supporting those big farmers (who sign North Fresh contracts).

“We should have all stepped up to $6.30/kg MS.

“They have kind of written off the little guys.”

Mr Keely said Fonterra wanted a flat milk supply to fill its factories.

“But the best way to do that is to pay a higher price across the board,” he said.

Any claim arising from the information contained on the eDairy News website will be submitted to the jurisdiction of the Ordinary Courts of the First Judicial District of the Province of Córdoba, Argentine Republic, with a seat in the City of Córdoba, to the exclusion of any another jurisdiction, including the Federal.

Source: The Weekly Times

Oversupply of Milk Continues to Erode Wisconsin Dairy Farmers’ Bottom Line

Latest Data Shows Wisconsin Dairy Farmers Paid Higher Trucking Costs In 2018

Increased trucking costs for Wisconsin dairy farmers is the latest symptom of an oversupply of milk.

The Upper Midwest Federal Milk Marketing Order recently released a report on milk hauling charges paid by farmers in 2018.

The report found the average charge per hundredweight, or 100 pounds of milk, in Wisconsin was $0.24, a 40 percent increase from 2017.

Corey Freije is an agricultural economist who compiles the report for the Upper Midwest Order. He said hauling charges typically increase by 1 or 2 cents every year, so last year’s 7 cent jump is unusual.

“That is partially a result of an increase in the diesel fuel costs,”  Freije said. “But it also seems to be an indication that the dairy farmers, with the supply that’s out there, have kind of lost their market power.”

With plenty of milk to go around, Freije said dairy processors don’t have to subsidize the cost of hauling milk as a way to attract farmers.

“The handler, particularly a co-op, would subsidize that hauling (charge),”  Freije said. “I’ve heard over time that the handlers and some of the co-ops want to reflect more fully the cost of the hauling to those deductions for dairy farmers.”

Mark Stephenson is director of dairy policy analysis at the University of Wisconsin-Madison. He said the 7 cent jump in the average hauling charges likely had a big impact on farms, especially given the continued low price for milk.

“You can’t influence price very much,” Stephenson said. “What you really can do is make sure that you’re a low-cost producer and so farmers, dairy farmers, corn growers, spend a lot of time trying to be sure that they are shaving costs. And for them, costs get down to pennies per hundredweight.”

As consolidation continues within the dairy industry, Stephenson said farmers will likely have to take on more production costs like trucking to stay competitive.

 

Source: WPR

Wintry weather takes a toll on US dairy industry

The U.S. Department of Agriculture issued its latest World Agricultural Supply and Demand Estimates report on Feb. 8. The report was not issued in January due to the government shutdown. The 2018 milk production estimate was lowered based on available data through December. The 2019 forecast was reduced on lower expected first-half dairy cow numbers and continued slow growth in milk per cow.

Cash cheese prices continued to strengthen in the Valentine’s Day week as traders anticipated the Feb. 19 Global Dairy Trade auction and the shortened President’s Day holiday week. The week will include Milk Production reports for December and January and December Cold Storage data.

Cheddar blocks climbed to $1.5925 per pound Feb. 13, the highest CME price since mid-October 2018, but closed Feb. 15 at $1.58, up 5.25 cents on the week and 4 cents above a year ago. Barrels finished at $1.4350, up 6.25 cents on the week, the highest since Sept. 13, 2018, but 4.5 cents below a year ago when they jumped 12 cents, and are at an unsustainable 14.5 cents below blocks. Sales for the week included six cars of block and 20 of barrel.

 

The West received its own version of arctic weather last week, with cold and snow causing more than the usual challenges. More than 1,800 dairy cows died in the Yakima Valley of eastern Washington, according to the Yakima Valley Dairy Farmers Association, where low temperatures and high winds took a huge toll.

