Canada’s $1.75-billion compensation package for dairy farmers will be based on “hypothetical losses” rather than hard evidence of lost profits due to trade deals, food policy analysts say.
What’s more, the payouts risk exacerbating competitiveness issues in the industry by failing to link compensation to productivity benchmarks.
“We’re setting out $1.75 billion to ‘quote-unquote’ compensate dairy farmers without really having a strategy to understand what the implications are from a trade perspective,” said Sylvain Charlebois, a professor in food distribution and policy, and scientific director of the Agri-Food Analytics Lab at Dalhousie University. “That’s a key thing. We know that market access will increase and it’s likely we’ll need less domestic milk but we don’t know how much. So we’re just writing cheques.”
The package for dairy farmers, unveiled by Agriculture Minister Marie-Claude Bibeau on Friday, is intended to offset lost sales caused by the expanded market access granted to foreign producers under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Those pacts will open up roughly eight per cent of Canada’s highly protected dairy market, where prices have long been kept high by a complex system of supply management involving production quotas, fixed prices and import tariffs and quotas.
Supporters of the system say it is critical to ensure U.S. products don’t flood across the border, threatening food sovereignty and putting Canadian dairy farmers and farms at risk of being pushed out by competition. Critics point out that Canada is the last industrialized country to operate such as system and its dairy industry has failed to keep up with some of the productivity gains and expansions that have taken place in other countries. It also raises prices for consumers, they argue.
A 2014 study by the IFCN Dairy Research Center at the University of Kiel in Germany found the cost of milk production by mid- and large-size farms in Canada was the second-highest in the world after Switzerland.
With that in mind, the government’s compensation dollars would have been better spent if they were tied to clear sustainability and competitiveness goals, Charlebois said.
… if we want to keep (the quota system) we have to make sure it’s serving the country well
Sylvain Charlebois, scientific director of the Agri-Food Analytics Lab at Dalhousie University
“I’m not saying we should get rid of our quota system, but if we want to keep it we have to make sure it’s serving the country well,” he said. “Some dairy farmers are doing very well and reinvesting in their farms and becoming more competitive, but others are just drifting and that’s costing a lot of money. If farmers want to stay in the industry they should be made accountable for their productivity or they should be enticed to exit.”
The market access granted under Canada’s latest trade deals represents a direct loss of profits that the government promised to cover, said Murray Sherk, chair of the board for the Dairy Farmers of Ontario.
“Dairy doesn’t like to look to the government for payments; we’d rather have the market share but we’re very pleased with the package,” he added. “And supply management provides a system of predictable pricing that encourages farmers to invest more in their operations, to be more efficient.”
The extra cash flowing into dairy farms comes when they are already overcapitalized — creating a problem for the next generation of farmers, said Al Mussell, research lead at Agri-Food Economic Systems in Guelph, Ont. Indeed, though an ideal return on assets like land and equipment is roughly five per cent, the data suggest Canadian farmers are currently realizing returns of just two to three per cent.
“They’re over-capitalized and drowning in their own capital,” Mussell said. “That might not seem like a problem but it’s sitting there in the land and all these assets. When it’s time to transfer the farm to the next generation, how are they going to afford it?”
The federal cash injection also comes as Canada’s grain farmers are struggling with depressed prices and demand due to the trade wars, he added. Ottawa granted grain farmers hit by direct Chinese trade measures an extra six months to repay cash advances under the Advance Payments Program. The government also strengthened the APP by increasing the maximum loan limit for all farmers to $1 million from $400,000 with additional interest-free loans for canola producers.
“Grain farmers could be in for a long haul of low prices and a sobering trade outlook,” said Mussell. “They look at this and say dairy farmers got $1.75 billion and what did we get? Debt.”
The Tillamook County Creamery Association, an Oregon-based farmers’ co-op, is facing accusations of misleading its customers with deceptive marketing campaigns.
The Animal Legal Defense Fund, a national animal rights organization, filed a proposed class action lawsuitagainst the mega-dairy Monday, accusing the association of tricking consumers into thinking their products are sourced from small, local dairies within Tillamook County.
In reality, the suit says more than two-thirds of the co-op’s milk comes from one massive farm in Eastern Oregon.
A Tillamook Dairy milk truck driver prepares to leave after delivering two tanker truck loads of milk to Alpenrose Dairy in Beaverton, Ore.,
Threemile Canyon Farms’ 25,000 dairy cow complex is the most industrialized in the country, according to defense fund attorneys. The farm boasts robotic carousels that allow for round-the-clock milking and computerized tracking of every calf. The dairy produces more than 1.4 million pounds of milk each day, according to the Threemile website.
ALDF lawyers say the farm isn’t just high-tech, but borders on inhumane. The complaint alleges cows are kept in industrial warehouses “where they stand on concrete or in their own waste” and are banned from grazing. The filing also cites federal records showing milk from the farm has often come out of infected udders.
Representatives for Threemile Canyon Farms are reviewing the lawsuit. Tillamook released a statement saying the co-op is proud of its 20-year relationship with Threemile.
“Our farmer-owners and suppliers all take good care of their animals not only because it is their livelihood, but because it is the right thing to do,” the statement reads. “The size of the farm does not dictate the quality of care.”
But ALDF attorneys say Tillamook’s advertising has intentionally obfuscated that a massive industrial farm counts itself as a co-op member.
“If you take a look at their uniform marketing campaign, you see things like cows on rolling green hills in Tillamook County in red barns, and kids helping take care of really small herds of dairy cows,” says Amanda Howell, a staff attorney at the legal defense fund, who is assisting with the suit. “That is incredibly misleading.”
Howell says the legal fund commissioned a survey of a little more than 1,000 consumers spread across Idaho, Montana, Oregon and Washington. The majority believed Tillamook purchased its dairy from small-scale family farms.
The suit accuses the dairy company of making money through misrepresentation. It cites a 2017 interview in which Tillamook’s CEO Patrick Criteser said revenues grew by 70% after the launch of their “Dairy Done Right” campaign.
Customers “purchase [Tillamook] to avoid industrialized finding, to avoid factory farms when Tillamook represents the epitome of factory farms,” says Howell.
The class action suit is filed on behalf of four plaintiffs who purchased Tillamook dairy products from supermarkets. All told legal fund attorneys they had been willing to pay extra for products from small dairies that they believed treated animals humanely. All thought Tillamook “aligned with [their] values.”
Had they known that much of their cheese, butter, ice cream, sour cream, and yogurt was sourced from a large factory farm, all said that they would either have paid less for it — or never bought it in the first place.
Howell says the defense fund is currently seeking an injunction that will force Tillamook to change its marketing style. In one month, they plan to amend the lawsuit allowing for claims for damages.
“Do you know that 128 million tons of dairy products are dumped every year globally? I am really upset by such a tremendous amount of dairy waste,” Mi Terro founder Robert Luo explains to me, “our goal is to educate the public that we are consuming too many dairy products and we need to cut down on our food waste.” In his bid to tackle the waste from the dairy industry, the sustainable entrepreneur saw an opportunity to upcycle the unused milk that would be thrown out and turn it into a high-quality shirt.
The new technology from Mi Terro uses waste milk to create an environmentally-friendly t-shirt.
Sustainability Through Innovation
The entire milk-to-clothing process takes about two months to complete with one glass of milk corresponding to five shirts. Mi Terrocollects milk from its dairy farm partner, skims it to remove fats before dewatering it to become powdered milk. It is then dissolved and purified to remove and substances that are not casein – the proteins that make up a large proportion of milk. Once the casein is isolated, it is immersed in an alkali solution and passed through a spinneret to solidify the proteins into fibers. After this, it is removed from the alkali solution and the fibers are stretched, spun into yarn and ready to be used in the manufacturing of clothing.
“There are only two manufacturers in China that has the craftsmanship and capability to turn unwanted milk into clothing fabric,” Luo continues, “Our next step is partnering with supermarkets, so we can collect the so-called expired, or past sell date, milk from them.” Upcycling milk to turn it into shirts isn’t Mi Terro’s first foray into sustainable fashion, having previously createda travel bag made from ocean plastics and natural cork. “Mi Terro’s vision is to make Earth green again. In order to do so, we need to teach people to shop eco-friendly products and to live with minimal waste. We want to make green fashion affordable to almost everyone.”
