For dairy farmers in the United States, the timing of the Covid-19 pandemic could hardly be worse.
As the disease caused by the coronavirus SARS-CoV-2 spreads across the US and changes so many aspects of public life, it’s also reshaping how consumers buy dairy products. And while lots of farmers are experiencing increased demand for their foods, experts estimate demand for dairy has evaporated by nearly half.
The US dairy supply generally increases in the spring season, part of the natural cadence at which cows produce milk. But according to a new report by CoBank (pdf), there’s little demand for it this year. Economic weakness led big export markets, including China, to slash the volume of US milk they’re importing. School closings across the US—particularly elementary schools—have also put a major dent in milk consumption.
“The biggest thing is the collapse in the restaurant and food service demand,” says Lucas Fuess, a food industry analyst with HighGround Dairy. “It’s tough to get numbers, but I would estimate as much as 40% of dairy goes into food service channels.”
That’s a significant number, especially considering many US dairies were already largely struggling financially. Farm balance sheets, checking accounts, and cashflow were already in a pretty critical situation going into 2020, Fuess says. Now, with the US expected to skid into a recession, people may be spending less on premium dairy products. The result: “We could see a lot of bankruptcies pretty quickly,” he says.
There are a few ways to visualize the pain dairy farms are feeling. One is by charting out prices on the spot market, a daily auction where buyers and sellers make bids for and trade dairy products. The daily settlements set the prices that companies use when doing business, reflecting how much farmers can get for their goods. Spot market prices of butter and cheese blocks show a clear dip in the last part of March.
Another way to visualize the downturn: actual photos and videos of milk dumping being shared by dairies on Twitter. Farmers who have more milk than they can sell are literally dumping whole milk onto the grounds of their farms because there’s nowhere for it to go.
There are a couple bright spots, the CoBank report points out.
“A stable-to-slowly shrinking cow herd will keep milk production figures in check while the world emerges from a global pandemic,” it states. The number of dairy cows in the US has been decreasing for decades as farmers have found ways to increase the amount of milk individual cows produce. The stability of that downward trend will help farmers plan for future business.“Feed costs are expected to be lower, which will also help dairy farmers weather this uncertain time.”
The question is how many farms will be able to weather the current crisis.
When the dust settles over the coronavirus, it is critical that all levels of government assist industry to rebuild.
The world has been turned upside down over the past month. The impacts on most people’s lives are extreme and this is likely to last for many weeks or months to come. As well as the personal toll, the financial impacts of coronavirus are unprecedented and are likely to be greater than World War II. Already it is having a devastating impact on the economy and will likely lead to a major recession.
In an effort to stave off a recession for Australia, both state and federal government financial packages to individuals and to businesses have been astonishing. But it all comes at a cost; it will lead to high debt levels which will probably take 10 years for the country to pay back.
In addition, the private sector will face a massive financial hit. Although the impacts on businesses will be partially offset by government spending, most businesses will be in a far worse financial position compared to pre-pandemic.
So what does all this mean?
It means that all industries will have to tighten their belts substantially and accept that this will probably take at least five years to recover from. The amount of money that businesses will have will be less, and the amount that state and federal government have to spend will also be reduced. This will have a domino effect, devastating businesses outside of the initial hit.
When the dust settles over the coronavirus, it is critical that all levels of government assist industry to rebuild and make significant funding available for this to occur.
As we are an essential industry like the rest of agriculture, the dairy industry has been able to continue operating during this time of crisis. Even though we have fared OK during the chaos to date, the long-term impacts could still be severe as we manage production when our export markets are in jeopardy.
While the state and federal stimulus packages and other financial support have been welcome and necessary to steer our nation’s economy through this troubled time; the government cannot take a short-term approach. It is going to be a long road back to a properly functioning economy and long-term projects and ongoing advocacy for our industry does not and cannot stop.
There are several good reasons why dairy and all agricultural industries are considered essential to the wellbeing and future of Australia. State and federal government need to be considerate of the long-term impacts on the economy and industries such as dairy beyond the next six to 12 months.
Dairy farmers in one of Canada’s largest milk-producing province are poised to dump millions of litres of milk due to coronavirus.
Dairy Farmers of Ontario has told farmers to get rid of raw milk to keep prices stable and prevent oversupply.
The industry group says demand has crashed as restaurants and other bulk buyers shutter due to Covid-19.
Some 500 farms have been asked to dump 5 million litres a week, according to a trade report.
The policy is a volte-face from last week, when Dairy Farms of Ontario, which oversees nearly a third of Canada’s dairies, had asked farmers to increase production amid concerns about a shortage.
“In its 55-year history, Dairy Farmers of Ontario has only once before had to ask producers to dispose of raw milk,” Cheryl Smith, the association’s CEO, told BBC.
Canadian dairy is produced under what is known as a supply-management system, which strictly controls production quotas and imports to support prices.
At first, the industry co-op was concerned there would not be enough milk to meet demand, as Canadians panic-bought at the grocery store. But hoarding has died down, and the dairy frenzy has waned.
Meanwhile, bulk-buyers like restaurants, hotels and schools have been forced to close due to federal restrictions. That means there’s milk on the shelves not being sold, risking a price plummet.
Dairy Farmers of Ontario is hoping that by spilling fresh milk, the supply will balance out and prices will remain stable. The group has not confirmed how much milk they are asking farmers to dump, but says it will be done on a “select and rotating” basis.
Producers told Ontario Farmer, a trade publication, that about 500 farms across the province have been asked to dump as much as five million litres a week. The province produces about 3 billion litres of milk a year, or about a third of Canada’s total supply.
“We are working very closely with processors and industry groups to respond to the unpredictable market fluctuations that are now part of our current environment,” Ms Smith said in a statement.
Dairy Farmers of Newfoundland and Labrador, another provincial dairy association, asked farmers to dump 170,000 litres last week. The province produces about 50 million litres a year.
Dairy Farmers of America, the largest dairy cooperative in the US, has also asked farmers to dump milk.
Dairy farmers aren’t the only industry struggling with how coronavirus has affected their supply and demand. Global oil prices have tanked with demand, as factories close down and air travel grinds to a halt.
But unlike dairy groups that have asked members to dump milk to keep prices stable, the Organization of the Petroleum Exporting Countries (OPEC) has decided to ramp up production. The move, spurred by a price war between Russia and Saudi Arabia, has pushed prices even lower.
The supply war has wrought havoc on another key Canadian industry- oil, based largely in the province of Alberta.
A Wisconsin creamery cooperative is offering dairy farmers an incentive to quit an industry stung first by years of low milk prices and then by the coronavirus.
A letter from the Ellsworth Cooperative Creamery board of directors to members offers to pay their equity in the cooperative from 2010 to 2019 if the farmers meet certain criteria, WSAW-TV reported.
“We know we have farmers that are not sure whether they are going to exit farming this year or next year,” cooperative spokesman Paul Bauer said. “We felt that this was a way to incent our farmers to exit the business, perhaps a little earlier than what they expected, for the betterment of the entire patron base.”
Paul LIppert, who runs a Wood County dairy farm with his father and brother, said the cooperative is trying to help its farmers. He said there’s “a glut of milk” and it doesn’t look like ” things are going to get better very quickly.”
The COVID-19 pandemic has added to the industry’s troubles. Several farms throughout Wisconsin have been asked to dispose of their milk while production plants struggle to keep up with the milk that is being produced.
Restaurants have been shuttered for weeks. Farms have been struggling with labor shortages for years. And grocery stores have been running out of bread, meat and eggs.
So what does that all mean for the national food supply during the COVID-19 pandemic?
The short answer is that U.S. agriculture is strong enough to handle it, with farmers still farming and no major shortages in sight, experts say. But because consumers recently have changed the way they buy and consume food, various snags in the food supply chain have led to disruptions, including truckloads of raspberries getting turned back from market and dairy businesses dumping thousands of gallons of milk.
“There will be enough food produced on the farm,” said Zippy Duvall, president of the American Farm Bureau Federation. But “there’s a lot of things that happen to the food before it gets to the consumer, whether it be in processing or transportation. If this thing was to get worse, what problems come along with that? None of us really know.”
Panic-buying and stockpiling by consumers have cleared supermarket shelves of certain foods in the meantime, creating the appearance of a problem. But those shelves are soon restocked, and the frenzy is expected to subside as supply chains adjust and home refrigerators run out of room.
The pandemic still has different ways it could impact food prices and dinner tables across the U.S., which imports only about 15% of its overall food supply.
The drastic reduction in restaurant dining could lead to cheaper butter while also putting some farms in financial despair. Unpredictable consumer shopping surges could cause more produce trucks to be delayed or redirected at a loss. The virus also could infect scores of farmworkers, adding to a series of concerns from farm to table.
Labor shortages in the fields
This problem preceded the pandemic but could get tangled up by it even more. Temporary foreign visa workers made up 20% of the country’s farm workforce, with most coming from Mexico, according to the American Farm Bureau Federation. Approximately 250,000 of these workers were approved to work in the U.S. in 2019.
But then when the coronavirus outbreak flared in March, the U.S. suspended routine immigrant and nonimmigrant visa processing services, raising concerns from American farms about being cut off from this labor supply. After hearing these concerns, the U.S. State Department since has eased requirements for these workers, much to the relief of farmers, who say they need their specialized help.
“Even with those 250,000, we still don’t have all our jobs filled, so we really need to have those 250,000,” Duvall told USA TODAY.
Duvall said he is hopeful that the loosening of restrictions will help meet farms’ labor needs. So is Carolyn O’Donnell, spokeswoman for the California Strawberry Commission, which represents more than 400 strawberry farmers, shippers and processors.
“Labor is always a concern for strawberries,” O’Donnell said. “They are hand-planted, hand-weeded, handpicked and hand-packed.”
At the same time, there’s a pandemic on the loose.
What if the farmworkers get sick?
Farms in California will have about 20,000 workers in the fields in coming weeks picking berries for Driscoll’s, the world’s largest berry supplier. What if 15% of them get sick?
“You just won’t be able to pick the whole crop,” said Soren Bjorn, president of Driscoll’s of the Americas.
Bjorn told USA TODAY his company has planned for such worst-case scenarios and has worked with partner farms to mitigate this risk by breaking up workers into groups of 10 instead of 30, staggering breaks and adding hand-washing stations, among other measures.
Prevention efforts still vary by farm. Many farmworkers also are undocumented, poor and not likely to stay home if sick because they need the money.
“Not all, but most of the companies are not taking the necessary precautions, such as informing the workers about what COVID-19 is and the basic kind of protocols they should be following to take care of their health,” said Arcenio Lopez, executive director of the Mixteco/Indígena Community Organizing Project, which supports indigenous migrant communities in California’s Central Coast.
In theory, the cratering economy could lead to a larger labor supply, helping fill any farm labor shortages. But these are specialized jobs that not everybody wants even if they’re unemployed.
“There just aren’t a lot of people out there who are going take these jobs,” Bjorn said. “There will be some… But if you have a very large outbreak, of 15 or 20% of the population, there won’t be a way to back-fill that.”
Even if farm workers are young and might not get sick, the risk of a workforce reduction still looms over farms and their crops.
“The food supply for our nation is planted already, and if you have no way to harvest your crop, you not only lose the opportunity to supply consumers now, you begin to reduce the overall quantity and availability of food in the future,” said Hector Lujan, CEO of Reiter Affiliated Companies, which grows Driscoll’s berries in the U.S. and Mexico.
Why restaurants being closed makes butter cost less
In 2018, food away from home accounted for about 54% of the $1.7 trillion in U.S. spending on food, according to the U.S. Department of Agriculture. In the age of COVID-19, the seismic shift from dining out to dining in already has rippled through dairy industry, creating a situation in which there is too much butter from the farms and not enough bread in the stores.
On the one hand, the surge in demand for some food products at retail stores can be accommodated in part because restaurants are no longer are using as much supply.
On the other hand, some products “just don’t transition well into the retail space” from restaurants, said John Newton, chief economist at the American Farm Bureau Federation. “A good example of that is butter. Much more butter is used in restaurants and bakeries than what people use at home. So you’ve seen spot market prices for butter and cheese fall pretty sharply since this started.”
The price per pound of Grade AA butter has dropped from $1.86 on March 6 to $1.28 April 3, according to the Chicago Mercantile Exchange. The drop might not lead to lower prices at the grocery store anytime soon because retailers might not immediately pass that reduction to consumers.
“It’s such a terrible thing,” said Julie Sweney, spokeswoman for the FarmFirst Dairy Cooperative in Wisconsin. “We’re hopeful we’re able to secure some emergency measures that will help support diary farmers through this time.”
The cost of food without a steady paycheck
While meat is in high demand from consumers now, the falling futures market for meat has concerned farmers, said Newton, the economist. This is based onexpectations of a shell-shocked economy and depressed demand because of lost jobs leaving consumers without enough money.
“The 2008 financial crisis showed us what can happen when reduced income and uncertainty make people spend less and result in shrinking demand,” said a report on COVID-19 by the Food and Agriculture Organization of the United Nations. “Sales declined. So did production.”
This, in turn, could lead to a shift of what farms produce and what kind of food consumers eat. Much will depend on how well the recent economic stimulus package works from Congress, with some Americans soon getting one-time checks of $1,200.
If that’s not enough to sustain the purchasing power of laid-off workers, “then people may have to start saving on food and shift to cheaper and potentially less healthy foods,” said Rob Vos, director of the Markets, Trade and Institutions Division of the International Food Policy Research Institute.
Specialty farms that supplied upscale restaurants with local, organic food also may suffer because of restaurant closings.
“Any product that is on the fancy end will have more reduced demand,” said Dan Sumner, director of the University of California Agricultural Issues Center. “That always happens in a recession and when there is uncertainty.”
Access and delays
Some local governments, including in San Diego, shut down farmers’ markets in March, but others have classified them as essential businesses during the pandemic, helping keep commerce flowing from farm to table. These are open-air alternatives to supermarkets, with the usual precautions emphasized, including social distancing and washing the produce, although there is no evidence that supports the transmission of COVID-19 by food.
Hoarding still has been prevalent but is expected to subside. Many are open for business in California and elsewhere.
“Our meat was selling out in an hour and a half at all these markets,” said Gail Hayden, director of the California Farmers’ Markets Association. “There’s no shortages, just overbuying, and then there’s a lag filling up the supplies in the traditional system.”
This also happened with a recent order of more than 10 truckloads of Driscoll’s raspberries. The customer canceled at the last minute after getting too backed up with other produce, Bjorn said. He said retailers had pushed produce down their priority lists in an effort to get other high-demand products back on the shelves, including toilet paper, Bjorn said.
Fruit wasn’t getting to the stores in time as a result, and some of it spoiled in the delay. In this case, Driscoll’s fresh raspberries got redirected into becoming frozen raspberries, causing Driscoll’s and its partner farms to get only 20 cents on the dollar in return.
Bjorn is hopeful these kinks are smoothing out as consumers develop more regular shopping patterns. Other questions remain, such as whether customers are willing to buy what they normally buy at peak berry supply in May.
Supply shortages won’t be the issue then either.
“The food supply chain is remarkably resilient and effective,” Sumner wrote in an e-mail. “Sure there are little inconveniences. But the basics are in great shape.”