The Feb. 12 Daily Dairy Report points out that “the increase in U.S. cheese prices has been augmented by the dollar, which continues to gain ground against the Euro, New Zealand dollar and Mexican peso. The strong dollar makes U.S. cheese more expensive when the price is converted to importers’ currency. Tariffs put U.S. cheese at a further disadvantage in Mexico and China,” according to the DDR.

Winter weather remains the topic of discussion among Midwest cheesemakers, according to Dairy Market News. Cheese production remains slower as plant managers work on inventories and weather-related production stoppages have slowed or stopped production in some cases. Contacts suggest cold weather and snow in the upper Midwest were affecting both milk and cheese deliveries.

Western cheesemakers stated that new business deals are harder to come by and demand for American-style blocks and barrels is slow: “Buyer interest seemingly ebbs and flows as the market price for cheese rises and falls. Cheese is moving steadily through regular contracts, but contacts say there does not seem to be anything right now that will give a boost to sales.”

As to the strength in cheese prices, some contacts suggest that fourth-quarter consumption was better than expected and the industry is seeing a bit of a refill from the winter holidays and Super Bowl. Others say marketers are getting prepared for upcoming export tenders, while others believe more cheese is moving into aging programs. They agree that inventories are long and “demand does not seem to be at levels hoped for.”

Some say the absence of market production and stock number reports due to the government shutdown made it difficult to get a picture of supply and demand. Manufacturers say cheese output is running mostly seven days per week, but winter storms slowed cheese output in some regions due to challenges transporting milk and the need to refill the pipeline following the storms.

Interestingly, California cheese output is likely starting to slow, according to the Daily Dairy Report’s Sarina Sharp. Writing in the Feb. 8 Milk Producers Council newsletter, Sharp says “cheese processors in the nation’s largest dairy state are now paying more for milk using the Federal Milk Marketing Order formula than they would have under the previous rules.

“Dairy Market News reports many manufacturers are running full schedules at their cheese facilities, but some contacts suggest a few processors are starting to ease back on cheese production and diverting milk intakes toward Class IV uses. That’s excellent news for California dairy producers, in particular, and for dairy product prices, in general,” according to Sharp.

“The shift in the product mix will mean a greater share of California dairy producers’ milk checks is based on the much higher Class IV price. Incrementally lower cheese output will slowly lift cheese prices relative to where they would have been had California stuck with its previous milk pricing formulas. Of course, the reverse is true for milk powder pricing,” Sharp concludes.

Cash butter saw its Feb. 15 price at $2.25 per pound, down 4.5 cents on the week but still 15 cents above a year ago. Twenty-four cars exchanged hands on the week. Grade A nonfat dry milk saw the week’s closing at 98.75 cents per pound, down three-quarters cent but 28.25 cents above a year ago. Thirty cars exchanged hands on the week, 23 on Feb. 14 alone, the highest single-day total since April 25, 2018.

Dry whey closed Feb. 15 at 35.25 cents per pound, down 1.25 cents, with 42 cars finding new homes on the week, a single-day record 15 on Feb. 13.

Plummeted dry whey shipments to China have pulled whey prices lower. FCStone reports that African swine fever has reduced soy meal demand in China and some estimates say meal feeding is off 20 percent. African swine fever has also been detected in Japan.

FCStone warns: “This issue will get worse before it gets better. How much damage will be done to China’s 700 million-plus hog herd and how long will it take it to recover is still unknown. Some analysts think it could take six to seven years for China’s hog herd to fully recover.”

The Dairy and Food Market Analyst says dry whey shipments to China have fallen 20 million pounds, or 40 percent. Total exports of whey products have decreased 18 percent and exports of milk powder were down 13 percent.

The Trump administration released its proposal to update the Waters of the U.S. Rule water quality regulation on Valentine’s Day. There will be a 60-day public comment period on how the Environment Protection Agency and the Army Corps of Engineers will regulate waterways under the Clean Water Act.

Bob Gray, editor of the Northeast Dairy Farmers Cooperative’s newsletter, reported that the update would “replace the rule that was promulgated in 2015, which proved to be confusing and vague in its provisions for compliance by the agriculture community.” EPA will also hold a public hearing on the new rule.

