Dairy Farmers of America Wants to Buy Dean Foods But Others May Too

Dairy Farmers of America Inc, the biggest U.S. dairy cooperative, is in advanced talks to acquire U.S. milk processor Dean Foods Co. But other would-be buyers could emerge.

While discussions are taking place between DFA and Dean, no agreement has been reached for the purchase of all or some of the Dallas-based company’s assets, Monica Massey, executive vice president and chief of staff at DFA, said in an emailed response to questions. She didn’t speculate on prospective bidders.

A deal could be a lengthy process, including an antitrust review. Any transaction would require an “extensive review of Dean Foods’ assets, thorough due diligence and other conditions, including approval from the Department of Justice and the Bankruptcy Court,” Massey said. Dean intends to file bidding procedures with the court to conduct a sale.

“We have been monitoring Dean Foods’ financial performance closely since the business began showing signs of distress and have been preparing for various scenarios, including a bankruptcy filing, in order to minimize the impact to DFA,” Massey said. “Our farmer leaders and management have built our cooperative to withstand a situation like this. Our members and employees will get paid, schools will get milk, and dairy products will remain on the shelves across the country.”

Dean Foods is the biggest customer of the Kansas City-based cooperative, which has around 14,500 family farmer members around the country. DFA is focused on “ensuring we have secure markets for our members’ milk,” she said.

While Americans may be drinking less conventional milk, 94% of U.S. households also keep it in their refrigerators, Massey said. The dairy category as a whole remains strong, with cheese and butter at all-time consumption highs. Americans ate 2.5% more dairy in August than they did the year before, and the retail market is worth over $100 billion, she said.


Dean Foods goes bust thanks to a fatal error: shying away from alt-milk

America’s biggest milk producer has just filed for bankruptcy — a newsflash that’s been a bit like hearing thunder after seeing lightning: stunning, but predictable.

Alternative products and changing consumer trends proved the undoing for Dean Foods, which had been a robust survivor in almost a century of dairy dominance. The company powered through the Great Depression and the Second World War, cementing itself as a case study in how to outpace rivals in a dairy industry churning with technological change. Now it’s become a cautionary tale about disruption.

Causes of the curdle

As the chart below shows, there were plenty of warning signs that things were beginning to curdle. Revenues for Dean Foods had reached a record high of $12.6 billion in 2011. But by last year, these had almost halved, sinking to $7.5 billion. Its share price plummeted accordingly — down 80% over the last year, with investors pressing the ejector seat after four quarters of negative earnings and mounting debt. Most analysts, though, didn’t even see this coming: just 30 days ago, four out of five coverage analysts still had a Hold rating; only one advised Sell (Credit Suisse). When disruption happens, it happens fast. 



Dean Foods CEO Eric Beringause explained these numbers in the context of a tough market for dairy as a whole. “Despite our best efforts to make our business more agile and cost-efficient,” he wrote, “we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption.”

The ghost of a WhiteWave past

This sudden shift in consumer demand is one of the totems we used to build out our recent White Paper, a thesis charting the reasons for launching our New Carnivore Fund. But a sour sectoral outlook is not the whole story. The moral of this downfall is not that they failed to respond to the rise of alt milks. They had. Instead, the story is a more ironic tale of turning their backs on them. Shockingly, Dean Foods was well-positioned for the changes ahead when, in 2002, it acquired WhiteWave Foods, the maker of Silk Soymilk, for $205 million. 

And what an acquisition it was. WhiteWave was founded back in 1977 by a 29-year old ex-hippie named Steve Demos living in Boulder Colorado; its mission: the “creative integration of soy into the average American diet.” After iterating on hundreds of products, Steve eventually landed on Silk Soymilk. He built authentic and mission-driven branding, and had the ingenious idea to position Silk in the dairy aisle, away from other unrefrigerated soy beverages he called “Armageddon food.” From then on sales soared. Dean’s initially bought a small piece of the company as part of a distribution agreement but seeing the growth, acquired WhiteWave in 2002. But by 2012, the execs at Dean Foods had other ideas and decided to spinout WhiteWave to “destroy unlock significant shareholder value,” taking it public at a $3 billion valuation and forking dividends out to shareholders. Five years on, Danone buys WhiteWave for $12.5 billion. And Dean Foods has now gone bust. 