From 2002 to 2019 the state of Texas had the biggest increase in milk production in the U.S. both in absolute and relative terms. Texas increased milk production by 8.55 billion pounds, which represents 160% increase from 2002 to 2019 (Figure 1).
During this time frame, Texas went from being the No. 10 to the No. 5 state in milk production in the U.S. If these trends continue, in the next few years Texas might surpass New York state and become No. 4. In 2019, Texas and New Mexico combined produced 10% of the milk in the U.S. (22 billion of the 218 billion pounds produced in the country) highlighting the economic importance the dairy industry has for this region. Roughly, 80% of the milk production in New Mexico takes place in the East region of the state and a similar proportion of the milk in Texas is produced in the Panhandle. Therefore, combined, the Texas Panhandle and Eastern New Mexico region is one of the biggest milksheds in the country.
Similarly, Idaho and Michigan milk production increased considerably from 2002 to 2019 (91.7% and 91.5% respectively). The only state that showed a decrease in milk production was Pennsylvania. This is explained by the decrease of milk cow inventory in the state (Figure 2) due to longstanding consolidation of the dairy industry combined with several years of low milk prices that led to acceleration of small dairies running out of business in the Midwest.
What was the cause of the increase in milk production in Texas?
The biggest factor driving the increased production was a significant growth of the dairy cow inventory in the state. In 2002, there were roughly 310,000 dairy cows in Texas whereas there are over 580,000 today (almost 90% increase, Figure 2). This increase occurred in the Panhandle area of Texas that had less than 20,000 dairy cows in 2001 and now has over 400,000 dairy cows. This was associated with dairy farmers moving mostly from the West coast of the U.S., but also from other states of the country or regions of Texas, to the Panhandle.
However, increase growth of dairy cow inventory was not the only factor contributing to increase milk production in Texas. Improvements in genetic selection, nutrition, environment, reproduction and management practices have contributed to the increase of milk production.
What are some opportunities for the future?
– Use of precision technologies and automation to facilitate daily tasks, and accurately measure behavioral and production variables to guide managerial decisions intended to improve animal performance and welfare.
– Develop Extension programs to train farm managers and workers on sustainable dairy practices and best animal welfare practices.
– Perform research to improve use of ground water irrigation, digestibility of drought tolerant crops, and nutrient management in dairy operations.
– Continued genetic improvements to decrease disease susceptibility, improve reproductive performance and feed efficiency which will have a positive impact on the environment.
– Provide unbiased, science-based information on agricultural practices and nutritional value of dairy products to build transparency and trust with consumers.
– Educational programs for the youth including field trips to dairies to show daily activities and job opportunities in the industry to engage and encourage them to pursue a career in the dairy industry.
U.S. Department of Agriculture, National Agricultural Statistics Service. 2002, 2007, 2011, 2015 and 2020. Milk Production.
The coronavirus pandemic is setting back a number of industries, including dairy farms.
Even though low prices and high demand is causing milk to fly off the shelves in grocery stores, the pandemic has caused a shift in the dairy supply chain leaving some farmers forced to dump thousands of gallons of milk down the drain.
The outbreak has dried up the marketplace for dairy products as the industry’s top consumers remain close.
Restaurants, food service businesses and schools fuel a large part of business for dairy farmers. With them closed for the foreseeable future, it’s leaving farmers depending on just retail to sell their milk.
“That humongous segment of food service is not taking in the products like they used to,” said Nate Chittenden, dairy farmer and owner of Hollow Dutch Farm in Schodack Landing.
“We’re going to have to learn that some of these things take time through the supply chain to react,” said Chittenden.
Though Chittenden hasn’t been forced to dump any milk yet, he remains nervous because he knows the shift in the supply chain won’t be short term.
“If our economy is going to be down for a long time and that food service doesn’t come back on and we don’t see the same amount of dairy being used in our country as we were used to that means there’s going to be an over supply,” said Chittenden. “Our price forecast already shows milk prices is going to be much lower in the next couple of months so we’re trying to figure out where we’re going to cut costs.”
Unlike other businesses, dairy farms are dealing with can’t shut down production because their cows need to be taken care of and fed daily.
“A factory that knows that they don’t have to produce something, they can shut down the production line temporarily, lay off their employees, send them home and minimize their losses. They’re not selling something but they’re also not producing things. That cost the money,” said Chittenden. “For us, we still have to feed these cows every day and we still have to milk them every day whether that product is being picked up and sold or not.”
Chittenden said the two biggest costs are feed and labor.
The dairy industry has been struggling in recent y ears, and was just bouncing back up before the COVID-19 outbreak.
“We have been in an over supply in this country of dairy for several years now, since 2015, we’ve had more milk in this country than what we can possibly produce,” said Chittenden. “This is not a one month problem for us that we’re looking at. This has been five years.”
“As dairy farmers, we are nervous because, for the short term, we are still living day-to-day knowing that we had to take care of these cows but there’s going to be farms that are going to have to be making long-term decision,” said Chittenden. “Ultimately there’s going to be farms that look at their business plan and realize that they is no way that they’re going to be able to keep going.”
Australian dairy processors are adapting to rapidly evolving markets, but warn global commodity markets face increased uncertainty due to the COVID-19 pandemic.
Bega Cheese executive general manager – ingredients Mark McDonald said global commodity prices were softening.
“Global incomes are an issue now,” he said.
One of the key drivers of global incomes was oil prices, which at US$30 a barrel were now well below the cost of production, which was having a huge impact on oil-producing countries, including in the Middle East and Russia.
Global milk production was growing at 1-1.5 per cent, which in a normal world would be a contraction of supply relative to demand, but in the current environment, demand was difficult to forecast.
“It will be an unsettled period for the next 6-12 months,” Mr McDonald said.
Saputo president and chief operating officer Kai Bockmann told a briefing last week downward pressure on global commodities was having an impact on its Australian business, while lower oil prices were affecting demand from the Middle East.
But both companies are seeing improved signs from the Chinese market.
Mr McDonald said there had been some delays due to tight capacity in Chinese ports but these were sorting themselves out.
Mr Bockmann said there had been some softness in China and South-East Asia due to lockdowns in countries there.
“But the good news is that we are starting to see the Chinese ports and transport in that country slowly getting back to normal,” he said.
“So we anticipate that those markets like China will pick up steam as we start to enter the second and third quarter of our fiscal year.”
Mr McDonald said it was paramount that borders remained open to allow trade to continue.
“Because while Australia has a very strong domestic industry, which is wonderful, it also relies on exports, and to a degree imports, to support the consumer and the farmers themselves,” he said.
Both companies are reporting changes in product mix.
Saputo, in its global briefing, reported an increase in demand for retail products but a decline in food service and industrial markets across its operations worldwide.
Mr Bockmann said in Australia there had been a surge in demand for longer shelf-life products such as UHT, powder, everyday cheese and chilled milk.
Food service is a smaller part of Saputo’s business in Australia, but demand in that sector was soft.
Mr McDonald said food service was slower but Bega was fundamentally a retail food business in the domestic market and was seeing strong demand for one-kilogram block and sliced cheeses, while cream cheese sales and infant formula into Asia were still going well.
Bega was focused on business continuity – both in terms of planning how to manage potential interruptions and in keeping in touch with existing customers, he said.
It was also committed to picking up milk from its suppliers and had plans in place should it have to close a plant.
“We have enough capacity to manage our milk across a number of multiple plants – we are in a very fortunate position,” Mr McDonald said.
Saputo is ramping up production in its plants producing retail goods and switching some of its other factories to making longer shelf-life products, but is keeping a close eye on the evolving situation.
But its chief executive officer Lino Saputo said the company could be left with inventory, if it could not repurpose some of its food service items that were getting close to the end of their shelf life.
The company would attempt to get this stock to foodbanks.
Mr Saputo said the company was also committed to collecting 100 per cent milk from its contracted suppliers.
But in some places, it was no longer taking milk from other sources.
Mr Saputo said the company’s strong balance sheet meant it was well placed to weather the COVID-19 outfall.
There might be opportunities for further mergers or acquisitions for the company as a result.
Although noting there might be opportunities in Oceania, Mr Saputo ruled out the likelihood of those being in Australia.
Any further acquisitions in Australia would be reviewed by the Australian Competition and Consumer Commission, and might not be viewed favourably, he said.
The coronavirus is setting the dairy industry back, forcing some farmers to drain surplus milk.
“I am doing everything in my power to become more efficient to try and prevent me from having to dump any milk,” Kyle Hemmersbach said.
Hemmersbach hauls dairy, and while he hasn’t had to drain any milk yet, he said the plants he works with are equipped to handle packaging for restaurants, rather than retail.
“We are coming into a problem where they are just not able to produce anything because they are not able to package it for where the demand is right now,” Hemmersbach said.
Hemmersbach said dumping one load can be between $8,000 and $10,000, depending on the size, and that price has been dropping over the past couple of months because of the coronavirus.
“When prices fall far enough, you’re losing money every time you turn the milk pump on to milk the cows,” Hemmersbach said.
Dairy Farmers of America Vice President Kristen Coady said the sudden changes in demand is forcing manufacturers to cut or change production.
“This, in combination with the perishable nature of our product, has resulted in a need to dispose of raw milk on farms, in some circumstances,” Coady said.
Dairy Business Association Executive Director Tim Trotter said all aspects of the dairy industry need to work together to survive this.
“I am confident we can, but we need government support. We need their buy in and solutions that are really looking at, you know, getting nutrition to the people who need it more,” Trotter said.
Trotter said dollars have already been allocated for the purpose of paying farmers during the crisis, but now it’s about quickly building a program with the United States Department of Agriculture to do that.
Hemmersbach said he doesn’t believe a solution can be found that easily.
“The dairy industry will never be the same,” Hemmersbach said.
Those working with the USDA said meetings are happening frequently to find solutions.
Q106 Farm Director Pam Jahnke said consumers can help out as well by purchasing as many dairy products as they can afford to, especially those products that are local to Wisconsin.
A message translated into 10 languages says U.S. dairy suppliers are working hard to continue shipments to other countries during the COVID-19 pandemic.
Thousands of shipping containers make for a dazzling array of colors at the Port of Oakland, one of several ports used by U.S. dairy exporters to reach overseas markets.
Global customers are being reassured that the U.S. dairy industry is committed to exporting a continuing supply of safe, sustainable and high-quality products and ingredients during the COVID-19 pandemic.
A letter conveying that commitment, signed by U.S. Dairy Export Council President and CEO Tom Vilsack, has been translated into 10 languages and distributed to U.S. dairy customers globally.
“In response to COVID-19, we want to let you know that our U.S. dairy farming community, U.S. dairy suppliers and food-industry professionals remain vigilant and dedicated to delivering safe, sustainable and high-quality U.S. dairy products,” wrote Vilsack.
The letter expressed solidarity with global customers while acknowledging the pandemic’s disruption of global supply chains.
“Stay safe, be well, and know that we are in this together with you and will continue to operate in the best interests for the health and safety of everyone.”
USDEC microsites carry message in multiple languages
The letter is being posted on USDEC microsites in multiple languages, including Spanish, Portuguese, Vietnamese, Chinese-Mandarin, Korean and Arabic.
A message on USDEC’s Spanish microsite reassures U.S. dairy customers.
In addition, employees stationed at USDEC’s nine international offices are personally distributing Vilsack’s message via email to U.S. customers in their markets.
With the health challenges posed by COVID-19, it is more important than ever for people to eat a healthy, balanced diet, and dairy is a key component of that — not just for the U.S., but the world.
Exports vital to U.S. dairy industry
The United States is uniquely positioned to provide high-quality dairy nutrition to the world. Tens of thousands of dairy farmers in the U.S. work long hours – 12 months of the year – to keep the milk tankers moving.
In 2019, milk from one out of seven of those tankers was turned into products and ingredients exported to other countries, totaling $6 billion in sales that boosted the U.S. economy, particularly in rural communities.
Truck drivers, food company employees, railroad engineers, ocean port stevedores, cargo ship captains and many others play a role in getting product to fast-growing countries that need more dairy than their own farmers can produce.
“Our stakeholders – from U.S. farmers to USDEC member suppliers – want to reinforce our commitment to be your partner in one of the most important jobs in the world, providing safe and wholesome U.S. dairy products to nourish families and communities globally,” said Vilsack in the letter.
Secretary Vilsack’s entire letter to global customers follows:
March 25, 2020
An Important Message to U.S. Dairy Customers Around the Globe
Dear valued customers and partners:
Our primary wish to you is a sincere hope that you and your colleagues, family and friends are all in good health and staying well as the impact of coronavirus (COVID-19) is increasingly felt across all corners of the globe. During these unprecedented times our objective is to maintain clear and open lines of communication. As cases of the COVID-19 continue to spread in the United States and other nations, we are keenly aware of the uncertainty and disruptions you may be facing given the dynamic nature of this global pandemic.
In response to COVID-19, we want to let you know that our U.S. dairy farming community, U.S. dairy suppliers and food-industry professionals remain vigilant and dedicated to delivering safe, sustainable and high-quality U.S. dairy products.
Here’s what we can share at this time:
Dairy has been identified as an essential “critical infrastructure” by the U.S. Department of Homeland Security (DHS). As such, U.S. dairy farmers and processors have a special responsibility to continue operations during the pandemic. U.S. dairy farms will continue to harvest milk around the clock, 365 days a year along with the full force of our processing and manufacturing capabilities.
We, the U.S. Dairy Export Council (USDEC), are continuing our critical work both within the United States and throughout our offices in Asia, Latin America and the Middle East/North Africa. For the safety of everyone from our contacts to employees, we have taken several precautionary measures such as postponing seminars and workshops; some of our staff are also now working from home or in shifts. However, we want to reassure you that we are just an email, phone call or website click away. During these times we remain ready and available as an ongoing resource to support you and your staff’s business and innovation needs.
As part of the U.S. dairy community, USDEC is in close communication with the exporting and trading establishments, which are flexible and continuously adapting to this fluid situation. We have staff on hand to help support the supply chain to mitigate disruptions, to the degree with which we can, during these challenging times.
Our stakeholders – from U.S. farmers to USDEC member suppliers – want to reinforce our commitment to be your partner in one of the most important jobs in the world, providing safe and wholesome U.S. dairy products to nourish families and communities globally. Stay safe, be well, and know that we are in this together with you and will continue to operate in the best interests for the health and safety of everyone!
The year 2020 was anticipated to bring relief for farmers who had faced more than five years of downward trends, but the coronavirus delivered another hit to the dairy industry.
Dairy sales to restaurants, schools, and hospitality businesses plummeted, bring prices to levels that may be unprofitable for farmers this spring who need to prepare for planting input costs.
Before the COVID-19 pandemic hit American soil, one Minnesota dairy farmer theorized a plan to help the small players in the industry.
Mike and Joan Gilles are first-generation farmers. Mike always enjoyed working outdoors and had a love for animals. The city kids started farming full time in 1982. In 1996, they bought a dairy near Ridgeway, Minn.
The grass-based dairy farmers are limited in their herd size based on the space and efficiency of farm pastures. The Gilles family milks about 110 cows and has 100 acres of open ground for pasture grass with another 150 acres of land they rent for growing forages.
Although it is a family farm today, Mike and Joan are not sure if there is a future in the industry for their children.