 

Source: Leader-Telegram

Australian Ag Minister calls for boycott over cheap milk

Agriculture Minister David Littleproud has taken aim at Coles and Aldi, telling shoppers to boycott the chains until they stop selling cut-price milk.

The federal agriculture minister has savaged Coles and Aldi for keeping their cut-price milk lines and has urged customers to boycott them.

David Littleproud has accused Coles of “pretending” to be a decent corporate citizen, and Aldi of “hiding under the stairs”, after they failed to follow Woolworths and stop selling milk at $1 a litre.

Dairy farmers struggling with drought need an end to Australia’s “$1 milk disaster”, he said, a price war that began eight years ago and has been blamed for sending some farmers to the wall.

“Publicity stunts like (Coles) asking shoppers to donate at the counter to help struggling farmers are just a smokescreen to hide the fact they pay bugger all for milk,” Mr Littleproud said.

“The farmers wouldn’t need donations from the public if Coles and Aldi paid fair prices. The big German needs to come out from hiding under the stairs and face the Australian public.”

On Tuesday, Coles said it would not axe it’s $1-a-litre Coles-branded milk, citing cost of living pressures on customers.

It said it would look for other ways to help farmers, including collecting customer donations it would match dollar for dollar from next week.

It also pointed out it had committed $16 million over the past six months to support diary farmers, and promised to continue liaising with the industry and the Australian Competition and Consumer Commission (ACCC) on future initiatives.

But the minister said Coles had been saying that since August.

“So now it’s time to put up or shut up. Act like a decent corporate citizen instead of just pretending to,” he said.

On Tuesday, Aldi said low prices were a core promise to its customers and gave no indication that its pricing policy would change.

It said it sourced its milk from processors, not farmers, and it expected processors to pay primary producers a sustainable price.

“Aldi can best support the long-term sustainability of the dairy industry by accepting price increases from milk processors that reflect difficult market conditions, thereby facilitating its milk processors to pay sustainable prices to dairy farmers,” managing director Oliver Bongardt said.

Mr Littleproud said Australians should send a message with their wallets, and switch their business away form Coles and Aldi.

Woolworths stopped selling its home-brand milk at $1 a litre on Tuesday, upping the price by 10 cents with the extra money to go back to farmers.

Source: SBS News

February’s Dairy Data Dashboard

The February Dairy Data Dashboard is now available.

 Dashboard February2 (2)-1


Want more dairy data?

  • Go here and scroll down page, past the dashboard, to dig deep into our interactive charts.
  • Get an email alert when the latest Dairy Data Dashboard publishes mid-month by subscribing to the U.S. Dairy Exporter blog here.
  • Delve into USDEC’s frequently updated interactive charts showing market and trade data here

The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. 

 

Sicamous farmer’s A2 milk could help those with trouble digesting dairy

The milk which contains no A1 beta-casein, a cause of digestive problems for some, hits stores soon

A Sicamous dairy farmer may have tapped into a way for people who have trouble digesting dairy to enjoy milk.

Nic Dewitt says for some people whose stomachs have been upset by dairy in the past, the A2 milk his cows produce at Dari Delite Farm could be the answer.

“We actually read an article about a company doing it in Australia, and it’s the fastest-growing fluid milk product in the world,” Dewitt said

“The big thing that caught our attention was they claim 50 per cent of people that are diagnosed lactose intolerant are actually sensitive to the protein in the milk.”

The protein in question is beta-casein, which occurs in a form called A1 and in the A2 form, which gives the variety of milk its name. Sensitivity to the A1 form of beta-casein carries many of the same symptoms as lactose intolerance.

Dewitt said dairy cows naturally fall into one of three groups: those whose milk contains only A1 beta-casein, those whose milk contains only A2 or those whose milk contains both.