The surprising New Carnivores

The decision of Dean Foods to distance itself from alt protein should serve as a cautionary tale for the animal products industry more broadly. The same changes we’ve seen over the last few decades in dairy are inevitably coming to the animal protein market. But with the path already paved and with a much greater market opportunity, we can expect that change to happen much more quickly this time around.

Fortunately many in the industry seem to get it. When we launched our New Carnivore Fund, we expected most investor interest to come from vegan and impact investors, but surprisingly most investor interest is coming from veteran players in the meat and dairy industry. Quietly and decisively, investors and executives are taking stock of consumer trends and are choosing to embrace change. The demise of Dean Foods only serves as another reminder of the need to do so.


Dean Foods Bankruptcy Is “Not Reflective Of U.S. Dairy Industry”

Dean Foods, America’s largest milk producer, Tuesday filed for Chapter 11 bankruptcy.

A prominent figure believes the U.S. dairy industry should be optimistic, despite this shortcoming.

Former United States Agriculture Secretary Tom Vilsack now serves as president and chief executive officer of the U.S. Dairy Export Council (USDEC). Vilsack, presenting at the 76th annual National Association of Farm Broadcasting Convention, says industry officials are starting to see a rebound for dairy farmers.

“There is good news in the dairy industry. Ninety-four percent of households in the U.S have fluid milk in their refrigerators. Butter consumption is at a 50 year-high; cheese is at a record high, domestically. We’ve seen an increase in exports both in volume and value. Value is up almost a billion dollars more than it was a couple years ago,” Vilsack said.

Vilsack makes note of Dean Foods decision to file for Chapter 11 bankruptcy. He calls the situation an “unfortunate circumstance,” but does not believe it is reflective of the industry.

“We’re selling the most nutritious product around. As they say, ‘Nature’s most perfect food,’” Vilsack said. “We have an interesting environmental story to tell; dairy farmers are the only farmers that reduce greenhouse gas emissions. We have an animal welfare program that’s internationally certified. A lot of good news in the dairy business.”

Vilsack says all of this good news stems from recent advancements within the industry.

“This is an industry that has embraced innovation,” Vilsack said. “You’re beginning to see a lot of different products. We just shocked the world, if you will, at the World Cheese Awards. A cheese from Oregon was voted ‘Best Cheese in the World.’ Rogue Creamery, with their bleu cheese, won 131 medals, the highest ever. I think the world is beginning to realize that U.S. dairy and U.S. cheeses are quality.”

Vilsack adds, “The long-term future looks good for the U.S. dairy industry,” which sets its sights on opportunities for increased exports to Japan, Southeast Asia, Mexico and Canada.


Why P.E.I. dairy farmers are worried about how they’ll feed their cows this winter

One fifth-generation dairy farmer in Marshfield, P.E.I., says this was the toughest growing season he has seen in 42 years of farming.

The farm has nutritionists that take samples of feed to be analyzed, then advise on what supplements he needs to add for extra energy. (Randy McAndrew/CBC)

Some dairy farmers on P.E.I. are worried about how they will feed their cows this winter after a poor growing season and damage from post-tropical storm Dorian. 

Gordon MacBeath, a fifth-generation dairy farmer in Marshfield, P.E.I., said this was the toughest growing season he has seen in 42 years of farming. 

“It’s been a challenge since early spring, there was a lot of winterkill on our grasses and then it was cold, wet and the forages got off to a poor start,” said MacBeath, who milks 100 cows at Goldenflo Holsteins, along with his son.

“Then of course we were hit with a hurricane and then followed by some early frost so, yeah, it’s it’s been a tough year.”

MacBeath has giant piles of corn silage that he was able to harvest, but said the issue now is quality.

MacBeath says the grain content in the farm’s corn silage was around 55 per cent last year. This year it’s 35 per cent. (Randy McAndrew/CBC)

“The hurricane compromised the plants and so it didn’t finish maturing,” MacBeath said.

“Corn is an energy source and the energy is in the kernel and if that doesn’t mature properly, their energy content will be down, the digestibility will be down and that’ll impact the intake of the cow.”

Lost energy

The farm has nutritionists that take samples of feed to be analyzed, then advise MacBeath on what supplements he needs to add for extra energy.

MacBeath said the expense of adding those supplements this year will be “significant.”