“It is hard for anybody in this generation to be enthusiastic to farm when they see the struggles involved,” Mike said. “When I started, if you worked hard and managed properly, you could be successful. That isn’t necessarily the case for the next generation we’re seeing.”
As Mike wondered if his farm would make it to a second generation, he thought of a plan to keep other small producers going. He said the principle of the idea can be split among three key groups: the farmers, the processors, and the retailers.
Using general, flexible numbers for easy math, Mike said they could stabilize markets for dairy farmers by guaranteeing $30 per hundredweight for the first 1 million pounds of milk. Any milk produced past that point would receive the market price.
“At the end of 2018, using 1 million pounds for every licensed dairy farmer accounted for about 15 percent of the milk produced in this country,” Mike said. “It’s a relatively small segment, so it doesn’t impact the whole industry significantly.”
Mike admitted that to keep prices the same in retail, the balance of the market price would come down to absorb the price increase.
“The good side of it is every single farmer is going to get the exact same benefit,” he said. “We’re constantly told the milk price is falling because of oversupply, but there’s absolutely nothing in the pricing system that gives you any reason to cut production.”
Mike noted that under this system, the average farm blend price would lower as the size of the herd grows.
“It is not a quota system that tells you this is what you can milk, but the small farmer shouldn’t be paying the price for your growth,” he said. “Statistics show that 90 percent of the milk in this country is produced by the largest 10 percent of farms. That means 90 percent of the oversupply comes from the largest 10 percent. Small farms are getting pushed out for something they are not doing.”
He also pointed out that this would not be taxpayer-funded. His plan is a mandate similar to the minimum wage mandate.
Small farmers leaving the industry impacts not only their family businesses but also the communities and retailers that supported them and have also been struggling in the dairy industry decline, according to Mike.
He predicted this price plan could incentivize young people to start farming and help them receive loans if they have a guaranteed number to show the bank.
One foreseeable challenge is for dairy processors or co-ops that work heavily with smaller herds. As the farmer’s blend price goes up, so would the processor’s cost. This is where Mike proposed a tax incentive that could level the playing field among processors. The tax credit would go to co-ops accepting at least 15 percent of their milk from small producers. The tax credit could then fluctuate based on higher percentages.
The retailer may also qualify for a tax credit if shelves are stocked with what could be labeled as “fair wage milk.”
“The consumers I’ve taught to like to keep our small farms,” Mike said. “If they can go and see this part of the dairy case has a percentage of its product from fair wage milk they may support it more than the section of the dairy case that doesn’t.”
He hoped if anything, the idea would spark a conversation of change as farmers look to pass their heritage down from generation to generation.
Cows are the Hartong family business. For three generations, Matt Hartong’s family has kept cows in a building built in 1911.
“We milk about 120 cows and we have about 200 in total,” Hartong said, standing outside the pasture gate.
He knows raising cows takes time.
The night before his News 5 interview, three calves were born on the farm. Cows are on their own schedule.
“The cows need to be milked,” he said. “They need to be fed; multiple times a day, every single day.”
And during the coronavirus pandemic, that schedule doesn’t deviate.
“Whether I’m sick or not, I have to be here,” Hartong said. “I have to feed cows, I have to milk cows because the cows don’t get sick.”
When Governor Mike DeWine announced a mandatory stay at home order for the state, he also released a list of “essential services.” The list is curated by the Department of Homeland Security and names agriculture as an industry that can continue.
Hartong knows keeping the farm’s schedule is important.
“As far as dairy markets go, it’s an extremely volatile market,” he said.
For the past few years, Hartong and his family watched their industry change.
“We’re the last dairy farm in the county, in Summit County,” Hartong said. “In the short term, we’ve been deemed an essential business. Hopefully the impact is very little.”
Without the disruption to their daily routine, Hartong is able to keep his farm running like clockwork. The cows are milked twice a day; once at 3:30 a.m. and again at 3:30 p.m.
But, while farms in the state are still able to run, they have to adhere to guidelines issued by the Centers for Disease Control.
“And, I’m not going to tell you it’s business as usual,” said Ty Higgins. “But, being an essential part of the food system does allow producers to continue with their business.”
Higgins works for the Ohio Farm Bureau. He said he wants consumers to remember that agriculture is chain. And if one part of the chain breaks, it could mean slower delivery to markets or loss of product.
When shelves emptied out, milk went fast. “In agriculture we were concerned about, maybe, the way the consumer was thinking,” Higgins said. “But I think this proves that what we’re doing on the farm is still so valuable to not only our consumers but their diets as well.”
The stay at home order is expected to end on April 6. However, DeWine hasn’t ruled out the possibility of extending it. If the order goes on longer, Higgins said farmers will remain an essential service. “Because the only thing we all need, despite the economy, is our three meals a day.”
Newlat has signed an agreement to buy 46 per cent stake in dairy group Centrale del Latte d’Italia, creating the third biggest domestic operator in the sector.
According to reporting from Reuters, the owner of the Delverde pasta brand said it would buy the CLI stake from a group of shareholders. This includes top investor Finanziaria Centrale del Latte di Torino, at a price of 1 euro and 0.33 Newlatordinary shares for each CLI share.
Newlat will then launch a mandatory takeover bid on the remaining CLI shares at the same price. The CLI shareholders selling their stake will reinvest in Newlat by buying a 5.3 per cent shareholding.
Newlat, which produces pasta, bakery products and baby food, said that the acquisition will boost its revenue to 500 million euros ($533 million).
CLI produces and sells about 120 products including milk and its derivatives, with brands such as TappoRosso, Mukki, Tigullio and Vicenza. CLI recorded revenues of 180 million euros ($198.04 million) last year and core earnings of around 6 million euros.
Newlat said its revenues rose 5 per cent to 320 million last year driven by pasta and dairy products.
The company said on 19 March that in the first two weeks of that month, when Italians stocked up food products in response to concerns about coronavirus, it recorded a 35 per cent rise in sales compared with the same period last year.
Dairy farmers are warning they will go out of business because the price they are paid for milk has fallen, despite shortages in some supermarkets.
The UK’s main milk processor Freshways, said its cut of 2p-per-litre was “unfortunate” but a drop in trade with coffee shops and pubs had forced it.
Staffordshire farmer Peter Pratt said this comes after he lost 65% of crops during floods.
The government said it was looking at the problem “as a matter of urgency”.
Payments to farmers by Freshways will also be deferred until 15 May after the “excessive decline”, managing director Bali Nijjar said.
The National Farmers’ Union (NFU) dairy board chairman Michael Oakes, said some dairy farmers were “particularly vulnerable” in this “highly volatile situation”.
Mr Pratt, a dairy, arable and beef farmer employing six people in Rugeley, said his family-run farm had been “hard hit”.
His 200 cows produce about 6,000 litres a day on the 1,500 acre site but he was “quickly running out of money” and wanted the government to act.
Alan Smith, from Bumble Bee Farm in Leicestershire, said the future of his 101-year-old farm, employing four family members, was now in doubt.
“We’re losing nine pence on every litre [of milk] we send but the worst of it is they won’t now pay us for 70 days,” he said.
“We can’t go on losing forever.”
Milk co-operative Arla Foods UK said it had experienced a “significant” increase in demand from consumers and had managed to increase supplies of milk to supermarkets significantly by “simplifying the business”.
Managing director Ash Amirahmadi, said he had spoken to the government who were “working very hard to put the framework together for us to allow more co-operation”.
A Defra spokesperson said: “We are aware of the need to redirect produce from the hospitality market to the retail market and are looking at it as a matter of urgency.
“We are working closely with representatives from the dairy supply chain to understand what short-term and long-term support the whole sector needs.”
For two fleeting decades, there was no status symbol more potent than the milk mustache.
“Got Milk?” stretched across nearly 350 print advertisements and more than 70 television commercials featuring some of the most famous people in America: Beyoncé and Tina Knowles. Serena and Venus Williams. Harrison Ford. Angelina Jolie. Alex Trebek. Rihanna. Taylor Swift.
Readers of a certain age may remember the way the print ads hung, on thin and crinkly magazine pages, from their friends’ bedroom walls. Those of a slightly younger age may have worn bibs that carried the slogan.
“The campaign was very brilliant, and very adorable,” said Faith Popcorn, a marketing consultant and self-proclaimed futurist. “It took an unbranded product and made it very special. Seeing celebrities with a little mustache on makes it very infantile and funny and warm.”
What the ads didn’t do was convince people to buy milk. In 1996, three years after the campaign’s debut, Americans were drinking, on average, about 24 gallons of milk a year, according to the U.S. Department of Agriculture. In 2018, that number was down to 17 gallons. (Meanwhile, thanks to yogurt and cheese, dairy consumption per capita is way up.)
But the mustache isn’t milk at all: It’s an oat beverage sold by Chobani, the company that made Greek yogurt cool in the 2010s. And it’s a sign of the times.
While nondairy milk has risen from the dusty shelves of health-food stores to Times Square billboards and supermarkets around the country, dairy farmers have faced economic turmoil. The question now is not whether anyone’s got milk. It’s how to sell it.
Our Milk, Our Selves
Many people view milk as a distinctly American product. Its primary consumers, in cities and suburbs, picture their gallons of two percent coming from rural idylls in upstate New York, Wisconsin and Idaho, where cows serenely graze and farmers procure their milk by hand.
More than half the states in this country have named it their official beverage. Milk is the only thing, aside from water, that senators are allowed to drink on the floor. In 2018, white nationalists were reportedly chugging it to show off their genetic superiority in lactose digestion. (It turns out that people whose ancestors were cattle herders in East Africa may also possess this genetic evolution, but OK.)
Despite their apparent attachment to milk, Americans are fairly disconnected from its agricultural underpinnings.
In an online survey by the Innovation Center of U.S. Dairy, seven percent of respondents said they believed that chocolate milk comes from … brown cows.
Despite the quaint imagery many people still associate with milk’s creation, almost all of it is produced at a factory scale. The largest dairy farms house thousands of cows, who are repeatedly impregnated (often by artificial insemination) so they can make milk nearly year-round.
Even with a set price, Americans still aren’t buying milk in the volume farmers say they need to turn a profit. Since 1975, milk consumption per capita has dipped roughly 40 percent, according to data from Nielsen, and between 2010 and 2018, sales of milk dropped by 13 percent. The already-low price of milk, which is set by the federal government, is projected to drop even further this year.
‘Clean eating” — a catchall phrase for a mostly plant-based diet free of processed foods — has become the North Star for many Americans looking to balance their desire for health with a desire to be thin, dairy has been branded as “unclean.” Joaquin Phoenix dedicated an entire Oscars speech to its supposed cruelty. The party line in women’s media is that giving up dairy will clear your acne, make you less bloated and bestow upon you the glow and energy of Gwyneth Paltrow. (Elsewhere, people are applying it topically to soften and smooth their skin.)
“We’ve done a poor job of explaining the nutritional value of milk,” said H.H. Barlow, the executive director of the Kentucky Dairy Development Council. “And we’ve done a poor job of innovation in selling our products. We’re still selling milk in that plain, simple gallon jug.”
The types of milk that are selling these days are the grass-fed, organic “specialty” milks that turn the dairy case more colorful. Consider the average American dairy case: Its heart is a sea of neutral plastic jugs, which are as visually exciting as a drawer full of worn-out socks. Things get louder and more colorful once your focus moves to the organic shelves — and then even more so once the dairy gives way to the sparkle of almond, oat and soy milk.
For those in the business of dairy milk, then, the solution may be to evolve. Here’s what a few have tried.
A Pivot to Nondairy
Elmhurst 1925, formerly Elmhurst Dairy, has turned what was New York City’s last milk processing plant into a company that “milks” things like oats, hemp seeds and almonds.
Henry Schwartz, the owner of Elmhurst Dairy, closed the plant in 2016, citing an unprofitable business. Soon, in a moment of entrepreneurial kismet, he met Dr. Cheryl Mitchell. Dr. Mitchell is a food scientist who, at the time, had recently developed a process that can break down things like nuts, seeds and grains into their smallest particles — separating stubborn fiber from protein, say — and produce a smooth, creamy drink.
Mr. Schwartz bought up Ms. Mitchell’s patents, hired her as his lead food scientist, and reintroduced Elmhurst Dairy as Elmhurst 1925, a dairy-free beverage company. The company started out with four styles of lightly sweetened “milked nuts”: almond, cashew, hazelnut and walnut. Now, they have 18 varieties and will begin selling coffee creamers this spring.
“Plant-based milk is really crossing over to people who are open to trying different things in their diet, whether or not that’s because of health concerns,” said Peter Truby, Elmhurst’s C.M.O. “They want to try it because they think it might taste good. We have Oatly to thank for some of that. Impossible Foods has done a lot for that.”
While almond milk is still the No. 1 seller in the category, Mr. Truby expects oat will surpass it eventually. But he’s also betting on fatty, nutty hemp seeds, which Elmhurst has begun whizzing into their coffee creamers for added fat.
“If anything deserves to have its day, I think it’s hemp,” Mr. Truby said, noting the plant’s sustainability. (Its byproducts can be used to make clothing and building materials, and it’s a fast-growing, regenerative crop.)
Sustainability and climate impact have become enormous factors in the way people talk about and purchase dairy milk and its substitutes. According to Helen Harwatt, a food and climate policy fellow at Harvard, “dairy is the second highest emitting livestock product, accounting for 4 percent of all global emissions.” (Beef, which happens to come from the same animal as dairy, is No. 1, responsible for 6 percent of emissions.)
Farming almonds for almond milk, Dr. Harwatt said, is “much less” harmful to the environment, as animals require food to produce food. She pointed to a study by Joseph Poore in 2018, which found that almond milk takes half as much water to make than the same amount of dairy, and produces a quarter of the emissions.
But dairy farmers take issue with these environmental condemnations. “I think dairy farmers are some of the country’s best environmentalists,” said Mr. Barlow, of the Kentucky Dairy Development Council.
For him, it’s a matter of using the land for its designated purpose: to feed the world. “You hear people say, ‘Let’s don’t have the cows in barns.’ But one acre of corn silage will feed a cow all year long. And if she’s grazing, there’s no way that can take place.”
For consumers, the issue is often less contentious. “There’s a lot of plant-based brands out there making an almond milk or a soy milk and they’re marketing it against dairy milk,” Peter McGuinness, the president of Chobani, said. “But the consumer doesn’t see it that way. Food manufacturers are creating a fight that consumers don’t want.”
Open the Farm for Tourism
In an industry that has become increasingly bleak, Chaney’s Dairy Barn is a success story born of desperation. Carl Chaney and his family have turned what was recently a foundering dairy business out of Bowling Green, Ky., into a tourist attraction that grosses over a million dollars a year.
Mr. Chaney, a second-generation dairy farmer, remembers coming to an impasse with his father, James, in 2000. “We had some rough prices,” Mr. Chaney said of that year. He recalled his father saying, “I made more money milking cows in 1943 than I am now.”
The Chaneys’s solution to the problem was more investment — but instead of buying state-of-the-art milking machinery, they opened an ice cream shop and a restaurant, and opened the farm for tours, the sort where small children can hitch a ride on a large tractor.
Agritourism of this sort has become a secondary, and sometimes primary, form of revenue for many small farms — which is to say, the vast majority of farms in America. They’re opening their homes for farm stays on Airbnb and renting out land on Hipcamp. They’re hosting tours and classes for urbanites who view their professions as picturesque pastimes. For many farmers, turning their land into a destination has been life sustaining.
