After four straight years of declining profits in New York’s dairy industry — one that’s already taken a beating from trade disputes and labor costs — 2019 is expected to bring only “marginal” improvements, professionals say.
But aside from those longstanding problems, shifting consumer tastes are now a “new cloud on the horizon that’s sort of troubling,” according to Andy Novakovic, a professor of agricultural economics at Cornell University.
Younger, millennial consumers are shunning the processed cheese and traditional plastic gallons of milk that earlier generations enjoyed. And while dairy products have been “relatively free from dietary criticism” over time, Novakovic said, the shift toward things like plant-based milk or artisanal cheeses could mean a loss in sales for some dairy farmers.
“The real dynamo for the dairy industry nationally has been cheese consumption,” Novakovic said. “It’s a huge, gigantic amount of milk.”
During the state’s Milk Marketing Advisory Council meeting earlier this week, industry experts pointed out the decline in popularity of processed cheeses as one of the biggest impediments to an increase in milk prices.
But other “wild cards” for the state’s dairy industry will be a continued labor shortage and barriers to trade.
While migrant farm workers often come to New York to harvest seasonal crops, the dairy industry’s year-round production requires a more robust guest-worker program to address the dearth of available workers, Novakovic said.
President Donald Trump’s imposition of tariffs on trade partners like Canada, Mexico and China has shrunken the market of buyers and forced farmers to cut sales prices, Novakovic added.
And as dairy farmers have sought to cut production costs, corn and soybean farmers who produce feed for dairy farms have taken a hit as a result, according to Colleen Klein, executive director of the New York Corn and Soybean Growers Association.
“A number of things have to change to give us a more rosy scenario for dairy,” Novakovic said. “I don’t see any of that really dramatically changing in the current environment.”
Despite some of the reasons for pessimism, however, a new Farm Bill passed through Congress last week, and is expected to be signed into law by Trump.
The bill revamps the Dairy Margin Protection Program, which “did not work effectively, and most farmers who bought into the program received no benefit,” according to New York Farm Bureau spokesman Steve Ammerman.
The new Dairy Margin Coverage Program will expand insurance coverage and flexibility for dairy farmers while reducing premiums. And to address losses farmers who paid into the MPP program had, the Farm Bill will allow participants to recoup losses by receiving cash back or refunding their payments to a new Dairy Rick Coverage program, according to Richard Ball, commissioner for the New York State Department of Agriculture and Markets.
The state also said Thursday it would provide $8.5 million in land conservation easements to ensure dairy farmland will not be converted to non-farm use — a key effort by the state to assist struggling dairy farmers who may otherwise be forced to sell their land to developers.
But Novakovic said the real key for New York’s dairy industry will be for dairy consumption to outpace dairy production, which will drive up prices and offset the recent oversupply of milk that’s been a result of enhanced dairy farm management and technology.
“What is giving a little sense that maybe 2019 will be better is a sense that the growth in consumption will be faster than the growth in production,” he said. “I think conditions will improve marginally into 2020. I don’t subscribe to some notion that were going to fall off a cliff again.”