“Last year, our grain content in our corn silage was around 55 per cent. This year it’s 35 per cent,” MacBeath said.

“We have to replace that with another energy source, either locally which will be tough because the grain growers, their crop was compromised as well so likely, in the end, we’ll be importing from off-Island.”

MacBeath said the extra expense is necessary to maintain milk production.

“For a healthy comfortable cow to produce large volumes of milk then she’s got to have good quality feed going in,” MacBeath said.

“If your crops are compromised and their digestibility goes down, that feed will just sit in the cow stomach for longer periods of time, rather than digest and pass through and generate milk.”

MacBeath says the energy is in the kernel and if that doesn’t mature properly, energy content will be down. (Randy Drenth/Twitter)

Request for financial assistance

The P.E.I. Federation of Agriculture has submitted a request for the provincial government to enact the federal-provincial program that helps farmers recover from natural disasters.

MacBeath says this was the toughest growing season he has seen in 42 years of farming. (Randy McAndrew/CBC)

The request includes corn and livestock producers as well as apple growers on P.E.I.

The AgriRecovery Framework provides financial assistance to producers for extraordinary costs related to harvesting after a natural disaster.

Potato producers on P.E.I. received $15.6 million from the AgriRecovery Framework after 2,800 hectares of potatoes were left in the ground in the fall of 2018 when rain and cold weather made it impossible to harvest them.

Harold MacNevin, the chairman of the Dairy Farmers of P.E.I., says the wet, low corn on the ground is also going to cause concerns about moulds and toxins in the corn after it’s harvested and stored. (Randy Drenth)

Harold MacNevin, the chairman of the Dairy Farmers of P.E.I., supports this year’s application.

“Producers are going to be struggling to have enough feed for the winter,” MacNevin said. 

“I’ve heard farms that generally have surplus feed that sell that surplus feed do not have the surplus this year to sell. They’re struggling to have enough for themselves.”

MacNevin says producers have been struggling to harvest the corn. (John Robertson/CBC)

MacNevin said some producers may end up selling some of their livestock if they don’t have enough feed.

“You don’t have the feed, you can’t get the feed, you can’t get the feed for a price that’s manageable and justified then yeah, selling livestock will be the option that they’ll have to choose.”

Wait for next year

MacBeath described the feed situation, for him, as a setback but not insurmountable.

“We’ve always had a good relationship with our nutritionist and our veterinarians,” MacBeath said. 

“But I think I’m going to have a more intimate relationship with my banker this year.” 

MacNevin says some producers may end up selling some of their livestock if they don’t have enough feed. (Randy McAndrew/CBC)

MacBeath said it will be a long winter for some dairy producers.

“We can’t harvest another corn crop until next October,” MacBeath said. 

“So we’ll spend the next year dealing with the challenges of this past growing season and then we’ll hope that we have a winter that our forages will come through and we can start off on a fresh foot next spring.”


Vilsack says dairy has a great story to tell

Former Ag Secretary Tom Vilsack addressed farm broadcasters at the National Association of Farm Broadcasting annual convention in Kansas City.

Currently the President and CEO of the U.S. Dairy Export Council, Vilsack said the dairy industry has reasons for optimism in spite of the Dean Foods bankruptcy announced this week.

“I think you have to understand that there is actually good news in the dairy industry, ninety-four percent of households in the US have fluid milk in their refrigerators. Butter is at a 50-year high consumption domestically, and cheese is at a record high domestically. We’ve seen increases in exports since we began our next five percent plan both in volume and in value. Value is up almost a billion dollars more than it was just a couple of years ago. And I think it’s reflected in the fact that prices are at the highest they’ve been in five years. So I think we’re beginning to see some rebound for dairy farmers.”

Vilsack says the dairy industry has come a long way in recent months, and is also an industry that has embraced innovation.


US dairy on high alert over NZ threat in CPTPP trade deal

The US food and agriculture industry says New Zealand is among those “stealing” markets from American exporters as pressure ramps up on the Trump administration to secure a trade deal with Japan.

The US National Milk Producers Federation (NMPF) and nearly 90 other industry signatories have written to the US Trade Representative, saying US interests are increasingly disadvantaged by competing regional and bilateral agreements with Japan, including the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) of which New Zealand is a member.