“The dairy barn is what has kept the cows here on the farm,” Mr. Chaney said. “If it was not for selling ice cream, and a restaurant, and tours, and taking our trailers out off-site to sell ice cream, we would have sold the cows. We lose money milking cows.”
Innovate and Educate
Consumer education is a necessity for the alternative and premium milk sector: Americans are drinking less dairy milk, but it’s still the product they’re most familiar with. For A2, a New Zealand-based dairy company that sells milk that’s free of the A1 protein that many people find difficult to digest, health benefits are a way into the fast-growing but hypercompetitive alternative-dairy market.
Milk, said Blake Waltrip, the chief executive of A2, is a “repertoire purchasing category”: The average consumer has three to four different types of milk or milk alternatives in their rotation. As far as they’re concerned, it’s all just milk. Which means that these companies need to constantly be innovating to recapture consumers’ interests.
For A2, health benefits are an easy sell. “People care more about what the product does for them than about getting deep into the science,” said Mr. Waltrip. In Australia, A2 accounts for 11 percent of all milk sales, and the company claims that 70 percent of their consumers have no milk intolerance at all. Mr. Waltrip believes it’s because theirs is a “better milk,” but it also may be that consumers, long confused about whether or not dairy milk is good for them, are relieved to have a “healthy” dairy milk to buy.
Finding new ways to market and process milk has become essential for dairy farmers looking to turn things around. But some are thinking of making bigger changes to their production.
Lorraine Lewandrowski, a dairy farmer and attorney in Central New York, said a number of New York dairy farmers have been looking to Canada for advice. She tweets about this often from her account, @NYFarmer.
“The Canadians have a system where they can only produce what they can sell,” she said. “If you produce more milk than you can sell profitably, they don’t pay as much for it.”
For the country’s struggling dairy farmers, organizing against the nearly monopolistic processing plants could be one small way to see better returns. If a cheeky mustache can’t get people to buy more milk, the answer might just be to make less of it.
The demand shock experienced by the entire economy is turning what initially looked to dairy farmers like the first decent year in the last five into one of potentially widespread economic devastation, according to a letter National Milk Producers Federation (NMPF) president and chief executive officer Jim Mulhern sent Tuesday morning to Agriculture Secretary Sonny Perdue.
“Over the last five weeks, the [U.S. Department of Agriculture’s] estimate of 2020 milk prices reflect a drop of about $2.85 billion at the farm level,” Mulhern wrote in the letter. “Further drops are possible as the impact of the COVID-19 outbreak spreads.”
Dairy farmers – whose work as part of the agriculture industry has been reaffirmed as critical infrastructure by the U.S. Department of Homeland Security – expect to face price declines and unstable demand over the next several months as joblessness rises, schools remain closed and farm and dairy processing operations face unprecedented logistical challenges.
Congress and the Trump Administration have already helped by approving food purchases and offering flexibility in transportation rules. In its letter, NMPF said it looks forward to working with USDA on program implementation, trade facilitation and other areas but said additional remedies will be needed.
NMPF said USDA may need to reopen the signup for participation in the Dairy Margin Coverage (DMC) program, the main safety net for dairy farmers, especially small and medium-sized producers. DMC participation declined in 2020 because of forecasts for higher prices, which now have been radically revised in light of the coronavirus pandemic.
One month ago, USDA’s DMC decision tool did not forecast a single month in 2020 when the program’s margin would drop beneath the maximum coverage threshold of $9.50/cwt. As of March 20, that forecasting tool predicted margins below that level from March through October, with five of those months below $9/cwt.
NMPF suggested additional dairy product purchases to help Americans in need during what may be a period of very high demand at food banks. NMPF urged the secretary to make a substantial purchase of multiple forms of dairy products under Section 32 of the Commodity Credit Corp. (CCC), which would help stabilize prices by sending a clear demand signal to disrupted dairy markets. NMPF is supporting replenishing the CCC’s borrowing authority to ensure that USDA can support distressed producers. A significant dairy product purchase, particularly with a focus on cheese, will also provide tremendous help by offsetting the precipitous drop in dairy foodservice sales resulting from restaurant closures and school and foodservice cancellations across the country.
NMPF is also seeking compensation for potential milk disposal. As an example, in a letter Foremost Farms sent its farmers on March 17, it told its members that due to the extreme nature of the coronavirus situation and the impact on the economy, they believe the ability to pick up and process milk could be compromised. “We also need to be prepared for scenarios that would require our members to dump milk on member farms, ship milk to digestors or dispose of it in some other manner,” the letter stated.
In the letter to Perdue, NMPF acknowledged that some dairy farmers or processing plants may be forced to dispose of milk due to transportation or logistical disruptions or if demand from domestic or international markets diminishes. Given the potential for supply chain interruptions as seasonal milk production peaks this spring and many schools remain closed, elements of existing USDA programs could provide the basis for a means to compensate farmers or processors, potentially with an incentive to donate milk when possible.
Th letter noted that in the past, the Wildfires & Hurricanes Indemnity & Milk Loss program “has assisted producers who have had to dump milk because of contamination from natural disasters; perhaps this program could be refashioned to assist in this situation.”
The Families First Coronavirus Response Act, which Congress passed and the President signed, included an additional $400 million for the Emergency Food Assistance Program. “We are eager to work with your department to ensure that dairy products make up a substantial amount of the assistance provided under this provision,” Mulhern said.
Independent specialty fresh milk processor, Riverina Fresh, has introduced production changes to keep up with changing demand for its products due to the coronavirus threat.
The company has experienced a reduction in demand from its central city barrister customers, but has seen an increase in demand in suburban cafes and restaurants.
The Wagga Wagga based company has also been trying to keep up with increased demand due to panic buying in the supermarkets it supplies.
Riverina Fresh CEO, Rob Collier said they were ramping up production to meet demand.
He said the company had been handling a surplus of milk in recent times and they were now capturing that extra supply for their customers to meet the unprecedented demand.
“We are making some changes and adjusting shifts to meet that demand, mainly from supermarkets.
“It is difficult in that we don’t know whether the extra demand will last for a week or six months.”
The company has About 5000 specialty coffee shop and café customers.
He supported the VFF’s recent remarks that there is enough milk production in Australia to meet consumer demand and there is no need to stockpile.
“Milk is flowing from the farm into the factories.”
In a cruel twist of fortune, the company has been selected as the official supplier of milk to the World Barrister championships which were to be held in Melbourne, but have had to be cancelled due to the coronavirus outbreak.
The competition focuses on promoting excellence in coffee, advancing the barista profession, and engaging a worldwide audience with an annual championship event.
Mr Collier said it was a huge honour to have their milks used in the championships and a reflection of the high regard in which Riverina Fresh milk was held in the specialty coffee industry.
The company has introduced protocols to minimise contact between staff and instructed its contract tanker drivers to introduce practices to minimise contact with farmers and their staff.
Riverina Fresh has suppliers mainly in the Riverina region of New South Wales as well as some in northern Victoria.
Dairy Australia and regional teams are currently working on industry-specific information to assist dairy farm businesses to manage changing workforce conditions as a result of the coronavirus outbreak.
This includes information abut:
Maintaining health and safety in the dairy industry
Legal obligations and responsibilities of employers
Rights and responsibilities of staff
Managing farm operations such as milking, calf management and feeding in changing workplace conditions
Working with contractors and suppliers
Protocols for tanker operators and farmers regarding milk pick-ups
For example, the Global Dairy Trade index dropped as much as 3.9% this week, after a steady decline in recent weeks. Further significant price decreases are also being seen on the Italian spot milk market. These prices have shrunk by almost 7% compared to February.
Following the same trend, the rates for milk-product futures on the European Energy Exchange (EEX) have dropped significantly. Contracts for May went down 5.7% to €3,300 ($3,544)/tonne.
Iindividual dairy-market stakeholders are already taking action to limit the fallout of the coronavirus crisis, the EMB said.
For example, Mila, an alpine-milk dairy in South Tirol, recently asked its producers to voluntarily reduce their production volumes to adapt milk supply to this crisis situation.
It has become clear over the past few days that during crises, everyone needs to act in concert in order to deal with the arising issues effectively, the EMB said.
It is not enough for individual regions to react or for different regions or institutions to implement measures that are all very different from each other, the EMB warned, adding the measures must be aimed at everyone and must enjoy broad support to bring the coronavirus crisis under control.
In many areas, the amount of milk being produced on farms is too high for existing processing and market capacity, the EMB argued. The spread of the coronavirus is leading to major difficulties in procurement and logistics in the processing industry. This is further compounded by possible personnel shortages, as well as the collapse in demand for certain products.
An effective way to bring real relief, the EMB said, is to actively reduce the pressure caused by these surplus milk volumes in the EU.
It has urged the European Commission to immediately start preparing for the launch of a voluntary volume reduction scheme with capping. As the situation continues to worsen as is currently expected, volume reduction must be promptly activated.
In this way, the EMB says farmers will jointly reduce production on their farms. This action, coordinated at EU level, can then adapt production volumes to current circumstances and can keep the economic consequences in check.
The EMB said failure to react risks the entire sector falling into its worst crisis yet.
Even after the health consequences of the coronavirus crisis start to subside, the economic fallout will continue to wreak havoc, it said, adding that in the major crisis of 2016, the voluntary production reduction scheme was launched too late.
Panic-buying at grocery stores in response to the coronavirus has led to a surge in demand for food staples such as milk and dairy products, but dairy analysts say the pandemic’s impacts on food service, the supply chain and export markets pose long-term concerns.
More immediately, the statewide stay-at-home order has Tulare County dairy farmer Ron Locke’s Top O’ the Morn milk-processing business “slammed.” The farm markets a portion of its milk in glass bottles, selling to retailers and through its home-delivery and drive-through business. As a small processor, Locke said he’s now running at 140% capacity to keep his customers supplied.
“The home delivery side, we literally had to shut our website off for a while because the demand was so high that we couldn’t handle it,” he said. “We actually have a waiting list right now on home delivery customers.”
He noted his wholesale business has been “getting calls every day,” with retailers asking for “as much milk as you can deliver,” while his drive-through business also has been “really busy.”
On the farm, there have been no disruptions to production and no shortage of raw milk, though Locke said he worries about running short on glass bottles and began rationing six half gallons per customer. With the state’s shelter-in-place order, he said he expects his home delivery and drive-through business will “stay pretty consistent” and remains “hopeful … that this will reenergize the fluid-milk market.”
“Now everybody is scrambling to get milk, so milk is back in their diet,” he said. “Kids are home, and I’m sure they’re eating cereal.”
Ben Laine, a dairy analyst for Rabo AgriFinance, said the recent retail buying frenzy could be short term, adding that the initial surge in sales will slow once shoppers “feel a little more confident and do less stockpiling.” In terms of what they’re buying, Laine noted people are stocking up on dairy products “across the board.” For example, sales of natural cheese, processed cheese and ice cream all rose, according to retail scanner data for the week ending March 8, said Mary Ledman with RaboResearch Food & Agribusiness.
Though school closures have reduced the sale of fluid milk to the national school-lunch program, which consumes about 7% of the nation’s milk supply, Ledman said dairy companies from California to New York reported gains at the retail level have more than offset those losses.
Because many schools were already on spring break and the school year finishes in May, Laine said the timing of school closures and their impact on food service was “not as bad as it could have been if it were to happen in the fall.”
With about 40% of U.S. cheese production consumed through food-service channels, Ledman said some losses—but not all—will be offset by increased retail sales.
Laine said the challenge now for dairy companies is trying to suddenly shift product mix and distribution channels to satisfy soaring demand from retail customers.
Organic dairy farmer Albert Straus, founder and CEO of Straus Family Creamery in Petaluma, said company operations continue “on a regular full-time schedule, balancing the higher demand for retail products with the softening of orders from restaurants, coffee shops and other businesses serving the public.”
It’s been “business as usual” for Tulare County dairy farmer Tom Barcellos, who noted his employees feel fine and are being cautious. But he said he remains concerned about pressure on the overall supply chain, particularly at the processing plant, which he said already gave notice to farmers about penalties for overproducing milk should the plant experience processing bottlenecks due to the virus and stay-at-home orders.
Having already reduced his herd due to unprofitable milk prices, Barcellos said he’s not too worried about producing over his base, “but going forward, things could change in the next few weeks or the next few days.”
As a large producer of nonfat dry milk, California will see immediate disruptions to the powder market, Ledman said, as China is expected to import about 20% less milk powder in 2020. Not only does China have large carryover stocks from 2019, she noted, but impacts from the virus also led China to convert more of its own milk production to powders.
“We’ve already seen the nonfat dry milk market suffer because of the coronavirus and the disruption to global trade because of it,” she said.
Meanwhile, sales of whey, much of it fed to pigs, continue to be down due to African swine fever, which has decimated China’s supply of hogs, Laine said.
Devaluation of the Mexico peso also could put at risk U.S. exports to Mexico, the largest importer of American dairy products, as the weaker peso will make U.S. exports less competitive, Ledman said.
And it’s not just toilet rolls that are flying off the shelves: powdered milk sales are up 375% since the company started tracking 756 categories on February 15.
Marta Cyhan, chief marketing officer at Catalina, said the company’s buyer intelligence database captures up to three years of purchase history, and more than 2bn Unique Product Codes are scanned daily, so the company can provide customers with near real-time insights and sales data that help inform their marketing decisions and even stocking and supply chain activities.
“Store trips began growing around March 1 and really took off last week – with visits peaking around March 13. For the week ending March 14, total dollar sales per store were up 60%, driven by 17% more shopping trips and basket sizes that increased an average of 37% versus the prior year,” Cyhan said.
Cyhan said that as well as milk powder, other previously declining categories have seen increases, including dry, hearty soups, up 235%, and aluminum foil, up 86%.
And, because of lifestyle changes, at least in the short term as workers stay at home, entertainment such as books and magazines have seen a rise in sales, with books up 42% and games and puzzles rising 23%. And with people not heading into the office, cosmetics, perfumes and grooming products are seeing a decline.
“Our role as a strategic partner to retailers and brands is to share data insights that help them unearth the facts, understand buyer behavior, and plan accordingly to continue meeting the needs of their shoppers, while also preparing for the months ahead once the precautionary measures surrounding COVID-19 have passed and people return to their normal routines,” Cyhan said.
Good weather conditions means good news for Tassie dairy farmers who help to supply bulk of Australian milk
Tasmania’s current milk production is on track to exceed the state’s annual production record of 913 million litres, which is good news for the sector as it, alongside Gippsland in Victoria, continues to supply the bulk of Australia’s milk.
Dairy Tasmania executive officer Jonathan Price said the state’s production levels were up 4.9 per cent in January.
“So July through to the end of January we produced 592.5 million litres of milk, which is 10 million litres up on the same time last year,” Mr Price said.
“Depending on how the autumn conditions unfold we may exceed the previous state production record … the early indications are that autumn could be quite favourable.”
He added that the main input continued to be high grain prices.
The state’s production levels however are in contrast to the rest of the industry, with Dairy Australia forecasting a drop in national milk production of between 3% and 5% to 8.3 to 8.5 billion litres for the full 2019/20 season.