As part of its goals for sustainability, Mi Terro partners with the Eden Reforestation Projectto plant 10 trees for every product they sell, planting over 2,700 so far. The Eden Project is a non-profit that operates eighty different sites in five different countries. Intending to provide fair wage employment to impoverished villagers by enabling them to become foresters, they seek to reduce inequality, increase local biodiversity and protect the environment. Mi Terro has committed to planting a million trees with the Eden Reforestation Project in the next five years.
Investing in the Future
As an example of sustainable development and green innovation that reduces waste, raises awareness of environmental issues and promotes conservation, Mi Terro is part of a new generation of responsible startups that want to create a better world on top of providing a high-quality product. As Luo illustrates: “I want my children and grandchildren to live in a world where they don’t have to count days of blue sky, wear a face mask to school, or learn about beautiful animals that only exist in the textbook.”
Responsible companies and consumers ensure a more sustainable business market that spurs more innovation and helps startups like Mi Terro to pioneer new products and pathways to reach them. With people striving to become more sustainableand companies beginning to transition towards more environmentally-friendlybusiness models, there has been a shift towards reducing waste and sourcing sustainable resources. Being aware of the issues and challenges created by consumerism goes a long way in shaping the decisions people make regarding their own habits.
Investing in the future of the planet through responsible products will not only reduce waste but help raise awareness about how people can live more sustainable lives. Mi Terro’s Kickstarter for its upcycled milk shirt was funded within two hours of launching and will continue to be open for pledges until September 15, 2019.
The U.S. Department of Agriculture (USDA) today announced that producers of nearly 17,000 dairy operations have signed up for the Dairy Margin Coverage(DMC) program since signup opened June 17. Producers interested in 2019 coverage must sign up before Sept. 20, 2019.
DMC offers protection to dairy producers when the difference between the all-milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer.
“We’re encouraged by the number of dairy producers who have signed up for this new program, but we are hopeful that we will get more folks in the door,” said Bill Northey, USDA’s Under Secretary for Farm Production and Conservation. “At this point in the signup process, we are well ahead of the number of producers covered at this time last year under the previous safety net program, with more producers enrolling every day. As we move into the homestretch, we expect more producers across the country to get coverage through DMC and our team at FSA is really going above and beyond to make sure we get the word out there, the returns this year to-date should speak for themselves.”
In June, when the DMC signup was announced, Secretary Perdue said, “For many smaller dairies, the choice is probably a no-brainer as the retroactive coverage through January has already assured them that the 2019 payments will exceed the required premiums.”
To date, more than 60 percent of dairies with established production histories have enrolled in the program. Wisconsin has seen the most participants with more than 4,832 dairy operations, followed by Minnesota (1,865), New York (1,779), Pennsylvania (1,511) and Michigan (702).
USDA’s Farm Service Agency (FSA) began issuing program payments to producers on July 11. DMC provides coverage retroactive to Jan. 1, 2019. The producers who have signed up to date will receive more than $219.7 million in payments for January through June, when the income over feed cost margin was $8.63 per hundredweight (cwt.), triggering the sixth payment for eligible dairy producers who purchased the $9 and $9.50 levels of coverage under DMC.
To view weekly enrollment, production and payment reports (posted each Monday at 2 p.m. Eastern), visit FSA’s DMC webpage.
It said the payment covered the final part of a deferred bonus dating back to 2017 and Mr Spierings’ final remuneration for this year including his base salary, superannuation, and holiday pay.
Mr Spierings’ annual annual salary was $2.5m a year but he earned over $8m for each of the last two years with bonuses.
Regional Economic Development Minister Shane Jones called the amount “offensive” considering the role Mr Spierings played in “bringing our national co-operative to its knees”.
“The fact that the directors signed a contract, enabling him to wander off with such a gross amount of money which he never earned, and we in New Zealand are left with this fiscal carnage. It’s just beyond belief.”
He called the Fonterra board “dysfunctional” and said it seemed incapable of reigning in corporate excess.
“I can tell you today that the Dutchman, the former CEO, is celebrating a famous Dutch saying, ‘It’s as if an angel is peeing on your tongue’. But he’s richly relieved himself on the tongue of Fonterra and the rest of us in New Zealand, not just farmers, are left with the cost.”
Regional Economic Development Minister Shane Jones. Photo: RNZ / Dom Thomas
Simplicity managing director Sam Stubbs said Mr Spierings should give the money back.
“It would be the honourable thing to do. Of course, there’s a contractual obligation there, which means he probably doesn’t have to. And given that he’s no longer working in New Zealand I wouldn’t expect him to.
“But it would be very nice if he did, given that the decisions he was involved with clearly have, effectively, destroyed so much value over a long period of time.”
Mr Stubbs said the case highlighted a fundamental problem with executive compensation, when someone could receive millions of dollars “at a time when so much farmer value and shareholder value has been lost”.
Agricultural economist Peter Fraser said while Mr Spierings certainly made some big mistakes, Fonterra’s problems couldn’t only be put down to him.
“They seem to blame everything that’s gone wrong, either directly or indirectly, on Theo Spiering.
“Look, Theo’s made some whoppers, but he’s not entirely to blame. Fonterra’s Australian business has been a dog for years. Farmers have complained about it for years because it doesn’t make cost of capital.
“The fact that they have droughts over there and the fact they have had to close down down a plant. That’s not Theo’s fault.”
A Fonterra statement said the incentives scheme which gave Mr Spierings his bonuses has been discontinued.
Milk futures on the Chicago Mercantile Exchange were lower Monday ahead of a mostly neutral milk production report. Class III milk continued a lackluster performance as grains fell. August was unchanged at $17.62, September fell 7 cents to $17.78, and October fell 5 to $17.78. The Aug – December average is at $17.52/cwt. 2020 markets were also weaker, falling 5-9 cents for Jan- March and averaging $16.49/cwt.
Dry whey up $0.0050 at $0.37. Blocks up $0.0275 at $1.9075. Two trades were made at $1.9050 and $1.9075. Barrels down $0.0150 at $1.75. Eight trades were made ranging from $1.75 to $1.76. Butter down $0.01 at $2.33. Two trades were made at $2.33 and $2.3325. Nonfat dry milk unchanged at $1.03. One trade was made at that price.
Grain and feed markets fell again on Monday. December corn fell 6 ¼ to $3.74 ½, November soybeans fell 13 ¼ to $8.66 ½, and Soybean meal fell $2.90 to $292/ton.
Holstein Association USA launches Red Book PlusTM Online, a web-based bull search and information program. Users can quickly and easily find comprehensive information on Holstein bulls, build and save tailored lists based on criteria that is important to them, and create customized selection indexes to rank bulls.
“One of the most important decisions dairy producers can make in terms of improving their herd genetics is selecting the right bulls to use,” said Lindsey Worden, Holstein Association USA Executive Director of Holstein Genetic Services. “Red Book Plus Online provides modern, flexible and customizable searching and reporting tools to help Holstein breeders find those right bulls to fit their goals. Our program is designed to not just allow users to simply find information, but also help them interpret and understand it. Breeders have been asking for an update to our Red Book Plus software program for some time now, and we are thrilled to make this available today.”
Red Book Plus Online is backed by the power of the Holstein Association USA herdbook – the gold standard in stewarding pedigree, genetic and performance information for Holstein cattle. Users will find complete information on all genetic traits, pedigree information, ancestor and progeny performance information, and more, for over 50,000 bulls, including the thousands of bulls being marketed by artificial insemination companies today.
Video user guide tutorials are available for every aspect of the program, helping new users get acquainted with all the tools and features at their fingertips. Because it is web-based, Red Book Plus Online can be accessed from any computer, tablet or smartphone with an internet connection.
Anyone with a current subscription to the desktop software version of Red Book Plus/MultiMateTM may create a log-in for no additional fees. Other new users may subscribe to Red Book Plus Online for $99 per year, billed as three payments of $33 at each official genetic evaluation. Access to Red Book Plus Online is an option for those enrolled in Holstein COMPLETE®.