He said he took tissue samples from his cows and had them analyzed for genetic markers that indicate what type of beta-casein each cow’s milk will contain and from there built a herd of entirely A2 producers.

The first test case for Dewitt’s A2 milk was his wife Lindy.

“She was never diagnosed lactose intolerant but what happened was about a year ago she wasn’t able to digest it properly. She started getting symptoms like stomach irritation,” Dewitt said.

Lindy’s doctor suggested cutting dairy out her diet so she did until she had the opportunity to try the A2 milk. Dewitt said his wife had none of the symptoms she had been suffering from after trying the A2 milk.

“As soon as she tried it I knew it would work for other people,” Dewitt said

Dewitt said about 10 people with sensitivity to most milk have tried his, and nine of the 10 had no symptoms.

The A2 milk still contains lactose so it will not help those who are actually intolerant to it, but Dewitt thinks there are a lot of people out there who will be able to enjoy A2 dairy in their diets who haven’t been able to before.

Dewitt said he is aware of other farmers testing their herds for the cows’ beta-casein types but to the best of his knowledge, he is the first in Canada to be processing A2-only milk.

The milk from Dewitt’s cows will be processed and sold by D Dutchmen Dairy in Sicamous. Dewitt said customers will be able to request the A2 milk at any store which carries D Dutchmen products and both Salmon Arm Askews locations as well as D Dutchmen’s on-site store, which will be stocking it as soon as it is ready for the market on Feb. 20.

 

Source: Salmon Arm Observer

Fonterra signs up farms to supply The a2 Milk Company

Starting today, Fonterra is signing up farms to supply milk for The a2 Milk Company in the 2019/2020 season.

Mike Cronin, Fonterra Managing Director of Co-operative Affairs, says “Signing up New Zealand farms to significantly increase supply of high quality milk to The a2 Milk Company is a positive step forward. It clearly shows the strength of our strategic relationship, and our shared commitment to fast-track market growth and enable farmers to create additional value from their milk.”

The Co-op’s initial milk pool will be based in the Waikato around its Hautapu site and will support the production of ingredients. It is anticipated around 100 farms will be needed for next season.

Jayne Hrdlicka, The a2 Milk Company Managing Director and CEO, says “The a2 Milk Company is pleased to be making progress on our relationship with Fonterra. These farms will help support new growth areas for our company across existing and new markets. This is the next step in what we believe will be a fruitful long-term relationship with tremendous potential.”

The location of the milk pool was determined by several factors. Most importantly, the site needed the ability to manufacture the specific product in demand, produce relatively small batches and adapt easily to any product demand changes.

“While other regions were thoroughly considered, ultimately the decision must be demand-led. The ability to efficiently manufacture a range of products to meet that demand was the over-riding factor in choosing a site. As demand and product lines grow, we’ll look to expand the milk pool to enable more farmers to participate,” said Mr Cronin.

Most of the value from the relationship with The a2 Milk Company will be returned to all Co-op farmers through the dividend. Participating farms will also receive a premium for their milk.

Today’s development follows the national launch of the a2 Milk™ brand by Anchor from late September 2018.

 

Source: Fonterra

Pennsylvania Dairies Have Advantages Over Idaho

As tough as times are for dairy farmers in Pennsylvania, farmers in Idaho in some ways have even fewer protections, according to a farmer who knows both states.

Pennsylvania native John Brubaker, owner of Knott Run Dairy in Buhl, Idaho, compared the two states on Feb. 6 during the Pennsylvania Dairy Summit at the Lancaster County Convention Center.

Idaho is the nation’s third largest milk producer, Pennsylvania the seventh.

Brubaker is a third-generation dairy farmer who got his start on a 77-cow tie stall in Lancaster County and was named a Pennsylvania Master Farmer in 1988.

He left for Idaho that decade at a bleak time for Pennsylvania dairy farmers.

He found himself in a place where farmers have less pricing power than in his home state.