Dairy Australia said the bulk of Australia’s milk production was coming from Tasmania, as well as Gippland in Victoria, which is shoring up national milk production levels and offsetting challenges elsewhere.
This is allowing Tasmanian farmers to capitilise on favourable weather conditions and high farmgate prices, “where pressure on milk supplies within Australia has prompted some processors to announce farmgate price increases, despite the ongoing economic risks associated with Covid – 19”.
Dairy Australia insights and analysis manager John Droppert said good weather conditions were key for southern producers.
“A recent recovery in national milk production, together with substantially more favourable weather conditions across many dairy regions have been positive developments at a time of strong local and global dairy market fundamentals,” he said.
“These have come amidst a tumultuous backdrop combining global disease with local drought and bushfires. Despite relatively stable supply and demand conditions, international trade faces the dual challenges of the ongoing African Swine Fever outbreak, and still-escalating Covid-19 crisis.”
As Covid-19 continues to create issues for various sectors, dairy farmers particularly in southern Australia remain currently shielded from the impacts, as supply and demand of dairy products “is yet to be materially impacted”.
Mr Price said Dairy Tasmania would continue to monitor Covid-19 impacts daily, and take necessary steps according to the best information available.
From transportation and farming technologies to ingredients solutions and lab-grown milk, the dairy industry is rife with technological advancements. Here, FoodBev provides a roundup of some of the industry’s most recent innovations.
Arla’s ‘supercooling’ tool enables fresh products to travel long distances by ship. Lars Dalsgaard, SVP product and innovation at Arla said: “We’re seeing more and more markets requesting chilled, fresh-tasting and natural products rather than frozen products that require defrosting or products with preservatives.”
“The relationship between time and advanced cooling is one of the keys to unlocking portfolio limitations in markets outside of Europe,” Dalsgaard explained. “Controlling these variables enables us to put the product into hibernation mode”.
The first shipment of supercooled Castello Decorated Cream Cheeses, which cannot be frozen, successfully reached Australia from Denmark, having been stored in special containers under supercooled conditions.
This supercooling technology will be particularly beneficial for global dairy companies and those with the aim of creating new global growth opportunities.
Mastitis detection technology
An udder infection in dairy animals known as mastitis has devastating impacts on the dairy industry worldwide. According to Frontiers in Bioengineering and Biotechnology, global dairy industry losses are estimated to reach a staggering €30bn per annum. This is due to poor milk quality, significant milk losses and culling of chronically infected animals.
Early diagnosis for bovine mastitis is crucial for dairy farmers, and EIO Diagnostics new technology has done just this using a combination of machine learning and multi-spectral imaging. The start-up began in 2017 and was backed by food innovation incubators and accelerators, including Food-X and Yield Lab.
Dairy animals with mastitis will show specific patterns of swelling and heat in their udders. Co-founder, Tamara Leigh said: “Our technology combines advanced sensor imaging and machine learning to detect these early indications of infection days before there any physical signs of infection in the udder or the milk.”
EIO Diagnostic’s technology is game-changing for the dairy industry. The sooner infected animals are detected, the sooner they can be pulled from production and treated, ultimately saving the dairy industry billions.
Transparency in the dairy industry’s food supply chain is key to gaining consumer trust, from sustainable sources to ingredients and processing claims. In 2018, Nielsen claimed transparency was driving the growth of food in fast-moving consumer goods.
Earlier this year, food safety company Neogen entered a partnership with Ripe Technology (ripe.io) to bring blockchain technology to its food safety diagnostics and animal genomics. Ripe.io essentially enables companies in the food industry to use its blockchain technology platform to ensure transparency in their food supply chain.
Blockchain is a digital technology platform that ‘chains’ together information ‘blocks’ to create a permanent record. This blockchain creates a history of products and animals in food and livestock in the dairy industry throughout the whole production cycle.
Neogen’s CEO, John Adent said: “There are countless potential benefits to adopting the technology. For example, the genomic profile of a dairy cow could be connected with the feed the animal eats, its medical history, barn environment, quantity and quality of the milk it produces, etc. Blockchain can serve to optimise the entire supply chains of many of the markets that Neogen serves.”
This technology ultimately adds a high level of transparency for the dairy industry from the beginning of the supply chain all the way to consumers.
Consumer demand for clean label and ‘clean taste’ is high in the current dairy market. There have been various technological developments in the ingredients sector in recent years that focus on improving the texture and taste experience of dairy products.
Synergy claims to have created technically-layered ingredients for taste and enhanced functionality by combining flavour science with modern dairy fermentation expertise. For example, unlike typical flavours that add a singular top note, such as caramelized butter or condensed milk, Synergy has developed advanced solutions that enhance quality, mouthfeel and flavour retention.
Its applications range from fresh and cultured dairy products to nutritional, bakery, beverage and confection, as well as savoury applications such as dips or cheese.
‘Dairy by Nature’ is a key technological development for the dairy and dairy-alternative industries as it offers a simple natural flavour enhancement of dairy indulgence.
Cow’s milk is extremely versatile and used in many products all over the world. For instance, in Canada alone, 70% of milk sold goes on to be used in further processing. However, according to an IPSOS survey, 48% of consumers buy both dairy and plant-based milks.
The industry has seen its fair share of innovation in plant-based milk alternative products over the years, with soy, pea, oat, almond and rice milk taking the foreground. But what if scientists could grow a vegan lactose-free version of cow’s milk, without cows?
One of the main technology innovations mentioned in our dairy trends for 2020 article was lab-created dairy. California-based startup, Perfect Day Inc., has developed a form of genetically modified microflora that produces whey and casein – the proteins found in cow’s milk. The company claims this lab-grown dairy provides the same high-quality nutrition as conventional dairy protein.
This innovation could have a significant impact on the dairy industry, as many consumers may want to reduce their intake of dairy products but enjoy the taste of cow’s milk.
Prime Minister Trudeau announces support for farmers and agri-food businesses under Canada’s response to COVID-19 pandemic.
Canadian farmers and food businesses work hard so Canadians have quality food on their grocery store shelves and kitchen tables. In these times of uncertainty, it is more important than ever to make sure that they are supported so they can continue providing the good, healthy food that nourishes our families.
The Prime Minister, Justin Trudeau, announced important new measures to support farmers and agri-food businesses in Canada facing financial hardship due to the impacts of the COVID-19 pandemic.
“Farmers and food producers work hard to put food on tables across our country, and they should not have to worry about being able to afford their loan payments or having enough money to support their own families. We are taking action now to give them more flexibility to meet the challenges ahead in these times of uncertainty,” he said on Monday.
Farm Credit Canada will receive support from the Government of Canada that will allow for an additional $5 billion in lending capacity to producers, agribusinesses, and food processors. This will offer increased flexibility to farmers who face cashflow issues and to processors who are impacted by lost sales, helping them remain financially strong during this difficult time.
In addition, all eligible farmers who have an outstanding Advance Payments Programme (APP) loan due on or before 30 April will receive a Stay of Default, allowing them an additional six months to repay the loan. This important measure, which represents $173 million in deferred loans, will help keep more money in farmers’ pockets during these critical months.
The Stay of Default will also provide farmers the flexibility they need to manage their cashflow when facing lower prices or reduced marketing opportunities. Applicable farmers who still have interest-free loans outstanding will have the opportunity to apply for an additional $100,000 interest-free portion for 2020-2021, as long as their total APP advances remain under the $1 million cap.
“Like many Canadians, I am truly grateful for our farmers and food business owners and employees, who continue working hard so we all have quality food on our grocery store shelves and kitchen tables. Their continued work is essential to our plan to manage COVID-19. The measures announced today will provide farmers and food producers across the country with important financial flexibility they will need during these challenging times.”
The Government of Canada remains committed to supporting Canada’s agricultural sector to ensure that farmers and businesses have the support they need to provide for their families and all Canadians during this critical time.
Quick facts for cattle farmers
Farmers will continue to have support under the Canadian Agricultural Partnership. The comprehensive suite of business risk management programmes are designed to help manage significant financial impacts and risks beyond farmers’ control.
The new deadline for outstanding Advance Payments Programme Loans is 30 September 2020 for cattle and bison producers.
The grocery store was the first stop for a lot of people when the coronavirus began to spread.
As people began to rush to the grocery store to stock up on necessities such as milk, dairy farms noticed a boom in business.
Milkhouse Dairy Farm’s owner, Caitlin Frame, said, “”Our farm store and the rest of our wholesale retail accounts were going way up and it has consistently stayed up for the past ten days.”
Similarly, another family owned farm, Pumpkin Vine Family Farm is well on its way to a surge in business this year.
As farm owner Kelly Roopchand said, they are shifting their focus from their bestsellers to stocking the shelves with items that will keep the public healthy amid the coronavirus outbreak.
“We really feel that the milk is a huge boost and the yogurt is probiotic. We have a regular following for years where everyone would come in and get their milk and their yogurt but we’ve just had this huge increased interest,” said Roopchand.
The Quebec dairy council is calling on the government to grant “essential service” status to the food-processing sector, in particular for dairy products.
The Les Producteurs de lait du Québec (PLQ) said workers in this sector have children of preschool and school age, and the organization believes that it is necessary to ensure maximum availability of this workforce, which is “qualified and essential to our activities.”
The Government of Quebec has already decreed that day care services, otherwise closed to the population, must be maintained for young children of workers in “essential services” such as employees in the health sector, firefighters and police.
The PLQ requests that the food processing sector also benefit from this status of essential services in order to “be able to continue to meet the food needs of the population.”
In a news release, the chairman of the board, Charles Langlois, said that global and national guidelines “are rigorously applied in all dairy manufacturing units,” and that dairy producers “deploy robust prevention plans to protect their employees, suppliers and production lines.”
Langlois also said that “it is scientifically recognized that milk and milk products are not modes of transmission of the coronavirus.”
The council includes around 90 dairy businesses in Quebec and some 50 service providers.
This report by The Canadian Press was first published Mar. 17, 2020.
Even with its strict production quotas and guaranteed high milk prices, dairy farms in Canada are disappearing at a rate not far below what is happening in the United States. The country’s latest agricultural census shows a 14 percent decline in the number of Canadian dairy farms from 2011 to 2016.
By comparison, U.S. dairy farms shrunk by 18.5 percent in the same five years.
The actual numbers, released earlier this month, showed 10,525 farms with milk cows in 2016. In the United States, dairy farm numbers declined from 51,291 in 2011 to 41,809 in the same fiveyear period.
Overall, Canada counts 193,492 farms of all types in its census, a 5.9 percent decrease from 2011, the lowest rate of decline in the last 20 years. As farm numbers have declined, the average area per farm has grown from 779 acres in 2011 to an average of 820 acres in 2016.
Dairy cattle numbers in Canada also declined in the census period to 1.4 million head, settling 3.8 percent lower than five years earlier, but milk production increased because of greater productivity and efficiency. The average number of dairy cattle per farm increased 11.9 percent to 100 in 2016, considerably smaller than the U.S. average.
More significant than the raw numbers is the picture the census provides of the distribution of dairy farms and thus the political influence that has helped protect the supply management system through a succession of governments, both liberal and conservative, for more than half a century. The quota system seeks to “balance the supply and demand of milk and maintain stable production throughout the year and throughout the country,” Statistics Canada explains.
It also shows that Canada’s dairy farms are concentrated in Quebec and Ontario – the two most populous provinces – which together account for more than threefourths of all dairy farm numbers in the country. With 42 percent of the nation’s total in Quebec and 34.9 percent in Ontario, and most of them small¬scale operations, their political clout is enhanced.
The number of small (200 dairy cattle or fewer) specialized dairy farms (operations reporting dairy cattle but no beef cattle) decreased, while the number of large (more than 200 dairy cattle) specialized dairy farms increased from 2011 to 2016, suggesting some consolidation.
While some producers left the business, remaining farmers were able to grow by buying quotas from those who left. On farms reporting dairy cattle in Quebec, the average number of dairy cattle per farm increased by 9 percent to 85 in 2016. Ontario saw the same trend, with the average dairy cattle per dairy farm rising 12.1 percent to 98 in 2016.
The government report notes that efficiency in the dairy industry was achieved through improvements in feed quality and management, genetics, and advancements in technology, including the use of robotic milking. According to census data, 8.9 percent of the country’s dairy operations now use robotic milking. Mid¬sized farms are more likely to report robotic milking than small and large¬sized farms, with 44.7 percent of farms with 101¬200 cows using the practice.
“In addition to using robotic milking, the improved efficiencies of many dairy type farms can be linked to advancements in animal housing, milking technology, herd management and feed management,” the census says. “In 2015, almost half of dairy type farms reported using automated environmental controls for animal housing or automated animal feeding technology. Investment in innovative technology contributes to the dairy industry producing more with less.”
Producing a liter of milk in California emits less greenhouse gas and uses less land and water than it did in 1964, according to a recent study from researchers at the University of California, Davis.
“We compared 1964 through 2014 and found a 50 percent reduction in greenhouse gases to produce the same quantity and quality of milk,” said senior author Ermias Kebreab, professor and Sesnon Endowed Chair in the Department of Animal Science at UC Davis. “The magnitude of change is surprising.”
Scientists conducted a lifecycle environmental assessment of cows from the time they are born to the time they leave the farm gate. The study included such inputs as producing feed for the animals, and the machinery and transportation needed to produce milk.
Cows belch methane, a potent greenhouse gas, as part of their digestive process. The study found the biggest emission cuts came from reductions in these emissions, known as enteric methane, compared to reductions in emissions from manure.
“Reductions in enteric methane intensity (i.e., methane emissions per gallon of milk) are primarily a result of better genetics and breeding and better nutrition for the animals,” said Professor Kebreab.
Water and land use
In addition, water use in the industry has dropped by 88 percent, due primarily to efficient water use in feed crops and the use of crop byproducts for feed such as almond hulls. Water use in housing and milking also dropped by 55 percent.
The amount of land it takes to produce a liter of milk compared to 1964 has also decreased. This is largely due to improvements in crop genetics and production practices that have increased yields of grain, hay and silage for cows on the same amount of land.
“We’ve saved an amount of land equal to the size of Connecticut,” said Professor Kebreab.
Over the last 50 years, dairy production in California has undergone significant improvements and advancements in animal husbandry, feeding and housing practices, and in animal and plant genetics and crop production methods.
Total greenhouse gas emissions from cows overall has increased in California as more cows are needed to feed a growing population. But cows are now producing much more milk. In the 1960s, one cow could produce about 4,850 kilograms of milk per year. Now a cow can produce more than 10,000 kg annually.
“There is a lot of discussion about how cows have a huge environmental footprint, but no one is talking about how the dairy industry has changed,” said Professor Kebreab. “Dairy farmers are doing a lot to help reduce the industry’s environmental footprint.”
Scientists continue to look for ways to reduce enteric methane emissions through better animal nutrition, including feed additives. In a previous study, Kebreab found that feeding dairy cows a small amount of a seaweed called Asparagopsis armata along with their feed, reduced methane emissions by up to 60 percent.
California is the top dairy producing state, and milk production is the third largest agricultural industry in the United States.
Producing dairy today is cleaner than it was 50 years ago, a study finds.
Each liter of California milk requires less land, water, and releases fewer emissions than in 1964 to produce, reports a new study from the University of California, Davis. The study takes into account inputs as producing feed for the animals, the animals themselves, as well as the machinery and transportation needed to produce milk.