For more information, visit www.holsteinusa.com, or contact your Holstein Association USA Regional Sales Representative. Those with an active subscription can visit www.breedholsteins.com to start using the program today! With questions, contact software help or call 800.952.5200, ext. 4003.
UWM’s Department of Agricultural and Applied Economics conducts this research every five years and compiles a report, The Contribution of Agriculture to the Wisconsin Economy. Its most recent data comes from 2017.
They found the Wisconsin agriculture industry generated $104.8bn in revenue that year, up from $88.3bn in 2012. It also supported 437,700 jobs, an increase of about 24,000 jobs from 2012.
Maintaining and growing rural areas
Dairy specifically was responsible for about half the agriculture revenue at $45.6bn, and 16.4% of the state’s total. Producing dairy milk supported 154,000 jobs in Wisconsin and generated $1.26bn in state and local taxes.
Professor Steven Deller, of UWM, said, “It is clear that agriculture – and particularly dairy – plays a critical role in Wisconsin’s economy. To put this in perspective, dairy’s economic impact is twice that of another key growing industry, Wisconsin tourism. It also shows dairy is Wisconsin’s signature industry and is central to our state’s identity.”
The report pointed out that dairy far outstrips other states in terms of important local goods. The $45.bn it contributes to the Wisconsin economy is greater than citrus’ $7.2bn in Florida and potatoes’ $2.7bn in Idaho.
Though the increases from 2012 can be partly attributed to inflation in the period (6.7%), agriculture industry sales increased by 15.7% and labor income was up 17.2%, indicating further growth.
Chad Vincent, CEO of the Dairy Farmers of Wisconsin, said, “This report reflects the importance of cheese and dairy in our state and is why we are America’s Dairyland. To me, the deeper importance is the impact dairy farming and processing has on maintaining and growing our rural areas.”
“The economic impact derived from agriculture in our state cannot be underestimated. Statewide dairy helps support a strong future for Wisconsin with job creation and tax revenue that goes toward better roads, new schools and a variety of other public services.”
Balancing two sides of the same coin
Some of Wisconsin’s agriculture growth is stemming from trade. According to the report, Wisconsin exported more than $2.5bn in agriculture products, including $451m worth of dairy products.
Because today’s consumers are also more health-conscious and keen on high-protein diets, Wisconsin believes that supporting the demand for its dairy products beyond its borders is key to the future of the state’s dairy industry.
According to the report, 90% of Wisconsin milk is used in cheesemaking, with the rest divided between butter, ice cream and cultured products like yogurt, cottage cheese and kefir. Wisconsin has a 48% share of the specialty cheese category in the US.
The report concluded on-farm activity was not a major contributor to the increases that Wisconsin dairy saw between 2012-2017, but is likely a reflection of weak commodity prices in 2017. Dairy processing had an overall greater impact on the economy than farm activity.
“The challenge facing Wisconsin agriculture is that on-farm activity and food processing are ‘two sides to the same coin’ and as one does better the other does better,” the report said.
“The continued weak net farm income, a pattern that Wisconsin farmers have not experienced since the farm crisis of the early 1980s, may put the food processing industry at risk.”
Fonterra’s greatest risk is not of further write downs, which are possible, but of a timid new strategy. Shaken by the failure of its 17-year quest to become a dairy multinational, it could retreat into being an exporter of commodities, ingredients and consumer goods, writes Rod Oram.
Fonterra’s price tag of failure is the thick end of $1 billion. The co-op announced this week write downs totalling up to $860 million, which could result in a net loss of up to $675m this year. Coupled with last year’s loss of $192m and the risk of further write downs in China and South America, the co-op is debt heavy and capital light. As a result, its strategy is shot, its confidence sapped and its shareholders rattled.
And that counts only the actual losses. It’s impossible to quantify the cost of lost opportunities. But just imagine, for example, the value Fonterra could have created if it had invested some of that squandered capital in A2 milk. Instead it fought the science and ignored the market, leaving the a2 Milk Company, the category pioneer, to reap the lion’s share of the rewards.
Latterly, Fonterra has reversed course and became a supplier to a2, which is a pure marketing company. Meanwhile it is struggling to build its own A2 production, products and brand. Yet, a2’s market capitalisation is twice that of Fonterra’s stock market listed Shareholders Fund. For analysis of Fonterra’s latest losses and thwarted ambitions, please read this Newsroom piece by Bernard Hickey.
If Fonterra wants to recover from this low point in its history and thrive it needs a bold new and practical strategy, not a tidy up of its failed one. The obvious opportunity is to become one of the world’s leading exponents of dairy farming that’s healthy for the planet, while producing dairy nutrition that’s healthier for people.
Currently, that’s an oxymoron. Dairying is an extractive industry that always damages the climate, and often land and water too, unless it is done exceptionally well. But dairy farmers mustn’t feel picked on. Many ways we produce food globally are as damaging or worse, as a growing body of research details.
The latest and most comprehensive to date is the UN’s report on climate change and land use released this past week. For more on it, read this Newsroom article; and for more on the urgent need for global changes in diets and farming systems, read this Newsroom column I wrote in February.
When it comes to the dairy response to the challenge of healthy people and healthy planet, a fair few companies here and abroad are working on the human nutrition part of that equation. But only a few anywhere in the world are working on the far harder farming challenge. On that Fonterra has four significant advantages over its foreign competitors:
– it has large scale and many (but not yet all) of its farmers are eager innovators;
– their co-operative relationship is increasingly effective at sharing knowledge and driving progress;
– we have a national science system that would gear up to deliver a big transformation of dairying, which the Government would help fund generously if farmers raised their ambitions (for example, Our Land and Water, one of the 11 National Science Challenges, includes a focus on regenerative farming systems that go beyond minimising damage to the environment to actively helping ecosystems to recover their vitality, diversity and resilience); and
– we have abundant natural capital and a unique and valuable national brand based on it – but to justify our claims, we urgently need such transformations of land use to end our degradation of our ecosystems and to start their recovery.
New core attributes for a ‘new’ Fonterra
Should Fonterra rise to these challenges to create and execute a bold new strategy it will need, broadly speaking, three core attributes which were scarce in its failed, old strategy.
Foresight: Fonterra was created 17 years ago by rolling up some 95 percent of our dairy industry into the new entity. It was seen to have three winning advantages: it was low cost, thanks to its farmers’ pasture-fed systems and the co-op’s highly efficient processing plants; it was one of the largest dairy processors in the world; and it was by far the largest dairy exporter in the world, although only 6 percent of global dairy products are traded across borders.
But Fonterra had no foresight beyond using those three attributes to get bigger and hoping to slowly shift a proportion of its products from commodities to higher value ones. But over the following 17 years, it was swamped by the dairy boom it helped create. From the 2000-01 to 2017-18 season, the sector’s land use grew by 33 percent to 1.76m ha, the national herd by 43 percent to 5m cows, farming intensity by 8 per cent to 2.84 cows per ha, the average herd size by 72 percent to 413 cows; and milk processed by 49 percent to 20.7b litres of milk.
No wonder land, water, farmers, cows and co-op became seriously stressed. Yet, as it was hitting peak cows here, Fonterra pressed on with its volume driven strategy. It made some ill-considered and poorly executed production investments overseas in the likes of its China Farms and other “milk-pools”, and in downstream investments to try to shift the rising volume of products to market. Most damaging was the debacle of its failed $755m stake in Beingmate, the Chinese infant formula company.
This time around, to thrive in a global food market which is changing very rapidly, it will need far greater and longer term insights about its best and enduring opportunities.
Structure and capital: Fonterra failed to evolve either of those fast enough to deliver on its strategy of rapid volume growth coupled with some shift from commodities to higher value products.
This time around, the co-op structure is even more important because that’s the best one for building and sharing knowledge to drive on-farm innovation to create truly regenerative systems.
But the co-op also requires equally great innovation to make highly nutritious products, to develop much closer relationships with consumers to help sell them on the value and virtues of the improved farming systems and products, and to find partners and capital to do so.