Only the northern tip of Idaho is part of a Federal Milk Marketing Order. Most of the cows are in southern Idaho, outside the federal order.

By comparison, southeastern Pennsylvania is part of Federal Order 1, which covers several northeastern states, while western Pennsylvania is part of Federal Order 33, which covers part of the Midwest.

Federal orders are designed to assure dairy farmers a reasonable minimum price for their milk and prevent wild fluctuations in consumer milk prices throughout the year.

“When you have an unregulated area, you tend to have cheap milk,” Brubaker said.

That’s made the area attractive to processors, including foreign companies like Ireland-based Glanbia.

Dairy farmer cooperatives, however, don’t have much of a foothold in Idaho.

There are a few farmer-owned processors like Idaho Milk Products, which three of the nation’s largest independent dairy farms opened in 2009 after being frustrated by low milk prices.

Unlike the large corporate processors, Idaho Milk Products allowed Brubaker to show photos of its plant during his presentation.

“That is the difference you get versus some of the foreign processors,” he said.

Idaho does have a history of edginess about the representation of its dairy industry.

It is one of several states that, peeved by undercover investigations by animal-welfare groups, passed a law to make secret recordings or photography of farms illegal.

In Idaho and other states, these “ag gag” laws have largely been struck down for abridging free speech rights.

Brubaker said Idaho farmers haven’t gotten as much help as they’d like from the dairy checkoff.

So in 2017, they created a new checkoff-funded nonprofit, Dairy West, that does promotion, education and advocacy for Idaho and Utah farmers.

Brubaker is the group’s vice president.

Idaho’s climate is also a lot different from Pennsylvania’s.

Brubaker’s area usually gets about 9 inches of rain a year, including snow melt.

Millersville University’s weather station near Lancaster, Pennsylvania, collects an average of 41 inches per year.

“We enjoy the sun. We take advantage of it,” Brubaker said.

His cows can be outside pretty much every day of the year.

There’s plenty of shade for the cows, though, when temperatures reach 90 degrees or more in July.

Compared to Pennsylvania soils, Idaho’s are more alkaline and need sulfur fertilizer along with lots of irrigation.

Brubaker can usually take off five cuttings of hay per year. His crop rotation is silage, alfalfa, orchardgrass and wheat.

Pennsylvania got to show off one of its advantages when the state Milk Marketing Board held a listening session during the summit.

Board chairman Rob Barley listened to attendees air their grievances and offer ideas for improving the industry’s beleaguered state.

Farmers and industry professionals agreed that dairy needed a more cohesive message in talking with consumers and retailers.

“The stronger, the more unified, the more people we have behind that voice, that helps,” said Gail Street, senior vice president of the American Dairy Association Northeast.

Moderator Caroline Zimmerman said that all dairy farmers need to be self-marketers, using social media and hosting farm tours to create connections that consumers want with their food producers.

“We live in a feeling-based society,” Zimmerman said.

Source: lancasterfarming.com

Fonterra and Synlait in war of words over dairy reform

No caption

Fonterra has strongly rebutted claims made by Synalit on its decision-making. Photo: rnz

In a strongly-worded comment, the listed dairy company Synlait accused Fonterra of “unilateral and arbitrary” decisions that “manipulate” the price of milk paid to the farmers who produce it.

Fonterra strongly rebutted this claim, saying it was overseen by the Commerce Commission, unlike Synlait.

This debate arose after the Dairy Industry Restructuring Act (DIRA) review began.

This review looked at two-decade-old rules governing many aspects of the dairy industry.

The rules were originally set up to stop Fonterra from exploiting its market dominance.

In a submission on the reform process, Fonterra said there was now plenty of competition, so many of those rules could be relaxed.

But Synlait’s submission accused Fonterra of often paying more to farmers than market conditions for milk said it should.

It funded this higher price by sacrificing the value of its own shares.

“The system enables Fonterra to make unilateral and arbitrary choices about the allocations of earnings between milk price and capital,” Synlait said.