California is the top dairy-producing state, and milk production is the third-largest agricultural industry in the US.
“We compared 1964 through 2014 and found a 50 percent reduction in greenhouse gases to produce the same quantity and quality of milk,” said senior author Ermias Kebreab, professor and Sesnon Endowed Chair in the Department of Animal Science at UC Davis. “The magnitude of change is surprising.”
A life cycle environmental assessment of California cows, from the time they’re born until they leave the farm, suggests that modern agricultural advancements really do help slash emissions and the environmental footprint of our food. The study included an analysis of inputs such as the feed, machinery, and transportation required to produce milk. The figures were then compared to their equivalents from 1964.
The largest cut to methane emissions seen in the study came from a decline in enteric methane — basically, cow belches. Reductions in emissions from manure were also recorded, but they were less dramatic than enteric ones.
“Reductions in enteric methane intensity (i.e., methane emissions per gallon of milk) are primarily a result of better genetics and breeding and better nutrition for the animals,” said Kebreab.
Overall, water use in the industry overall dropped by 88% compared to 1964 levels, the team explains, primarily through more efficient water use in feed crops and the use of by-products such as almond hulls for feed. Water use in housing and milking also dropped by 55%. Land use per liter of milk has also decreased, mostly through the introduction of better crops and agricultural practices.
While per liter efficiency has definitely increased, total greenhouse gas emissions from cows in California has increased, as more animals are being reared today. The team notes, though, that a cow in the 1960s could produce about 4,850 kilograms of milk per year, while one today can produce over 10,000 kg annually.
“There is a lot of discussion about how cows have a huge environmental footprint, but no one is talking about how the dairy industry has changed,” said Kebreab. “Dairy farmers are doing a lot to help reduce the industry’s environmental footprint.”
On the one hand, I definitely find the results encouraging, and I applaud the farmers that are doing their part to clean up the industry. But at the end of the day, there’s only so much they can clean. In the context of climate change, the most effective choice is simply to not breed any more cows. But I do love cheese, and I’m quite a fan of meat, so I secretly hope that we’ll be able to still put these on the table and safeguard the health of ecosystems around the world. In a previous study, Kebreab found that feeding dairy cows a small amount of Asparagopsis armata seaweed along with their feed, reduced methane emissions by up to 60% — so maybe there is still hope.
The paper “Greenhouse gas, water, and land footprint per unit of production of the California dairy industry over 50 years” has been published in the Journal of Dairy Science.
A2 will give Agrifoods access to its intellectual property and marketing systems, as well as work with it to get the necessary milk from Canadian dairy farmers.
Chief growth and brand officer Susan Massasso said it was part of the company’s plans to expand its North American market.
“It is an extension of the learnings and marketing assets that we’ve established in the US, but it is an exclusive licensing agreement with Agrifoods Co-operative. So in a sense we’re leveraging the learnings, we’re leveraging the existing marketing assets and Agrifoods are thankfully expanding our brand for us in North America.
“It allows us to expand our footprint in North America without being a distraction to our core business with our core team.”
She said it was similar to the licensing agreement it had with Fonterra in New Zealand.
As a licence owner, the company would benefit from royalties.
Australia’s dairy sector can expect continued growth in demand while overall production will remain flat to 2030 compared to 2018 levels, according to research released by ANZ today.
The Milk Run report found that despite recent challenges faced by the industry, the market opportunities which have driven dairy growth and innovation over the past two decades remain as strong as ever.
Commenting on the report, Head of Agribusiness at ANZ Mark Bennett said as with most major agricultural industries, the Australian dairy industry had been through a period of significant structural change in recent years.
“However, for those producers who are profitable today, the outlook is strong for prices as processors look to secure supply,” Mr Bennet said.
The outlook for exports also remains strong with demand from East Asia continuing its positive growth, particularly for fluid milk and cheese exports.”
“For consumers, the pricing outlook for retail milk and dairy product is unclear, and will be driven by a number of variables.
Factors that will impact shelf prices include changes in sourcing, offtake-pricing and milk production, as will strategic and marketing decisions made by retailers about milk prices in relation to wider supermarket pricing strategies.
At the same time, the growing range of new dairy products available to consumers continues to present fresh opportunities for newer and smaller processors.
The Milk Run — key findings:
The continuation of current trends would see milk production remain flat for the next decade compared with 2018, as higher cash costs would see milk production rebounding on the dip in production felt in 2019 but rising to just over 9400 Ml/year compared with the 2018 production year.
A constrained domestic production and ever-increasing demand for milk and dairy products in East Asia is likely to spell future strong prices for those dairy producers remaining in the industry.
The impact of the recent bushfires, while locally devastating, is unlikely to have a significant impact on national milk supply.
Australian milk production looks set to continue to be flat for the short term with current trends resulting in production in Queensland continuing to decline, while the primary source of growth being seen in the southern states, particularly Tasmania, where production would rise by 20 per cent by 2030.
Lower production in the major production countries should bode well for prices in the future, however many in the industry are concerned that consumers have limited tolerance for higher prices.
The future of retail milk prices remains uncertain following the end of $1 milk in the major supermarkets. Depending on whether retailers continue to keep a lid on prices, the price of a litre of milk could increase at an average of between 1.4 and 2.8 per cent a year until 2030.
Processors are likely to face the most significant challenges going forward as they look to make best use of manufacturing capacity and growing export markets with lower milk supply and a shifting supply base.
A year ago, a blizzard collapsed the Hoffman family’s barn in Chatfield, Minn., killing several cows and nearly driving a century-old family farm out of business. Today, the Hoffmans have a new barn, a new herd and a new appreciation for the friends and neighbors who helped them through.
Bad weather, bad markets and bad luck nearly drove a century-old Minnesota dairy farm out of business last year.
The new year has been kinder to the Hoffman family.
They have a new herd under the new roof of their new dairy barn and a new appreciation for the friends, neighbors and strangers who helped them through.
“You hear so much that’s negative in the news,” said Corey Hoffman, who runs the North Creek Dairy in Olmsted County with his father, Gary, and brother, John. “This sort of made you realize that people are good. There’s not just bad events happening throughout the country.”
In Chatfield, Minn., the sun is shining, the ground is thawing and the barn doors are open wide to let the cows enjoy the breeze. A year ago, blizzards were roaring across Minnesota, collapsing barns and battering farms already crushed by trade wars and commodity prices too low to pay the bills.
One out of every 10 dairy farms in Minnesota — more than 300 of them — went out of business last year. North Creek Dairy could have been one more.
After the first section of barn collapsed, killing 13 cows, the Hoffmans scrambled to get the rest of the herd to safety. A neighbor down the road offered a fair price for the herd, sight unseen, and the community rushed in with trailers to help get the cows.
“We had about 40 trucks and trailers that came and moved them out,” Hoffman said. “Half the people, we had no idea who they were. They were people who wanted to help out.”
As the cows moved into their new home, the 290-foot barn continued to collapse under the snow and ice while the family waited to see whether insurance would cover the cost of replacing the 12-year-old structure.
For the first time since Corey and John Hoffman’s great-grandfather established the farm in 1903, there were no cows to milk at North Creek Dairy.
“We’d never gone a day without milking cows in 116 years, so that was pretty heartbreaking,” said Corey Hoffman, who knew every cow by name and had them so well-trained, they responded to voice commands like 1,500-pound puppies.
As word of the family’s misfortune spread, they were showered with calls, letters, gift cards and good wishes from around the state. The Hoffmans talked about getting out of the dairy business, but when the insurance check came through, they were ready to rebuild the barn, restock the herd and get back to work. State officials visited and the Legislature approved zero-interest loans to help farmers repair and rebuild after the brutal winter.
By summer, a sturdy new barn was rising, with better ventilation and a roof that should stand up to any weather Minnesota throws at it. By October, they’d found a family getting out of the dairy business and looking for a good home for their herd. That family still visits the cows occasionally, and Hoffman sends them pictures whenever there’s a new calf.
“They’re almost like pets. You have these animals, you work with them every day,” he said.
He’s not quite on a first-name basis with the entire new herd, he said, but he’s getting there.
“There’s a lot of faces to remember,” he said with a laugh. “But for the most part, we’re getting to know them pretty well. Everything’s been going very, very good with them.”
Dairy prices even started to improve last year. At least, until the markets took a hit from coronavirus.
“Every previous generation has gone through their struggles,” Hoffman said. “This is just ours.”
Hoffman’s grandfather was only 12 or 13 when his father died and he took over the farm, just as the country was sliding into the Great Depression. One day, he took 12 steers and 20 hogs to market, hoping to use some of the money from the sale to buy a new pair of shoes.
“What little he got [from the sale], he couldn’t even afford a pair of shoes,” Hoffman said. “That’s how bad it was then. He came home and he sat on the front steps and bawled his eyes out. He didn’t know what he was going to do.”
His grandfather saved the farm for the next generation — and the one after that.
“If he can get through that,” Hoffman said. “We should sure be able to get through this.”
The Hoffman brothers have small children of their own now. Maybe someday they’ll tell them the story of the bad storm and the good neighbors.
“This was, obviously, a horrific event, but there was a lot of good that came out of it,” Hoffman said. “Everybody rallied around us to support us. … If the government could get along as good as the ag community, this country would be in a lot better shape.”
Struggling with competition from milk alternatives, innovative startups and private label, this timeline shows how Borden and Dean Foods got here and what’s next for the industry.
Within two months, two of the largest milk processors in the U.S. filed for bankruptcy. First came Dean Foods, which made the announcement in November. By January, Borden Dairy was doing the same. So what happened?
For at least two years, the dairy giants have increasingly struggled with competition from milk alternatives, innovative startups and deeply discounted private label dairy.
“It’s going to take some disruptors to wake up some of the folks who haven’t made those decisions to invest in the future. If you’re not investing in the category today, you’re going to have a major challenge to survive,” Paul Ziemnisky, EVP of global innovation partnerships at Dairy Management Inc., told Food Dive.
Consumer preferences shifted, but Borden and Dean didn’t change enough, leaving them in dire financial straits and facing significant debt. Dean Foods’ net income dropped from $61.6 million in 2017 to a loss of $327.4 million last year. And while Borden once had a presence in all 50 states, as of last summer, it offered only 35 products in parts of the Midwest, South and Southeastern U.S.
“The company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry,” Borden’s CEO Tony Sarsam said in a statement when it filed for bankruptcy. “These challenges have contributed to making our current level of debt unsustainable.”
Although for Dean and Borden, the troubles date back further than just 24 months, the issues have accelerated to a breaking point.
Eric Snyder, partner at law firm Wilk Auslander and chairman of the firm’s bankruptcy department, told Food Dive that for both Borden and Dean, debt was building as people were drinking less traditional milk. He said that dairy processing facilities are also extremely cost intensive, and it can be very difficult to scale down businesses like these.
“It’s just too much debt on the books for businesses that can no longer support it,” he said.
For decades, milk consumption has been declining while new innovations and plant-based options have taken away some consumers who once turned to the popular drink. Non-dairy milk sales in the U.S. increased 61% from 2013 to 2017, while overall sales of dairy milk dropped 15% from about $18.9 billion in 2012 to $16.12 billion in 2017, according to Mintel.
“Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption,” Dean Foods’ CEO Eric Beringause said in a statement when the bankruptcy filing was announced.
Although the economy is strong, certain industries have seen increased bankruptcies because of changing consumer demands, Snyder said.
“It’s a function of the times, it’s a function of the cause and it’s a function of the debt. So it doesn’t look good for dairy just like it doesn’t look good for coal and it doesn’t look good for retail,” Snyder said. “There are certain businesses that just don’t have bright futures and we know what they are.”
Snyder said that about 90% of bankruptcies end in a sale today.
In February, Dairy Farmers of America agreed to buy a substantial portion of Dean Foods’ business for $425 million. If the deal is approved by the bankruptcy court and the U.S. Department of Justice, DFA will acquire 44 of the company’s fluid and frozen facilities, but could still face the same issues that have weighed down Dean for years.
Kenneth Rosen, a partner focused on bankruptcy and financial reorganization at Lowenstein Sandler, previously told Food Dive that Dean is facing “a lot of problems” that likely won’t just be resolved with a change in ownership.
Ziemnisky, however, believes there is a bright future for dairy when looking at the growing international market and the players that are adapting, finding innovative ways to produce and sell the staple beverage.
New Zealand’s a2 Milk’s products, for example, lack a protein that can cause stomach discomfort, and more than doubled its retail count in 2018. Meanwhile, Fairlife, a joint venture with Coca-Cola, produces ultra-filtered milk, a higher-protein and lower-lactose product that has seen substantial growth.
Retailers themselves are launching their own products into the space.
In 2018, Walmart held a grand opening for its first U.S. food production facility, a milk processing plant that produces whole, skim and chocolate milk under its own Great Value brand — a move that led Dean to cancel its contracts with more than 100 dairy operations across eight states. Kroger and Albertsons have also introduced private label lines.
“So retailers today, if you’re a mainstream product and you’re not bringing innovation in the market, they’re asking what are you going to do to drive a category,” Ziemnisky said.
Below is a compilation of some of the major events that happened over the last two years, offering the big picture of how Borden and Dean got here and what’s next for the industry.
Queensland dairy farmers who have survived deregulation and dollar-a-litre milk are finally being paid closer to their break-even point by all but one major processor.
Maleny Dairies key points
Maleny Dairies raises prices to pay more to farmers
QDO says 73 cents a litre is needed to keep farms sustainable
1,200 Queensland dairy farms have closed since deregulation 20 years ago
Whether it will be enough to keep about 300 remaining dairy farmers in business will depend on the coming seasons.
Despite recent rain, it will take time to reduce the spiralling cost of grain and hay due to drought.
Maleny Dairies has publicly pledged its continued commitment to its 11 suppliers launching a new campaign called ‘Because We Care’.
Owners Ross and Sally Hopper have raised the wholesale price of their milk by 12 cents a litre and adopted a ‘We Care Dairy’ logo.
Maleny Dairies processes milk from 11 farms, including the home farm owned by Ross Hopper’s brother and his wife.
ABC Rural: Jennifer Nichols
The first price rise in five years has enabled the couple to pay farmers an average between 73–75.5 cents per litre — up from 64.9 cents in January last year.
“They are [Queensland dairy farmers] still disappearing at a great rate of knots,” Mr Hopper said.
The couple has invested around $10 million in factory upgrades, including plastic bottle blowing and recycling.
“The cost of operating the farms in today’s environment with grain prices is prohibitive.
“We’ve put ourselves in a position where after protracted negotiations (with retailers), we could put our price up (through Coles and Woolworths and IGA) and we’re passing the majority of that on to the farmers.”
Maleny Dairies General Manager Peter Falcongreen at Maleny Dairies, November 2019.
“In 2000 Lactalis and Lion, as they do today, had custody of the Queensland dairy industry,” Mr Falcongreen said.
“There were 1,500 farms. There’s now around 300. That’s 20 years under their watch.”
Loyal customers rallied behind the family business, which has won a much smaller contract to supply Sunshine Coast Council with 600 litres of milk every week.
Maleny Dairies new “We Care Dairy” branded milk bottles.