Culture: Fonterra isn’t quite the fortress it was but it still has a way to go in being the open, creative and agile business it needs to be if it wants to lead in the dairy sector here and abroad in these crucial transformations of food and farming.
Such an ambitious strategy would create a valuable future for the co-op’s farmer-shareholders while greatly benefitting the country at large. But it is also Fonterra’s last chance. If it fails this time around, it would have neither the capital nor support to attempt another revival. Its shareholders would have to break up the co-op, sell off its assets and redeploy their much depleted capital in other ways.
Every great scientific discovery begins with an idea. Innovative research is the backbone of progress in any industry — and that includes the dairy community.
Holstein Association USA is currently accepting research proposals for the next round of funding. The applications must include expected outcomes to benefit the profitability of Holstein cattle. Submit applications for research grant funds by August 15, 2019.
Supporting research is a top priority for Holstein Association USA, the world’s largest dairy breed association. Roger Shanks, the organization’s genetics consultant, explains.
“I’m excited about the research program that Holstein Association USA has ongoing,” Shanks says. “We are getting into our third year, our third request for proposals this year. The overall objective of the whole program is really to try to increase the amount of research that’s done on Holstein cows, so we can then help Holstein members be able to implement and take advantage of those research results as they come along.”
Holstein Association USA is currently funding two projects. One at North Carolina State University that’s looking at how genomic information can be used to manage inbreeding; and a second project at the University of California-Davis exploring the opportunity to breed Holstein cows for heat tolerance using the slick hair gene. Both hold great potential for future progress with U.S. Registered Holsteins.
Genetic progress on the nation’s dairy farms has been quite remarkable. Thanks to advanced reproductive technologies, over the past 30 years. From embryo transfer to in-vitro fertilization, the ability to expedite top-performing genetics has improved production for dairy farmers worldwide. Veterinarians and friends Dan Hornickel and Chris Keim were first talking about embryo transfer and IVF in their college days in the 1970s.
“Our start was very early. There wasn’t a lot of information. I wouldn’t call us pioneers, but we were certainly among the first that were doing work in the field,” said Hornickel. “And from there it grew.
The pair worked on their animals for several years. They didn’t feel qualified to put that technology into the public, but as they became more proficient. Clients began asking for the technology. As luck would have it, Sunshine Genetics started about 1982.
Keim and Hornickel agreed freezing embryos was the biggest factor to impact their business in 30 years
“Freezing technology was a big, big breakthrough for us and other businesses in the ET industry,” Keim said. “We could go to a client’s farm and preserve the leftover embryos if he didn’t have enough recipients available. That gave the farmer a lot of flexibility.”
The advent of freezing opened up a whole world of export work for the duo. It became a large part of their business, freezing and exporting. Along with that over the years, the development of IVF techniques has added to the merchandise ability of the cattle owned by Sunshine Genetics clients.
Another significant milestone in the advancement of reproductive technologies is sorted semen, which can allow breeders to select for either male or female offspring
“It’s helped with the marketing of embryos when clients in other countries want female embryos from some of the best Holstein cows in the world, they could have a 95 percent chance of producing a heifer calf from one of these frozen embryos,” said Hornickel
Working alongside progressive dairy farmers through the years has kept Hornickel and Keim encouraged about what the future may hold
“The biggest challenge for dairying today is profitability, and obviously, the advancing genetics is all designed to add to that profitability,” Keim said. “But keeping your eyes open, keeping your operation viable and financially sound as best you can, using all the tools that you can, I think that takes a lot of pressure off of dairymen today if they can accomplish that. And that’s a big challenge right now.”
The rolling cornfields and sounds of cows chewing their cud at Freund Farm in East Canaan couldn’t be further removed in spirit from the paneled walls and political conversation at Connecticut’s Legislative Office Building in Hartford— but for dairy farmer Amanda Freund, the change of scenery was necessary.
Last week, Freund, a third-generation dairy farmer, along with five other legacy dairy farmers, made the drive to Hartford to meet with members of the state legislature’s Rural Caucus to discuss the ailing industry that has long been troubled by economic instability.
“It does not bring me pleasure to go to the State Capitol and to ask for a subsidy for us to be able to keep our business afloat,” Freund said. “It’s not how we want to run this business. We want to be able to at least cover our costs, but when the federal system doesn’t allow us to do that, we’re really looking for the state to recognize that.”
Connecticut’s dairy farmers say they have reached the limits of innovation, and attempts to diversify and employ new technology on their farms haven’t been enough to stave off the crippling effects of trade-war tariffs, low milk prices, high operating costs and dwindling state subsidies.
Joan Nichols, executive director of the Connecticut Farm Bureau, said the price that dairy farmers can fetch for their product at market often is significantly less than what it takes to produce. The federal government sets the price for milk, meaning that dairy farmers can’t shift their costs to consumers when prices are low.
While some prominent lawmakers and some farmers see hemp as the next great hope, many of the state’s dairy farmers are saying that the odds of hemp becoming their cash cow are slim.
Since the state’s pilot program began in June, the Department of Agriculture has issued 71 licenses for prospective hemp growers —giving them the opportunity to tap into the still-fledgling industry that was estimated at $800 million last year.
“We could probably make more money with hemp, but we are here for a greater cause. We believe feeding people is more important.”
Seth Bahler Co-owner, Oakridge Dairy Farm in Ellington
“Until hemp is an established industry, we’re not going to know what the funding stream is going to be. So, it’s not something that will help a five-year downturn that is happening right now,” said State Sen. Cathy Osten, D- Sprague, a member of the Rural Caucus. “I believe that hemp will help out many in the farming community. I’m not certain that it can help dairy right now.”
Many of the state’s dairy farmers share Osten’s concerns. Freund said the logistics alone eliminate hemp as a viable solution for dairy farmers.
“With respect to [hemp] being a guiding light for the dairy farms in the state, I would say it’s not likely that it is going to keep us afloat,” Freund said. “It requires resources beyond what we have, and we need to stay focused on growing the crops to feed our cows before we can consider growing additional crops.”
Seth Bahler, co-owner of Oakridge Dairy Farm in Ellington, said the dairy industry is not going to be saved by the hemp industry, and he’s not going to grow it.
“Hemp just doesn’t fit with our strategy or our values,” Bahler said. “We don’t live off of CBD oil. We need more food grown locally. We could probably make more money with hemp, but we are here for a greater cause. We believe feeding people is more important.” CBD oil, or cannabidiol, is a non-psychoactive strain of cannabis highly valued as a treatment for a number of health issues, especially seizure disorders.
Jim Smith, a fifth-generation farmer from Franklin, said that even if the infrastructure to manufacture CBD were in place, growing hemp is labor-intensive, and expensive at $1 a seed or $4 a plant.
“I plant 1,750 acres of corn. To convert that to hemp, that would mean I’d probably have to employ like 3,000 people to keep it cultivated,” Smith said. His farm currently employs 18 full time and four part-time people.
“I really don’t think anybody did that full budget on it. I think they saw it as an opportunity and on a small-scale, there probably is an opportunity there, but it’s nothing that we can turn on overnight,” Smith said.
As the dairy industry enters its fifth year of decline, dairy farmers like Freund and her family, have found ways to create value wherever they can. The Freunds launched Cow Pots in 2007. The biodegradable planters are made out of the farm’s second most valuable commodity: manure.
Both Freund and Smith, like many dairy farmers, have joined or started collectives made up of other local farmers to diversify their revenue. Freund is a member of the Cabot Creamery Farmer Co-op and Smith and five other families started The Farmer’s Cow— an agriculture advocacy group that also sells a popular line of dairy and food products.
In addition, many of the state’s dairy farmers have installed milking robots, solar panels, and cutting-edge systems that repurpose the methane extracted from their cow’s waste.
“Even when we invest in the best technology, and we optimize as many efficiency things as we can, we’re still left in a position where we’re asking the state to keep us keep us around,” Freund said.
The state’s dairy farmers have been bedeviled by years of low milk prices. Dairy prices were expected to rise last year, before the Trump administration imposed new tariffs on aluminum and steel from Mexico, China, and Canada, provoking those nations to retaliate with tariffs on U.S. goods.