“There is a lack of transparency, effective oversight and accountability in the way Fonterra sets the milk price.”

Synlait said these problems tilted the playing field in favour of Fonterra, at a cost to independent dairy companies, and hampered the goal of having a fully contestable milk market.

To fix this, Fonterra should be required to give detailed explanations every time it changed its prices, and have them overseen by an independent panel.

But Fonterra has rejected the allegations against it, turning the accusation back on Synlait.

Its chairman John Monaghan said it was in the interest of “non co-op competitors” to pay farmers as little as possible for their milk, in some cases, using “complex and obscure pricing structures”.

Mr Monaghan said his company provided plenty of documentation of its decisons – it was required to maintain and publish a Milk Price Manual, which described how the base milk price was calculated.

 

This manual was in turn overseen by the Commerce Commission.

In addition, rules requiring milk price transparency should be imposed on all processors, not just Fonterra, so “farmers can compare apples with apples and be paid an honest milk price.”

In a related development, New Zealand’s second largest milk firm, Open Country Dairy, has filed legal action against the Commerce Commission’s oversight of Fonterra’s milk price calculation for 2017-18.

In earlier submissions to the reform process, Fonterra said there were many other problems with the existing regime.

One of these was a requirement for the company to buy milk from any farmer who wanted to sell it – a rule known as the Open Entry provision.

That meant Fonterra had to invest in expensive infrastructure for bulk storage of milk that it did not always want, sometimes produced by farmers whose environmental standards fell short.

Forest and Bird argued the obligation to buy milk allowed the dairy industry to intensify beyond natural business limits, and also put a huge burden on the environment.

It noted Fonterra’s own statement that it would prefer not to see dairy expansion in the Mackenzie Basin, but if the farms were there, they had to be traded with.

Forest and Bird said the Mackenzie Basin’s ecosystem and others should be protected.

Fonterra Shareholders Council produced submissions, which echoed many of those from Fonterra management.

It also wanted an end to Open Entry and for all milk processors to be subject to the same scrutiny that Fonterra is.

Source:radionz.co.nz

Open Country challenges validity of Fonterra’s milk price

Open Country Dairy is seeking a judicial review of the way Fonterra Cooperative Group set its milk price in the 2018 season, despite the Commerce Commission giving the price-setting process a pass mark.

The commission noted the judicial review on its website, saying Open Country Dairy brought proceedings against certain conclusions in its 2018 report.

In that report, the regulator was satisfied that Fonterra’s calculation was largely in line with the efficiency and contestability elements required by law governing the dairy sector. However, it was also of the view that Fonterra’s asset beta – used in calculating the cost of capital for a milk processor – was too low, meaning the dairy giant ended up paying its farmers a higher price for their milk than warranted under the law.

Open Country’s submissions on the report were that the beta was too low and that Fonterra’s sales outside the Global Dairy Trade platform were too opaque.

The country’s second-biggest milk processor also told the commission that independent processors were limited to investing in areas where they can earn a viable return, and that Fonterra’s dominance meant that there wasn’t a contestable market.

The regulator disagreed with that submission in the report, saying it didn’t consider that Fonterra can use its market position to lower farmgate prices below competitive levels or restrict independent processors from accessing raw milk.

Those questions are among those up for review, with the Ministry for Primary Industries analysing 188 submissions on proposals to change the Dairy Industry Restructuring Act, which enabled the formation of Fonterra.

In its submission, Fonterra noted Open Country’s and Synlait Milk’s concerns over the way the base milk price is set. Fonterra said the status quo is working and is transparent.

Fonterra acknowledged Open Country’s judicial review in its submission, saying the claims were on issues the smaller processor had already raised during the review.

“We consider that OCD’s claims have little merit and are joining the proceedings to defend the decisions of the commission that are being challenged,” Fonterra said in its submission. “OCD’s ability to do this is another element of the checks and transparency in the regime.”

Source: nzherald.co.nz

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