ABC Rural: Jennifer Nichols
Relief for farmers
“This is just a breath of fresh air, it’s just marvellous,” Witta dairy farmer and Maleny Dairies supplier, Rob Cork said of the farmgate price rise.
“I think last year is probably the worst year on record in the 20 years since deregulation because of our commodity prices.
“We’re paying $700 a tonne for grain, four or five years ago it was only $330 a tonne and all the other costs associated with drought have gone up, so it’s been really tough.”
“It’ll make a big difference to us and it’s given us the incentive to milk more cows as well,” his wife Anne added.
Anne and Rob Cork say Maleny Dairies fair price is keeping them in business.
ABC Rural: Jennifer Nichols
But farmers’ margins remain incredibly tight —73 cents per litre is the figure deemed sustainable by the Queensland Dairyfarmers’ Organisation.
Queensland is importing cheaper milk from the southern states, with demand far outstripping supply.
Norco CEO Michael Sampson said the cooperative was offering the industry’s best price to around 220 fresh milk suppliers in Northern New South Wales and Queensland.
“Norco is currently forecasting to pay its members in northern NSW and Queensland an average of 77.5 cents per litre from January to June 2020,” Mr Sampson said.
“Norco has increased its price significantly over this time to assist with the cashflow effects of the drought, and we thank our loyal customers who continue to support us, which in turn supports our farmers.”
Sara and Markus Bucher from Maleny Cheese pay suppliers 75 cents per litre for their milk.
Supplied: Maleny Cheese
Support for farmers
Maleny Cheese founders Sara and Markus Bucher are proud to pay an average of 75 cents a litre to four local farmers as well as sourcing milk from their family-owned ‘Obi Obi Dairies’ at Kenilworth.
“All of our farmers are in the hinterland and we have always paid above average,” Ms Bucher said.
By January next year, the Federal Government’s Mandatory Code of Conduct will require all dairy processors to publish details of their contracts with farmers, including the price they pay per litre for milk.
ABC Rural has been told that Lactalis is offering around 72 cents a litre.
Joe Bradley has been a dairy farmer for more than 40 years.
ABC News: Isabella Higgins
Pressure is mounting on Lion Dairy and Drinks to pay more to farmers.
Formerly Japanese-owned, the company has been in a state of transition.
Last month the ACCC announced it would not oppose its acquisition by China Mengniu Dairy Company, after ‘closely considering the potential impact of competition’.
“We’re still around 10 cents behind the opposition at the moment and that’s ridiculous,” Lion supplier Joe Bradley said, at the Maleny Dairies launch.
The Dayboro dairy farmer supplies Lion Dairy and Drinks and said the company paid between 62 to 67 cents a litre to around 75 Queensland dairy farmers.
“At the moment they haven’t and it’s very disappointing because on the current prices it’s unsustainable for us to continue.
“I don’t know what’s going to happen. Queensland is in dire straights and what Maleny has done is brilliant. They’re paying their farmers a sustainable price.”
Mr Brdaley said Lion did increase farmgate prices by 4 cents a litre on January 1, and pointed the finger at retailers for not supporting the industry.
“I can tell you the farmers are being ripped off. There’s no ifs or buts. The supermarkets can put all the spin they want in the world.
“It’s not just us — the processors are hurting too.”
Sylvain Charlebois’ article is a study in contradictions. On one hand, he acknowledges supply management has given Canadians access to fresh, high-quality, local milk at stable prices for years. On the other, he calls for its elimination.
He observes how urban consumers are increasingly disconnected from farmers (“dairy farming is a mystery” he notes), but chides the industry for its efforts to showcase real dairy farmers and help Canadians understand what modern dairy farming is all about.
He describes a dairy industry that is local, ethical and responsible, then attempts to justify alternatives that would be “very taxing on the environment if purchased in Canada.”
First and foremost, Canadian dairy farmers share consumers’ desire to be mindful of the environmental footprint of the products they consume. Good stewardship is actually one of the foundations of our national quality assurance program, proAction. Dairy farmers are also governed by extremely high standards of animal welfare, milk quality, food safety, traceability and biosecurity — a far cry from the ‘short-sighted’ industry he claims doesn’t listen to consumers.
Supply management in dairy production is part of a desire to produce enough milk to meet the country’s needs. Our American neighbours overproduce and export dairy at a rate of 15 per cent annually, overburdening that country’s natural resources so that products can be exported around the world. Unlike U.S. production, our model of sustainable agriculture encourages the consumption of local products while preventing food waste.
Milk production also contributes to enriching the land, which in turn plays a crucial role in carbon sequestration. It is thus in line with the report of the Intergovernmental Panel on Climate Change published last summer, which stresses the importance of good management of agricultural and forest soils in carbon capture and the importance of avoiding soil degradation.
As a result of producers’ ongoing efforts and research — the sorts of innovation he says are lacking — milk production accounts for only 1 per cent of Canada’s GHG emissions. Moreover, the sector’s environmental footprint is steadily decreasing. According to the most recent environmental life cycle analysis of dairy production, Canada ranks among the best in the world. From 2011 to 2016, we have reduced the environmental impact substantially, reducing the carbon footprint of production of a glass of milk by 7 per cent, its water consumption by 6 per cent and its land use by 11 per cent.
The vast majority of Canadians believe that dairy farmers do an excellent job of producing quality milk. Moreover, 88 per cent of Canadians believe milk is an important food for health, including 82 per cent of millennials.
What further illustrates the opinion of consumers is our sales. General demand for all dairy products is on the rise, contrary to what Charlebois claims. Between 2015 and 2017, we have seen a 15 per cent increase in total Canadian demand. Between 2013 and 2016, the demand for butterfat increased by 23 per cent in Canada, largely due to scientific research that has shown that milk fat is not linked to the incidence of cardiovascular disease.
Dairy production in Canada is ethical and responsible, which addresses the concerns of most Canadians. Dairy producers communicate seamlessly with consumers, particularly Millennials and Generation Z, on the various digital platforms, social media and other mediums they use.
Whether Mr. Charlebois likes it or not, our dairy farmers have long been committed to sustainable production. Accusing them of “burying their heads in the sand” may be entertaining, but it doesn’t make it a reality.
Pierre Lampron is President of Dairy Farmers of Canada
One at a time for six days, the 27 livestock trailers pulled up to the barn at Adams Dairy Farm, as if part of an extended funeral receiving line.
They came from other parts of Wisconsin, and Iowa and New York, picking up youngstock first, then their share of 600 cattle.
When the last rig eased over to State Highway 93 on Tuesday, dairy farming ceased on this expanse of Trempealeau County land that’s been in Paul Adams’ family since shortly after the Civil War.
“It’s amazing how long it takes to wind something like this down,” he said while watching the farm’s last milking session before those cows were sorted and walked up ramps into the trailers.
Adams Dairy went organic in 2002, so most of the tractor-trailer rigs were headed to an organic operation east of Dallas with about 2,000 cattle. The last four rigs headed to a slaughterhouse in Omaha, a move Adams said was upsetting but unavoidable because he couldn’t find another buyer for those cows.
Equipment on the farm, which is about $8 million in debt, is going up for auction and the land will be listed for sale with a real estate firm.
“This isn’t the way I wanted it to end, but at least it’s a definite stop,” Adams said.
At 68 years old, he has been a dairy farmer since he graduated from high school in 1970 and completed the industry’s “short course” at the University of Wisconsin-Madison. Back then, his parents milked 30 cows.
Today, he and his wife JoAnn live in a home they inherited that overlooks the farm but isn’t part of it. Their daughter Becky lives in the farmhouse where she grew up. She has worked with her father for 15 years and was poised to take over the business as he neared retirement. She managed the herd and supervised nearly 20 employees.
“Becky has been pretty amazing, watching out for everybody,” Adams said.
Now, she and her two children will lose their home. The plan is to move to Altoona, closer to Eau Claire, and figure the next steps out.
“Everything she had worked for, the equity in the farm, is gone,” Adams said.
Even then, there might not be enough revenue from the liquidation to pay off the crushing debts. If that happens, a bankruptcy filing could be in order.
“I’m at the point where I’m not trying to save anything,” Adams said.
Taking the right steps
The collapse of family dairy farms has been changing the landscape of Wisconsin — literally and figuratively — for years. Wisconsin branded itself America’s Dairyland 80 years ago, and family farms are ingrained in the state’s identity.
But many of those operations have been losing money or are barely hanging on. In 2019, about 820 dairy farms shut down in the state, a rate of more than two a day. Low commodities prices, intense competition, declining consumer interest in milk and an oversupplied marketplace have conspired against farmers.
The collapse of Adams Dairy, however, generated some shock waves given it had followed the script for survival.
Through the years, the Adamses grew the size of their herd to take advantage of economies of scale. They also added land; today they own 800 acres and lease 300 more. They found a niche to specialize in, and their Holsteins and Brown Swiss were from award-winning genetics. The family invested in new machinery and kept the farm modern. They did everything by the book and then some.
Becky Adams even traveled to Mexico to better understand where many of her workers came from — the families they left behind, the dreams they had of returning, the challenges they faced so far from home.
“When you see the quality of the barns, the cattle and everything going on here, this was clearly a family farm that was looking to the future,” said Danielle Endvick, communications manager for the trade group Wisconsin Farmers Union, as she watched the cows being loaded onto the trailers.
Even as the milk price improved some this year, more dairy farmers have called it quits, too deep in the hole to benefit.
“It’s hard to watch these losses and have a lot of hope,” said Endvick, whose family lost its dairy farm years ago.
“There was no doubt that I would be the next generation running that farm. But I remember my dad telling me point blank, ‘These are the numbers and here’s why it’s not going to pencil out,’ ” Endvick said.
For a time, outlook was bright
Not long ago, the market for organic milk was growing at a rapid clip. Adams raised cattle feed on land where the nutrients and natural processes were kept in a careful balance. His cows grazed on postcard-perfect hillsides.
“I saw a beautiful future in organic,” Adams said. “I learned that if you manage the soils right, you’re going to have healthier crops, healthier cows and healthier people.”
For quite a while, the business thrived. The price the farm received for its milk was high enough to cover the additional costs of organic farming — mostly higher feed costs — and assure a nice profit. The milk was shipped to a bottler in New Jersey, and the farm kept growing.
Then, in November 2017, Adams lost his contract with that processor when it found it could get milk cheaper from farms with thousands of cows in Texas.
He found another milk buyer, in Rochester, Minnesota, but the price kept falling as the organic market became saturated by big farms in the Southwest. At least once at the Rochester plant, he saw tanker trucks with Texas license plates.
A handful of mega-sized dairies in the Southwest now produce more certified organic milk than all of Wisconsin’s 450 organic dairies combined, according to U.S. Department of Agriculture data.
Critics contend the industrial farms skirt the rules calling for, among other things, a minimum amount of grazing time for cows in order for the milk to be certified organic.
“It’s really hurting the organic label, which is bad because it took many years to get it where it was three or four years ago,” said Darin Von Ruden, an organic dairy farmer from Westby and president of Wisconsin Farmers Union.
“As the industry got bigger, I thought that some of the rules would save us from the competitive downhill rush. But it hit us anyway,” Adams said.
“The system is broken. We can’t modify it. There has to be an overhaul,” he added.
‘We have pretty well lost everything’
Two years ago, Adams put the family farm up for sale. But there were no offers and the farm’s outlook worsened as the milk price remained below the cost of production amid a deep industrywide slump.
Adams drained his retirement savings to plant corn for the cattle and keep the business afloat. Then his local bank sold his loans to an out-of-state investment firm that demanded higher monthly payments and he lost another milk contract.
Earlier this year, “it became impossible to continue,” Adams said. “We dragged down our equity to the point where we are now hoping to sell the entire business and come out at net zero.”
It bothers him that the industrial dairies have come to control much of the organic milk market by hauling in massive amounts of organic cattle feed from other places and getting around the grazing requirements. Yet he understands the cost pressures; his own farm nearly qualified as a concentrated animal feeding operation, or CAFO, and the rules that come with that designation.
“I am not really that negative on the organic CAFOs,” he said. “I just thought that consumer demand for better milk would stay ahead of the demand for cheaper milk. But it didn’t.”
Lowering standards was unacceptable
He might have saved the business by lowering his expenses and standards over the years. But that would have gone against what he believes in, Adams said.
“I have never been a low-cost producer,” he said. “I want to treat my cows right and my people right. I know the quality of the milk we are producing.”
Adams says he doesn’t know what he’s going to do now that he isn’t working on the farm seven days a week.
“One thing I will miss is harvest time … getting to play with the big toys,” he said.
At one time, there were four other dairies on a mile stretch of road between his place and Eleva, a village of about 650 people on the Buffalo River. Now there are none.
Becky Adams, who studied dairy science at UW-Madison, says she may pursue a career in natural health practices for people, not livestock.
“My original plan was to become a veterinarian and not come back to the farm. But while I was at UW, I realized I wanted to work with the healthy cows on our farm rather than everyone else’s sick cows,” she said.
At one point, tears welled up in her eyes while she helped sort and load the cows onto the caravan of trailers leaving the farm for the 16-hour trek to Dallas.
“I will miss the friendly ones, my pets,” she said.
Will the 36-year-old dairy farmer who worked 15 years on her parents’ farm ever get back into the business?
“Right now I am pretty emotional,” she said. “I don’t think so, but time heals wounds. We’ll wait and see.”
Join us at the Midwest Dairy Symposium March 16 in Platteville
Gov. Tony Evers, Journal Sentinel reporter Rick Barrett and dairy experts from across the state will meet March 16 at the University of Wisconsin-Platteville to discuss the dairy crisis and — just as important — solutions for Wisconsin farmers. Travis Forgues of Organic Valley Cooperative will be the keynote speaker.
A new study was released on Feb. 25, which associated dairy milk intake with greater breast cancer risk. The study, entitled Dairy, soy, and risk of breast cancer: those confounded milks, was published in the International Journal of Epidemiology and funded by the National Cancer Institute at the National Institutes of Health and the World Cancer Research Fund (United Kingdom).
As expected for such a topic, media around the world picked it up rather quickly, with stories published in the U.K.’s Daily Mail, CTV News in Canada and ABC News in the United States.
Dairy Farmers of Canada (DFC) provided the following statement from Isabelle Neiderer, DFC’s nutrition and research director, to several media outlets: “We are aware of a new study looking at the associations between dairy consumption and breast cancer risk. DFC is concerned the findings of this research study could be misleading.”
DFC also cited evidence from a study by the World Cancer Research Fund International, considered the authority on diet, weight, physical activity and cancer risk, which suggests total dairy product consumption is either not associated with risk of breast cancer or may reduce the risk of breast cancer. Milk is specifically not associated with risk in both pre and post-menopausal women;
The International Dairy Federation (IDF), which represents the global dairy sector and ensures the best scientific expertise is used to support high-quality milk and nutritious, safe and sustainable dairy products, states research generally does not support a strong association between consumption of milk or dairy products and breast cancer risk, although further research is needed;
DFC also cited a 2016 study by researcher Jing Wu and his colleagues’ revealed risk of breast cancer decreased by four per cent with skim milk intake. Yogurt and low-fat dairy consumption have also been associated with a reduced risk of breast cancer (Zhang et al 2015).