Freund, whose family oversees about 500 acres of land and milks 300 cows, said most dairy farmers have invested thousands if not millions into their farms so that they can be competitive in a global market. Even though most of the state’s dairy farmers sell their product locally, the U.S. dairy industry as a whole shipped about 17 percent of its product overseas between 2015 and 2016, according to Freund. Mexico and China were the biggest importers of U.S. cheese and whey, respectively. But with exports down, a surplus of milk and other dairy products have flooded the U.S. market, driving prices down.
In 2018, the federal government rolled out a program to mitigate the market disruption caused by the trade war. The disruption was estimated to be in the millions and Connecticut farmers received $370,560, according to the Connecticut Farm Bureau.
“Not being able to export these dairy products that we had built a market for is proving to be very consequential for us and affects our bottom line,” Freund said.
Osten said the Agricultural Sustainability Account (Community Investment Act Dairy Fund), which was created to subsidize the state’s farmers during times of economic downturn, remained intact for the last two years despite historically being raided to bolster the general fund. Osten said the raids cut the payments to farmers by more than half.
Osten said although an additional $1.4 million has been secured in this year’s budget, it is not enough to sustain the dairy industry.
“In order for us to sustain dairy throughout this downturn, we’re going to have to set money aside to save 25 percent of a $4 billion-dollar agricultural industry,” she said. “We have plans to introduce legislation next year, but we have a problem between now and next year that we need to deal with.”
State Agriculture Commissioner Bryan Hurlburt said the state’s 99 remaining dairy farms still punch well above their weight economically, but there is more that the state could be doing to invest in its farmers.
“Many states looked to Connecticut,” Hurlburt said. “The Agricultural Sustainability account was the model for a number of years. Maine has just put in $14 million as a general fund allocation to support their dairy farmers. I think one of the most important things is that we continue to have these conversations… and look at what other states are doing.”
According to Hurlburt, Massachusetts will implement a study in the next year to quantify the environmental benefits of its dairy industry, and he said Connecticut may be able to do the same.
Eighty percent of the available farmland in the state is leased by dairy farmers. The land is not only a base for local food production, but contributes to open space and wildlife habitats.
Freund said she hopes both residents and lawmakers realize how integral dairy farms are to the state’s culture and well-being.
“If you really do care about the quality of your food and the effect that it has on the environment, then you should be demanding that we have farms here and that we have a local food system and that we’re protecting it,” Freund said.
James “Cricket” Jacquier, a third-generation farmer from Canaan, said he wants to continue to grow his business for the next generation.
“We didn’t get in this business to get rich or build our 401ks. We got into this business because we are passionate about farming and we know the work is important.”
Maya Moore Maya Moore is CT Mirror’s 2019 Emma Bowen Foundation Intern. She is a journalism and political science student at the University of Connecticut and has an interest in topics covering race and social justice. Moore began her undergraduate journalism career as a campus correspondent with UConn’s independent student-led paper, the Daily Campus, and has since interned for the Hartford Courant. Her work has also been published in the Willimantic Chronicle and the university’s premier publication, UConn Today. Moore is a New Britain native and currently resides in Mansfield, where she continues to write for UConn’s communications department.
Fonterra’s value has almost halved since its overseas expansion strategy imploded in early 2018. Now its new leaders have found yet more losses and look set to dismantle what remains of what many hoped would become a national champion. Bernard Hickey looks through the rubble.
The dream is over, except for the final garage sale and the divvying up of the proceeds.
The last Labour-led Government drove through the Dairy Industry Restructuring Act (DIRA) in 2001 in concert with the almost all of New Zealand’s 12,500 dairy farmers in the hopes of creating a national champion with the global scale and ambition to match or beat the likes of Danone, Arla or even Nestle.
The idea was to create an internationally connected powerhouse that would deliver super-sized returns for New Zealand’s white gold and make both the nation’s 12,000 farmers and the communities around them much richer. The dream was to create a value-adding machine that broke the tyranny and volatility of being a commodity-producing price taker dependent on the whims of currencies, markets and the weather.
Back then, dreamers talked of Fonterra becoming the Nokia of the south. How things have changed. For both Finland and New Zealand. There was still hope as recently as the beginning of 2018 when Fonterra appeared to be recovering from years of low payouts and a damaging botulism scare.
But no more.
This week’s news of another $840 million of asset write-downs caps a truly awful 2018/19 season for Fonterra farmers and has set the co-operative on the path to a break-up and a return to the main dairy company being a simple milk collection, drying, bagging and shipping company of milk powder for others to make the real profits from consumer brands and complex food and other products. The carving off of Fonterra’s value-added consumer brands and food service businesses, which currently use about half of its capital (debt plus equity) of around $12 billion, now looks most likely. Fonterra said it was actively reviewing its capital structure along with its strategy, and faced years of dividend-free debt repayment without major changes.
“Capital structure is a discussion that the board have kicked off as well,” CEO Miles Hurrell told reporters yesterday. He said the board remained committed to being a co-operative, but the scale and focus of its activities were all on the table.
CFO Marc Rivers admitted Fonterra had fallen behind on its plan to repay $800 million of debt by July 31 and had not reached its targeted debt to debt plus equity leverage range of 40-45 percent. They did not detail the current debt position, but rejected suggestions Fonterra was in breach of its debt covenants. Fonterra had $7.1 billion of debt at January 31 and its leverage was at 52.5 percent.
Fonterra’s management, board and shareholders now face an intense debate ahead of its final results and strategy announcement in September about whether the co-operate will sell off the value-add assets and return the proceeds of over $5 billion to farmers to repay dairy debt owed to banks such as ANZ, Rabobank, Westpac, ASB and BNZ of $42 billion. Some of the proceeds may have to be used to repay Fonterra’s own debt first.
The Reserve Bank warned again in May that dairy sector debt was too high, with around 35 percent of the debt (around $15 billion) on farms with more than $35 of debt per kilogram of milk solids. On average, these farms need a cash payout of $6.20/kg just to break even. The removal of the dividend this year, and potentially next year, would leave many of the most indebted, large, recently-converted mega-dairy farms making losses with the current forecast milk-only payout of $6.30/kg.
Farmers meet for Fonterra’s annual meeting in November. It is set to be an historic one with the potential to formally end Fonterra’s grand ambitions. It will bookend an awful year for Fonterra’s shareholder-farmers, which now number 10,500.
An annus horribilis in 2018/19
The market value of their co-operative has fallen $4.8 billion since the shock resignation of CEO Theo Speirings in March 2018 and their expected cash payouts from milk and dividends have fallen $1.1 billion. They once hoped for as much $7.10/kg, including a dividend of around 20 cents a share. Now they’re looking at payout of around $6.30/kg with no dividend and their share price has dropped from $6.68 to $3.57, including a 5.0 percent fall on Monday after the latest shock announcement.
New CEO Miles Hurrell and CFO Marc Rivers held a hastily arranged mid-morning telephone conference with journalists to warn that the final results would show a net loss in a range of $590-675 million or 37-42 cents per share. Early last year Fonterra was forecasting earnings of 25-35 cents per share, and that was after Fonterra reported its first ever net loss of $196 million for the 2017/18 year because of $638 million of writedowns on assets in Australia and China. Back then, some hoped the scale of the losses overseas had been fully accounted for.
But the latest news was much, much worse than expected.
Hurrell said “it has become clear that Fonterra needs to reduce the carrying value of several of its assets and take account of other one-off accounting adjustments, which total approximately $820-860 million.”
“Since September 2018 we’ve been re-evaluating all investments, major assets and partnerships to ensure they still meet the Co-operative’s needs. We are leaving no stone unturned in the work to turn our performance around. We have taken a hard look at our end-to-end business, including selling and reviewing the future of a number of assets that are no longer core to our strategy,” he said.
“The review process has also identified a small number of assets that we believe are overvalued, based on the outlook for their expected future returns.”
There were more losses in China, which has been the main source of concern for years, and most concerningly, there were big losses in Fonterra’s home market because of the botched launch of a new national distribution centre and hotter competition on local supermarket shelves from new brands of milk, yoghurt and cheese.
“In our New Zealand consumer business, the compounding effect of operational challenges, along with a slower than planned recovery in our market share, has resulted in us reassessing its future earnings,” he said.
“We are now rebuilding this business and, as part of this, have sold Tip Top which allows the team to focus on its core business. The combined impact is a write-down of approximately $200 million.”
Problems in New Zealand too
Hurrell confirmed in the news conference that the New Zealand writedown was actually $300 million, given the Tip Top sale for $380 million yielded a profit of $100 million.
He detailed a write-down of Fonterra’s DPA Brazil assets of about $200 million. Fonterra is reviewing this joint venture with Nestle. Fonterra wrote down the value of its Venezuelan assets by $135 million and reduced the value of its farms in China by $200 million. It increased its Australian write-down from $50 million to $70 million.
Rivers talked down the prospect of a quick return to dividends or hitting the debt reduction target.
“The key position we’d need to get ourselves into is to be able to continue to perform on that underlying business. As that performs, that puts us in a position to be able to pay a proper dividend, but we need to earn it first,” he said.
“This is going to take a couple of seasons to get the balance sheet to a level it needs to be at but we’re actually on a good path,” he said when pressed about future dividends.
A2 Milk shares closed yesterday at $16.04 and the company was worth $11.8 billion, more than twice Fonterra’s value.
Asked if Fonterra would now need to reduce debt by more than $800 million, Rivers only said more work needed to be done.
“The key for that, when we talk about the strategy in September, is we need to get the balance sheet into a strong position to be resilient to give us optionality. This will take time for us to do this in a proper diligent way.”
Meanwhile, Fonterra farmers have watched Fonterra’s market value crater from over $10.7 billion in early 2018, when it was worth almost twice as much as A2 Milk.
Fonterra’s shares closed on Monday at $3.57, down 5.0 percent on the day, and its market value was $5.7 billion. A2 Milk shares closed yesterday at $16.04 and the company was worth $11.8 billion, more than twice Fonterra’s value.
So, she got up early on Aug. 12 and drove three and a half hours from her home in Warren County, to a dairy meeting with the top U.S. agriculture official and federal legislators, in Cambria County.
The meeting, organized by U.S. Rep. Glenn “GT” Thompson, at Mount Aloysius College, was organized for dairy farmers to learn more about the renewed dairy margin coverage program and other state programs.
It was also styled as a listening session for Sonny Perdue, U.S. secretary of agriculture; Russell Redding, Pennsylvania’s agriculture secretary; and U.S. Reps. Fred Keller and John Joyce. Local farmers, agricultural leaders and state FFA representatives filled the hall.
When the time came for her to address Perdue, Curtis gripped the microphone and carefully read her prepared comments.
“I, as a producer, am bearing 90% of the cost of production. I receive about 40% of the revenue of the final sale of my product,” Curtis said. “This is not a business model that is sustainable for any industry and especially not for dairy farmers.”
She offered two solutions, short- and long-term, to the gathered representatives. “The (U.S. Department of Agriculture) sets the price of my product every month, using a formula that dates back to the early 1930s. It includes no cost of production figures. It relies to a significant extent on the information from processors.” She added that the numbers used in the formula have proved to be incorrect.
“So, sir, could you please go back to Washington and take a look at that formula, and make the processors be fair with me?”
Curtis, who milks 63 Jerseys with her husband and children and hosts a fledgling AM radio show, spoke of how her husband’s family had milked 300 cows and bottled on-farm. They made a profit, until they shut down in 1997. “Food production is a matter of national security,” she said. “For a long time now, we have been consolidating the processing of our product down to a very few corporate entities.”
Her long-term solution? More local, producer-processors, in the form of individual bottling facilities or cooperatives. “We need to give control back to the farmers over their own product and allow them to participate in the free-market, capitalist system,” she said.
She pointed out that as processors have had to tighten their belts as well, it makes them vulnerable to foreign takeover. “If a foreign entity owns our largest processor, and I don’t have any other choice as a producer, I’m going to be giving them my product, and they will be shipping it to themselves,” she said. “The trade agreements aren’t going to matter and I’m going to be working for the Chinese.”
Her comments prompted a question from Perdue. “What do you think are the impediments for more value-added production and processing, like you’re talking about?” he asked.
“Cash,” Curtis said immediately. Emotion clogged her voice as she shared her family’s situation. She wants to save her family’s historic farm. A neighboring processor plans to retire, but according to a business plan she put together through the state’s Center for Dairy Excellence, she needs at least $500,000 to take it over.
The opportunities are there for investment, Redding said in reply, thanking her for articulating a situation that many dairy farmers have faced or are facing.
“This re-discovery that society has about who’s feeding them is a really important discussion in dairy,” Redding said. “We’ve got existing channels, but what else can we do?”
Curtis’ situation echoes what dairy farmers have experienced over the past year. The U.S. Department of Agriculture has reported that the industry shrank by 2,500 farms and 100,000 cows in 2018. Milk prices paid to farmers have contracted for years.
Despite the industry’s struggles, Perdue said in a later interview he is optimistic about the industry’s health.
“I actually think it’s a good time to be in the dairy business, starting here with (the 2018 Farm Bill),” he said. He encouraged dairy farmers to sign up for the current dairy margin coverage program before the end of September, calling it a “safety net,” particularly because of retroactive provisions that date back to Jan. 1.
“This is almost like betting on the Super Bowl the day after the game,” he said.
Redding agreed with Perdue, in his opening remarks. “What the (dairy margin coverage) does is provide some stability,” he said. “Let’s use that moment that we have some stability, to be thinking about what else do we need to do to make it better.”
Last year, Dean Foods announced it was ending contracts with a number of Pennsylvania dairy farms. Redding said in a later interview that announcement was a “wake-up call.”
“Every single producer needs to know who they are doing business with,” he said. “The community also woke up. They want local products. They want local farms.”
Pennsylvania government and agencies have been examining how to evolve and adjust to the changing markets demands. “It’s in full partnership,” Redding said. “I think today is a good example that there’s a human on both sides of this discussion of dairy: the producer and the consumer.”’
As the number of dairy farmers declines in Japan, so-called gigafarms that churn out more than 10,000 tons of milk a year are stepping up production to meet consumers’ growing appetite for dairy products.
A giant dairy farm about 90 minutes from Obihiro on the northern island of Hokkaido is a case in point. It has 1,600 head of adult cows and calves in 14 barns, far above the 85 head kept at a conventional dairy farm.
The Nishikamikano farm employs automation for milking and health monitoring. Milking is done in a long shed where cows wait for staffers to disinfect their teats and attach suction equipment. Once the milking is done, the suction terminals detach, allowing the cows to return to their barns.
Japan had 16 such giant farms in fiscal 2017, industry data shows — barely a blip against the 15,700 dairy-farming households. But they are crucial in propping up the country’s milk production.
Japan’s dairy farms, just like the rest of Japan, are facing labor shortages, even with workers recruited from overseas. As the farms’ scale increases, automation has become crucial, creating business chances for equipment makers.
In July, a Hokkaido dairy farm installed four milking robots made by Netherlands-based Lely as part of a capacity expansion. The new machines, which are electric rather than pneumatic, cut the time needed to latch on to cows’ teats by about 30%, to roughly 25 seconds.
Dairy farms “have relied on foreign workers, but hiring competition is fierce,” said Hideto Nanbuya, president of equipment distributor Cornes AG, which supplies robots for such tasks as milking and feeding.
The ranks of Japan’s dairy farms have decreased roughly 60% over the past two decades, shrinking milk output by around 10% in a decade. But milk consumption rose for a fourth consecutive year in fiscal 2018.
This fiscal year, the volume of milk produced is projected to rise for the first time in four years, according to the Japan Dairy Association, and the government has set a production target of 7.5 million tons in fiscal 2025, up 3% from fiscal 2018.
Dairy Farmers of Ontario’s Board of Directors announced today Cheryl Smith has been hired as chief executive officer (CEO), effective Aug. 19, 2019.