Dairy Farmers of Ontario (DFO) does not support the findings of the study. DFO strongly supports educating Canadians on dairy’s contributions to a healthy and sustainable diet using all available scientific evidence to support those claims, and will continue educating the public about dairy’s benefits via community-based programs and events, and through various advocacy efforts and initiatives.
Wisconsin’s dairy industry is integral to the state’s identity, but the industry is struggling — and the threat of climate change hasn’t helped. Flooded fields, washed out roads and rising temperatures are making an already challenging job more difficult to manage. In this series, WPR is exploring how the state can adapt to and mitigate the affect climate change is having on some of Wisconsin’s most iconic foods.
On a cold, sunny day in December, a row of dairy cows chews through a precise mix that contains corn, alfalfa and soybeans at Crave Brothers Farm outside of Waterloo.
Those crops, grown on 3,000 acres of farmland, feed Crave Brothers‘ 2,200 cows. In turn, the cows produce enough milk for the roughly 15,000 pounds of cheese coming out of the farm’s cheese factory each day.
“Our story is crops to cows, cheese to the consumer,” said George Crave, who runs the farm with his three brothers.
But there are costs to producing dairy products.
Dairy farms make a measurable contribution to greenhouse gas emissions. And globally, greenhouse gases from agriculture production create a vicious cycle — a hotter planet makes food production more difficult in many places.
Farmers like the Craves believe a farm that runs efficiently is ultimately better for the environment.
That’s one reason the Craves installed two anaerobic digesters — producing enough electricity for the farm, cheese factory and 300 homes in the community from the methane in cow manure, as well as fertilizer for the fields and bedding for the cows.
Recent years have been tough on dairy farmers — plummeting milk prices, oversupply and an overwhelming trend toward consolidation have led to a record number of bankruptcies across the state. Amid those struggles, climate change has emerged as yet another adversary. Wisconsin is a warmer and wetter place than it was a generation ago, and will continue to be so.
Experts say the agriculture industry needs to fundamentally change to mitigate and adapt to a changing climate. But dairy farmers, in an industry that is already stressed at the seams, have questions on what that means — and who’s going to help them do it.
Increasing Temperatures Tough On Dairy Cows
It takes a lot of milk to produce cheese.
While it depends on the style of cheese, Mark Johnson, assistant director of the Center for Dairy Research at the University of Wisconsin-Madison, said it averages to about 10 pounds of milk for 1 pound of cheese.
But as the state warms, farmers are concerned about seeing their dairy cows produce less and less milk.
Cows like it cold and are particularly sensitive to heat stress, so every August and September there’s a dip in milk production, Johnson said. This could be problematic for cheesemakers who rely on milk that’s high in fat and protein.
Sarah Lloyd, a dairy farmer and director of special projects at Wisconsin Farmers Union, echoed Johnson’s concern, and added that summer nights don’t seem to cool off like they used to.
“It definitely reduces production,” she said. “You can see it immediately that day.”
Ninety percent of the milk produced in Wisconsin goes to making cheese. And while changes in tastes and lifestyles have led to a steady free fall in the consumption of drinking milk for decades, Americans are eating more cheese than ever before.
Since 1950, Wisconsin has warmed by about 2 degrees Fahrenheit. By 2050, scientists expect the state to warm by an additional 2 to 8 degrees Fahrenheit; the likelihood of greater frequency in heat waves will also rise.
Graph courtesy of Dan Vimont, director of the Center for Climatic Research
A dairy cow’s optimal temperature range is between 25 and 65 degrees Fahrenheit — when temperatures reach 80 to 90 degrees Fahrenheit, milk production can decrease by about 10 percent. Above 90 degrees, production can dramatically decrease, often by more than 25 percent, according to UW-Extension.
On Crave Brothers Farm, the cows are kept in open air, free-range barns designed to keep them comfortable and productive.
“If the temperature is over 75 degrees, they get water sprayed on them periodically, and we have large fans that continually cool them … keeps them eating, keeps them productive,” Crave said.
Out in the field, where the Craves grow the crops to feed their cattle like many other dairy farmers in the state, the last few years of intense rainfall have been tough on crop production.
‘The Ground Is Just Always Saturated’
There used to be dry-offs between rains, Crave said.
“But now it’s like, OK, here’s 2 more inches and there’s 2 more inches and there’s 2 more inches,” he said. “And all of a sudden in July, you get 7 inches. In August, you have 7 inches of rain, which is totally unheard of.”
“I can think of 2018, where I dumped 10 inches of rain out of the rain gauge in a one-week period,” Crave continued.
Yet, Crave considers his farm among the lucky ones. They’ve still been able to farm and work most of their ground — although he admits not very efficiently.
In other parts of the state — particularly in the western region — and the wider Midwest, so much rain has been devastating, delaying or altogether preventing crop plantings across the region.
Between disruptions to freeze and thaw cycles, dealing with washed out bridges and roads and increasing feed prices, farmers are feeling the pressure. The added unpredictability can be discouraging, but Crave said he’s not an alarmist.
“When Mother Nature really keeps stopping you from advancing, it’s frustrating for everyone,” he said. “It makes more work, and no one pays us for that extra work either.”
“When Mother Nature really keeps stopping you from advancing, it’s frustrating for everyone,” dairy farmer George Crave said. “It makes more work, and no one pays us for that extra work either.”
2019 was the wettest year on record in Wisconsin, and the 2010s went down as the wettest decade on record by a large amount, said Dan Vimont, director of the UW-Madison Nelson Institute Center for Climatic Research.
“Boy, you look across Wisconsin this summer, it was shocking how much standing water there was,” he said.
If annual average precipitation keeps increasing at current rates — around 20 to 30 percent since the mid-20th century — it will be catastrophic, said Chris Kucharik, chair of the UW-Madison Agronomy Department.
“In the last 10 years, our average rainfall is pushing 40 inches,” Kucharik said “It’s to the point that a lot of the landscape can’t handle that.”
Consensus among climate models suggests Wisconsin will be closer to 10 to 15 percent wetter in coming decades — meaning dry years will likely be mixed in.
“The law of averages suggests, well, maybe the next 10 years we’re gonna be 10 inches below normal each year,” he said. “If we get to like averaging 50 inches a year, you’re going to start seeing lakes appear in places that they weren’t.”
Graph courtesy of Dan Vimont, director of the Center for Climatic Research
Adverse weather events are becoming more frequent and more extreme, often in different places at the same time, said Molly Jahn, a UW-Madison professor and leader of Jahn Research Group, which researches risk in food systems.
And that’s challenging risk management and responses to natural disasters.
Farm credit services exist to cushion the risk farmers face, but as weather patterns are changing so are the risks they face — and there are concerns that risk profiles aren’t adapting as quickly as patterns are changing, she said.
“The whole system is affected in ways that intersect,” Jahn said. “A connects to B to C, etc.”
“But we frequently don’t think about the risks as intersecting,” she continued. “We have historically separated them and assess the likelihood of each one.”
Risks from events like flooding and drought can be pooled, Jahn said. And she expects there will be innovative risk mitigation measures going forward that come from a variety of stakeholders, such as insurance companies.
“Insurance isn’t the only solution, but insurance can provoke a set of actions or can organize,” she said. “Because ultimately … if we link capital to good behavior, we will see good behavior.”
A Low-Tech Vs. High-Tech Response
A thick cloud of steam pumping into the sky is immediately visible at Crave Brothers Farm. That steam is a byproduct of the two 750,000 gallon anaerobic digesters that capture the methane — a greenhouse gas 25 times stronger than carbon dioxide at trapping heat in the atmosphere — from manure and turns it into electricity.
Crave is frank that digesters aren’t a good, or economically viable, fit for all farms.
“Everything’s dependent on volume, efficiencies of size and scale. And it does take a lot of biomass or fuel, which in our case is the manure to power these,” he said. “There’s truly economic value to being certain sizes — and balanced in size, just getting bigger doesn’t guarantee anything.”
There are about three dozen digesters in Wisconsin. Farms have to be a sophisticated operation to make them work because they can take a fair amount of maintenance and capital, Jahn said.
Producing electricity alone isn’t enough to make the digesters worth the investment, Crave said. Electricity in the U.S. is cheap, so for digesters to make economic sense, they needed to find additional ways to add value through cow bedding and fertilizer.
Anaerobic digester at Crave Brothers Farm. Mary Kate McCoy/WPR
Lloyd, of the Wisconsin Farmers Union, calls digesters a high-tech approach to climate change. On her family farm outside of the Wisconsin Dells — where they milk 400 cows — digesters don’t make sense because of the smaller size of their herd.
“That’s the risk, that you’re like, ‘Oh, don’t worry, technology will fix this,'” she said. “And it’s not to say that someone can’t come up with a technological fix. But then you just go back to that question of: who controls the technology, who has the money to access the technology?”
“The average dairy farmer right now is not that person,” she continued.
Lloyd is concerned solutions requiring a high amount of capital will only exacerbate the trend of consolidation and larger farms across the state.
“The risk is you devastate the small- and medium-scale producers … by not having the economy of scale, but they are creating a lot of other values,” she said.
While Lloyd considers anaerobic digesters a high-tech response, she calls rotational grazing the low-tech response.
Grazing is about making agriculture mimic the natural landscape as much as possible, said Randy Jackson, professor of agronomy at UW-Madison who leads Grassland 2.0, a recent USDA-funded project focused on transforming livestock agriculture from grain-based to perennial grass-based.
Perennial crops are a huge part of both adaptation and mitigation, he said. Perennial grasses improve the ability of soil to hold onto water, prevent erosion and runoff, and are much more resilient than row crops in the face of flooding.
“We’ve modified the grasslands and the wetlands and the forests so much that those modifications have basically cracked them open and made them leaky and made them unable to support biodiversity and do the things that we’d like them to do,” he said.
Jackson said all livestock raised for milk and meat production can be grazed.
But it’s not without challenges. Most obviously, grass doesn’t grow all year in Wisconsin. And if grazing isn’t managed properly — say, allowing cows to eat the grass down to a nub — it’ll undermine all of the environmental benefits.
“Management intensive rotation grazing is not your grandfather’s grazing,” Lloyd said. “It’s not like dumping your cows out to wander around, (it’s) much more like you’re a grass farmer.”
There’s also a productivity cost, grass-based milk and meat production provides lower yield than grain-based. But Jackson counters that studies show grazing is more profitable than confinement operations by reducing machine, production and feed costs.
“If we want to have something out on the landscape that’s more benign environmentally, that holds onto nutrients and carbon, we’re going to have to take a little bit less yield out of the landscape,” Jackson said.
“If we want to have something out on the landscape that’s more benign environmentally, that holds onto nutrients and carbon, we’re going to have to take a little bit less yield out of the landscape,” said Randy Jackson, a professor of agronomy at UW-Madison.
What Does It Mean To Be Sustainable?
Experts agree that agriculture needs to be a more resilient, less intensive system.
Globally, it’s estimated that about 25 to 30 percent of greenhouse gas emissions are attributed to agriculture. U.S. dairy farms are estimated to contribute about 1 to 2 percent of U.S. greenhouse gas emissions.
Graph courtesy of Matt Ruark, UW-Madison professor in the Department of Soil Science
Studies show dairy farms can significantly lower their emissions, while increasing profitability, through improving feeding strategies, cow genetics and manure management.
But the costs of making the changes to a more sustainable system can be out of reach for many farmers, and it’s left them wondering who will cover the cost, who’s responsible for what, and how they are supposed to get there.
“Right now, coming off of five years … of these low, low prices, it’s very difficult to imagine doing anything drastic that’s going to be risky or take investment into a new enterprise,” Lloyd said.
Graph courtesy of Matt Ruark, professor in the Department of Soil Sciences at UW-Madison
Yet Carol Barford, director of the Center for Sustainability and the Global Environment, said that to feed a growing population on a limited amount of farmland, it’s far more efficient to feed people on plants than on animals.
The majority of corn grown in Wisconsin goes toward feeding livestock and producing ethanol. And corn as far as the eye can see is not a stable system, she said.
“We have to feed people, and if we want to do that and produce less greenhouse gas, we should feed people mostly on plants and not feed so many animals first … that’s a big change for a lot of people,” Barford said.
Back on his farm, Crave said contemporary farms like his often shoulder the blame for environmental problems because people have lost touch with where their food comes from, and who produces it.
“To say we’re not paying attention or we’re wasteful or that we don’t know what’s going on or that we don’t care is a misrepresentation of how we really run our businesses,” he said.
Crave Brothers Farm outside of Waterloo, Wis. Mary Kate McCoy/WPR
Since 2002, Vermont has lost half of its dairy farms.
But one dairy product may be the Vermont industry’s saving grace: premium cheese.
For the past year, the consulting firm Karen Karp and Partners has studied market challenges and opportunities for Vermont’s dairy farms. And the firm identified cheese as a hot new opportunity, largely because Americans are eating so much more of it.
“These cheese retailers, they love Vermont cheese,” KK&P consultant Ben Kerrick told lawmakers Wednesday. “They say the cheese from Vermont is the highest quality in the U.S.”
The new report was requested by lawmakers who are trying to find a way to spur market revitalization of Vermont’s dairy market.
At a joint hearing last week, the Senate Committee on Agriculture and the House Committee on Agriculture and Forestry heard about the impact of five years of low prices on Vermont’s dairy industry. Farmers are struggling to keep up with agency regulations and there’s a decline in academic research driving dairy market innovation, according to KK&P’s research.
While specialty cheese may be the answer for the state’s dairy farmers, Vermont isn’t leading in cheese sales, Kerrick said. He recommended that Vermont’s cheese producers reimagine their brands. The fact that a cheese is from Vermont isn’t enough to hook consumers into buying a premium product.
“Cheese brands that sell well in the New York and Boston markets, sell well because … they have interesting stories,” Kerrick said. “When someone comes into a high-end cheese retailer in Manhattan … they’re not looking for Vermont cheeses, they’re looking for the story of Jasper Hill. They’re looking for the story of Spring Brook. And those stories really resonate.”
Millenial and Gen Z buyers, who are taking up a larger portion of the United States’ consumer base, are also looking for food products that provide an experience.
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“It’s often said that food is the new rock,” KK&P consultant Christophe Hille told lawmakers. He suggested that dairy farms could attract customers by providing tourism experiences on their farms.
Kerrick said consumers are more apt to buy more expensive dairy products that promote more natural ingredients.
Sen. Bobby Starr, D-Essex-Orleans, said it was “exciting” to hear that Vermont could expand the premium cheese market.
Starr supports a “price order” on certain dairy products. A price order is a fixed amount that dairy products can be bought and sold for, based on other market factors. The price would likely be fixed by a state commission, similar to Maine’s system, which Starr pointed to as a potential model for Vermont.
“So everybody can make some money,” Starr said, “but no one would get it all or get none.”
Rep. John O’Brien, D-Tunbridge, who sits on the House Agriculture Committee, said it’s unrealistic to think that many of the Vermont dairy farms the state has lost could be brought back.
“Everybody’s gotten so good at making milk,” O’Brien said, “When you hear about a 50,000 cow dairy starting in California, how do we compete with that?”
O’Brien, a sheep farmer, is more focused on preserving the small farms still left in the state. He’s thinking about introducing legislation that would make it easier for smaller Vermont dairy companies to compete with big-name brands in grocery stores. Placing local products at the same shelf level as Hershey dairy products could make a big difference, he said.