Smith is a highly experienced business leader with 30 years of leadership experience, including leading a billion-dollar revenue-generating business with a team of more than 150 employees. She recently retired from Parmalat as a member of the executive team and general manager of the Cheese Division.
Named as one of the Top 100 Most Powerful Women in Canada and most recently a Golden Pencil Award Winner, Smith brings proven leadership and valuable experience to the organization. DFO is fortunate to have her join the team as CEO.
“Cheryl will help us realize a dynamic profitable growing Canadian dairy industry. As we face many challenges of the future, we felt having a leader who understands consumers, the food chain and the interconnectivity of our dairy industry has great benefit. She is a forward-facing thinker with an acute understanding of the opportunities ahead. We have every confidence Cheryl will make great contributions to DFO and our industry at large,” says Murray Sherk, Chair of the Board.
To prepare for re-opening, beef cows and goats returned to Joyceville Institution in May, and six dairy cows were more recently placed at Collins Bay Institution — descendants of the cows removed from the farm in 2009. Goats are expected to arrive at Collins Bay in 2020.
Karen McCrimmon, parliamentary secretary to the Minister of Public Safety and Emergency Preparedness, said in a news conference at Collins Bay Thursday morning that while some work has been completed, more needs to be done.
“We are still only at the first step of this renewal process,” she said. “Crops were planted, farmland has been repaired, equipment and supplies were purchased throughout 2018. Also, renovation work is well underway in preparation for getting dairy operations up and running.”
A dairy cow barn is expected in 2020, and a dairy goat barn is expected in 2021, she said.
So far there are about 20 jobs between both institutions, and there will be about 60 positions available once operations are fully underway, McCrimmon said.
Other things being done on the farms include beekeeping and a field devoted to organic crop production, and there are plans to plant flowers and trees as well. Full implementation is expected in the coming years.
‘Satisfying to see’
“It’s very satisfying to see that it’s been restored,” said Dianne Dowling, a member of the National Farmers Union and a founding member of the Save our Prison Farms campaign, which fought for years to see the program restored.
Prior to its closure, hundreds of inmates participated in the program at six institutions across Canada, where they typically provided food including milk and eggs for penitentiaries as well as community food banks.
Prison farms in Canada had been operating for more than a century. Over the years, the system shifted from forced labour to a rehabilitation program run by CORCAN, a Correctional Service of Canada program that provides inmates with employment experience and skills.
In 2006, the Conservative government commissioned a study into the viability of the CORCAN agribusiness that recommended phasing out the program in favour of operations offering a better return, like manufacturing.
The 2008 Correctional Employment Strategy report stated: “There is a definite need to become more responsive to changes in the labour market … and aligning the type of training and skills offered with economic demand.”
The program ended in 2010.
Battle over closure
During parliamentary hearings in 2010, prisoner advocates and community organizers pushed against the closure, pointing to research suggesting the programs bolstered work confidence, lowered recidivism, and offered inmates the therapeutic opportunity that comes with caring for animals.
In August 2010, protesters at Collins Bay tried to stop the trucks from hauling away the animals to auction, leading to a number of arrests.
For a decade, the Save Our Prison Farms campaign held regular vigils at the gates of the shuttered farm at Collins Bay, and lobbied the new Liberal government to reinstate the program.
Dowling, who now sits on the government advisory committee steering the renewal of the program, said inmates at Joyceville will get to work with dairy cows and dairy goats.
Both the Joyceville and Collins Bay programs will include land management, horticulture and crop production.
“We’re moving along towards having a substantial program there for inmates to gain work skills and also to benefit from the rehabilitation or therapeutic aspects of farming.”
In what was a litmus test for the tanbark trail, the outstanding team at Ferme Jacobs that has dominated the show scene over the past decade, put the weight of the industry on their shoulders to hold this momentous sale to see if the industry was going to survive. With three cows over $200,000 and a sale average of 12,900 on over 150 lots the resounding answer is….YES!
Topping the sale at $250,000 was PIERSTEIN CICERO TIME OUT, the EX-95 MS Chassity OBS Cicero daughter from 2011 All-Canadian and Res. All-American Senior Three-Year-Old, Pineland Goldwyn Tidbit EX. This extraordinary five-year-old is considered to be an early favorite for World Dairy Expo and was purchased by Randy Fraser.
Selling for $215,00 to Duckett Holsteins was IDEE DOORMAN LYSA, a stunning Junior Three Year Old, the Doorman daughter of none other than Idee Winbrook Lynzi, the 2017 Intermediate Champion and HM. Grand Champion at the Royal. Lysa looked extremely impressive as she named Grand Champion at the recent Expo Rimouski being named Grand Champion for owners ferme Jacobs, Pat Conroy, and JM Valley Holsteins.
Rounding out the top sellers at $200,000 to Milksource Genetics was JACOBS DOORMAN VICTOIRE, a stunning Senior three year old for 2019. In what may prove to be one of the greatest show cows ever bred by Ferme Jacobs, Victoire’s 2nddam, Jacobs Dundee Voltage was All-Canadian and All-Quebec Milking Yearling in 2008, and her 3rddam, Jacobs Spirit Valsie was All-Canadian 4 year old in 2004.
In what was a very touching moment of the sale, JACOBS GOLDWYN BRILLIANT, the own daughter of Jacobs Goldwyn Brittany EX-96 was sold for $40,000 as a fundraiser for Charly Jacobs who has been suffering from severe dystonia caused by a genetic mutation of the EIF2AK2 gene.
Wisconsin crafts more varieties, types and styles of cheese than anywhere on earth and holds a 48 percent share of the nation’s specialty cheese category.
The overall economic impact of Wisconsin’s dairy industry is bigger than ever, according to new research conducted by the University of Wisconsin—Madison.
Dairy continues to lead Wisconsin agriculture, the new report shows, generating nearly half of Wisconsin’s annual industrial agricultural revenue – and represents 16.4 percent of the state’s total. Despite recent milk price challenges, the report shows dairy continues to make a significant impact on local Wisconsin communities.
The report is based on the most recent data available (2017) and updates research conducted every five years by UW—Madison under the direction of Professor Steven Dellerat the Department of Agricultural and Applied Economics and Extension’s Center for Community Economic Development. Total agricultural economic impact grew from $88.3 billion to $104.8 billion with dairy’s impact growing to $45.6 billion.
“To put this in perspective, dairy’s economic impact is twice that of another key growing industry, Wisconsin tourism. It also shows dairy is Wisconsin’s signature industry and is central to our state’s identity,” says Deller.
The report shows that from farmers’ milk 154,000 Wisconsin jobs are created and $1.26 billion in state and local taxes are generated. Every dollar generated by Wisconsin’s dairy industry generates another $1.73 in additional revenue for the state, according to the report.
“This report reflects the importance of cheese and dairy in our state and is why we are America’s Dairyland,” says Dairy Farmers of Wisconsin CEO Chad Vincent. Additionally, the report identifies foreign export markets as a primary source of new growth for Wisconsin agriculture. As a state, Wisconsin exported over $2.5 billion in agriculture products last year with dairy products as the second-largest contributor at $451 million.
“Consumers from around the world need and want protein in their diet. With Wisconsin’s abundance of protein-rich dairy products, it’s easy to see why we are an international leader in the dairy industry,” said Secretary-designee Brad Pfaff of the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP).
Additional key findings from the report include:
Dairy generates 43.5 percent of the state’s total agriculture activity.
Dairy, combining both on-farm and dairy processing, contributes $45.6 billion to industrial revenues (7.1 percent of the state total), 157,100 jobs (4.2 percent), $9.0 billion to labor income (4.5 percent) and $15.1 billion to total income (4.7 percent).
Dairy processing accounts for roughly two-thirds of dairy’s total contribution.
90 percent of Wisconsin milk is devoted to cheesemaking while the remaining is deployed to butter, ice cream and cultured products such as yogurt, cottage cheese and kefir.
Wisconsin’s dairy heritage dates back generations and is rooted in European traditions. Wisconsin crafts more varieties, types and styles of cheese than anywhere else on earth and holds a 48 percent share of the nation’s specialty cheese category.
Judge Mandi Bue of Freedom placed 12 outstanding young cows on Saturday, August 10 at Wisconsin State Fair Park during the first All-Breeds Futurity. Since 1987, the Wisconsin Holstein Association has hosted an annual Holstein Futurity at the Wisconsin State Fair, but this year was the first year all seven dairy breeds were eligible to show.
Taking top honors and Best Udder was Floydholm MC Emoji-ET, exhibited by Shawn and Seth Nehls of Hustisford. They took home a $1,500 check sponsored by Compeer Financial and $50 from CentralStar Cooperative.
Second and Best Bred and Owned was Milgene Defyin Jackolantern, exhibited by the Hildebrandt family from Hustisford. The Hildebrandt family was awarded $750 sponsored by International Protein Sires and the Best Bred and Owned award sponsored by Lirr Farm, the Nigh family.
Rounding out the top three and the production and combined fat and protein winner was Crestbrooke A Cabernet-ET exhibited by Kyle Natzke of Fond du Lac. Agropur sponsored the $500 third place award and Brian Greenman, Rural Mutual Insurance Agent sponsored a prize for the production awards.
The first-place junior was Dreamfix Summer Fling exhibited by Landon and Mylie Wendorf, Dawson and Kylie Nickels, and Christian Sachse of Ixonia. They won an award sponsored by Angela Davis-Brown of Ma-Brown Holsteins and Jerseys and a cash prize sponsored by the Wisconsin Junior Holstein Association.
The Nigh family of Lirr Farm also sponsored the Best Junior Bred and Owned award. This award went to Colton and Ashley Brandel of Lake Mills exhibiting Brand-New Iron Man Allis.
Although the cows are the stars of the show, the exhibitors dress their best in competition for the Best Dressed awards. The Best Dressed junior was Carly Strauss of Lake Mills, who won an award sponsored by the Barron County Junior Holstein Association. Brett Hildebrandt of Hustisford was awarded Best Dressed male and received an award from Robert and Karyn Schauf. Yvonne Preder sponsored the Best Dressed female award, which was awarded to Kayla Wright of Johnson Creek.
The night was led by the Master and Mistress of Ceremonies, Kevin and Peggy Coffeen of De Pere. They announced the winning cows and introduced the dignitaries that were present as well as sharing Wisconsin dairy facts with the crowd. Representing the sponsors were Jill Armbruster from Compeer Financial, Ron Sersland of International Protein Sires, and David Hitner from Agropur. Royalty from across Wisconsin also attended the event and helped present awards including Wisconsin Holstein Association Princess, Lauren Siemers; Wisconsin Holstein Association Princess Attendant, Mikayla Endres; Wisconsin Brown Swiss Queen, Natalie Roe; Alice in Dairyland, Abigail Martin; and Wisconsin Fairest of the Fairs, Meghan Buechel.
The Wisconsin Holstein Association All-Breeds Futurity would not have been possible without the generous donations from our major sponsors, Compeer Financial, International Protein Sires, Agropur, and Brian Greenman, Rural Mutual Insurance Agent. In addition, we would like to thank all of the committee members, volunteers, and additional sponsors that helped make the show a success.
We hope to see everyone at the 2020 WHA All-Breeds Futurity at next year’s Wisconsin State Fair on August 15, 2020.
Wisconsin Holstein Association is a not-for-profit membership organization with the purpose of promoting the Wisconsin Registered Holstein breed, its breeders and owners. Established in 1890, it has grown its junior and adult membership to become the second largest state Holstein association in the nation. For more information visit the WHA website at www.wisholsteins.com.
Wisconsin’s agricultural economy has been growing even with a steep decline in the number of dairy farms, a new report from University of Wisconsin-Madison shows.
Altogether, farms and agriculture businesses in the state generated $104.8 billion in economic activity in 2017, according to the new data released Tuesday and published once every five years.
That’s up nearly 19% from $88.3 billion in 2012, despite the loss of several thousand dairy farms, many of them small, family-run businesses.
The dairy industry contributed $45.6 billion in economic activity in 2017 — up 6% from five years earlier. Dairy processing, which includes cheesemaking, accounted for roughly two-thirds of the amount.
Wisconsin is America’s Dairyland, but there’s more produced here than milk and cheese. The state ranks first in the nation for snap beans, cranberries and ginseng. It ranks third in the nation for potatoes.
Overall food processing, which includes dairy, vegetables, fruit, beef, pork, poultry and other products, contributed $82.7 billion to the agribusiness economy and represented the bulk of the growth over the five-year period.
Wisconsin lost more than 2,300 dairy farms during that time. But milk production climbed steadily to a record 30 billion pounds in 2016 as farms got bigger, the number of cows stayed roughly the same, and the amount of milk per cow increased.
“The cows did not go away. They were bought up by other farms,” said Steven Deller, a UW-Madison agricultural economist and author of the report.
The American dairy industry is undergoing seismic change, and farms — especially small, family operations — are shutting down at one of the fastest rates since the Great Depression. In the first half of 2019, a total of 449 dairy farms were lost in Wisconsin alone — nearly 25% more than during the same period last year.
The report “doesn’t soften the financial blow that many farms in Wisconsin are taking under continued depressed commodity prices,” said Heidi Johnson, interim director of the UW Extension Agriculture Institute.
The demise of farms is worrisome because they are the lifeblood of many rural communities and support food processors as well.
“The continued weak net farm income may put the food processing industry at risk. There is a clear balancing act between ensuring a healthy farm economy while continuing to promote growth in food processing,” Deller said.
Connecticut dairy farmers told state lawmakers Tuesday they need the state’s help to ensure the industry remains financially healthy, given the challenges of low, federally set milk prices and expensive production costs.
Appearing at an informational meeting of legislators who represent rural parts of the state, dairy farmers said the industry must be financially viable so a new a generation of farmers will want to work the long, hard hours to provide locally grown food.
“We need your help to try and come up with a solution to make it at least profitable,” said Seth Bahler, owner of Oakridge Dairy Farm in Ellington. “We need to be profitable to have a next generation.”
Bahler recalled how his family’s farm, started by his great-great grandfather in 1890, was once one of 50 along what was called the “Milkiest Mile in America,” between Vernon and Somers. Today there are just two dairy farms left.
Statewide, there are less than 100 dairy farms, about 55 to 60 fewer than a decade ago.
It’s estimated that the dairy industry, including cattle, goat and sheep milk producers, contributes more than $1 billion annually to the state’s economy. And despite the decline in farms, the number of cows has remained relatively steady at 19,000, compared to roughly 20,000 in 2009.
Experts on Tuesday cited the years of low milk prices, the recent trade war with China, and the high cost of production, including expensive equipment, among the industry’s challenges.
Ned Ellis, owner of Maple Leaf Farm in Hebron, said the industry is cyclical, with periods of low milk prices lasting about three years. But that, he said, has changed, and farmers are currently in the middle of a five-year low period.
“The highs have been shorter and the lows have been longer,” he said.
Bonnie Burr, assistant director and department head with the Cooperative Extension System at the University of Connecticut, has worked on the issue of milk prices for years. She described it as a complicated federal problem that Connecticut legislators likely can do little about.
Instead, she encouraged them to enact policies that make the industry more financially stable.
“We need to know that the state of Connecticut is working with us on policy that can help us ride that fluctuating storm of federal policy,” she said.
Farmers and their advocates repeatedly called on lawmakers to protect the Community Investment Act. Funded by a recording fee on municipal land records, the program assists dairy farmers who are financially at the mercy of fluctuating milk prices. In past years, lawmakers have raided the fund to help balance the state’s budget.
Farmers also spoke of the need for trained workers and help with making expensive equipment purchases, including robotic milking machines.
Democratic state Sen. Cathy Osten of Sprague, co-chair of the rural caucus, said she hopes to work with fellow legislators to secure additional funding to help stabilize the industry.
She suggested writing a letter to Democratic Gov. Ned Lamont, seeking additional financial support for farmers in the near-term. For the long-term, she brought up the idea of enlisting her colleagues to work for a day on a Connecticut farm to get a first-hand experience of a farmer’s challenges.