“Japan recently decreased tariffs on agricultural imports from the European Union and CPTPP member countries, which the group (signatories) warned, is stealing markets once enjoyed by American exporters,” said the federation in an industry note.

“Expanded agricultural market access to Japan is vital for America’s struggling rural economy, and that access needs to be on par with what’s already enjoyed by US competitors,” it said of the message delivered to the administration.

“The administration finally took the necessary step of announcing talks late last year, formally starting negotiations last month. NMPF is focused on touting the urgent need for a deal with Japan that helps US dairy exporters maintain and grow their competitiveness in this dairy-hungry market,” it said.

The latest lobbying effort follows the US Dairy Export Council sounding the alarm early this year about New Zealand’s first trade agreement with Japan via the CPTPP.

New Zealand and Australia, which is also a member of the CPTPP, are Japan’s two largest dairy suppliers. Japan is New Zealand’s 5th largest dairy export market with an annual value of about $450 million.

The CPTPP eliminated tariffs on all New Zealand exports to CPTPP economies with the exception of beef to Japan and some dairy products into Japan, Canada and Mexico, where access is improved through partial tariff reductions and duty-free quotas.

US President Trump withdrew from Trans-Pacific Partnership trade talks, the precursor to CPTPP, in 2017.

NMPF said the US exported US$270m (NZ$411m) of dairy goods to Japan last year, making it the fifth largest buyer of US dairy products.

It said the letter to Washington highlighted a US Dairy Export Council study earlier this year which showed America could double its share of the Japanese market over the next 10 years if given “appropriate” market access.

“Without positive action from trade officials, the (council) study forecast that dairy exports to Japan will fall 20 per cent over the next 5 years as Europe, Australia and New Zealand increase their dominance in the market, given the benefits their own trade treaties with Japan provide them.

“A US trade agreement with Japan is needed quickly and it must include market access provisions at least equal to the terms of the CPTPP and the EU-Japan EPA (economic partnership agreement), building on those precedents where possible,” NMPF said the letter spelled out.

The CPTPP, signed by 11 Asia-Pacific countries, which collectively were the destination of 30 per cent of New Zealand exports worth $16.7 billion last year, has been ratified by six of the countries. It came into force in December.

The Government says the agreement has the potential to deliver about NZ$222m of tariff savings a year once fully in force.

The Japan-EU trade agreement took effect earlier this year.

As the Herald reported in February, the economic impact study commissioned by the US Dairy Export Council on the potential fallout for the US from the CPTPP, concluded competitors including New Zealand could seize US$1.3b in sales from the American industry in the next 10 years.

This could climb to US$5.4b once the two trade agreements were fully implemented over 21 years, the study claimed.

The report also claimed New Zealand and Australia had “limited capacity to increase their supply” to Japan, the second biggest importer of cheese in the world after the UK.

As a result Japan had looked to the US and the EU for extra supply, the study said.

It found if the US had the same market access as its competitors, American dairy exporters share of the Japanese market could grow from 13 per cent in 2017 to 24 per cent in 2027.


Can touching cows’ teats during milking spread bacteria leading to mastitis?

Bacteria live on skin, so there’s always a risk that teats will become contaminated by mastitis bacteria during the milking process, writes DairyNZ senior scientist Jane Lacy-Hulbert.

Bacteria can be spread during milking by contact with milk from an infected udder. The risks can be minimised by ensuring good teat condition and effective teat-spraying practices.


Foremilk stripping is the most effective way to detect clinical mastitis, which shows as abnormalities in the milk. Stripping a few squirts of milk onto a black paddle, rather than the ground, makes these changes more visible.

Farms that routinely foremilk strip tend to have better control of their bulk milk somatic cell count (SCC). Foremilk stripping offers other advantages to make milking easier on-farm:

Teat condition monitoring

Maintaining healthy teat skin is important for successful prevention of mastitis. Bacteria grow and multiply in rough teat skin and teat sores. Foremilk stripping provides an ideal opportunity to check teat condition and spot any emerging issues.

Calmer cows

Milker injuries are common on-farm. Cows that are less familiar with their udders being touched can fidget and kick during cup attachment. ACC reports large numbers of injuries caused by cows kicking milkers.

However, when they have their foremilk stripped and teats inspected, cows become more accustomed to having their udders handled, so they’re less likely to react during cup attachment.

Calmer cows also produce dung less frequently while being milked, kick the cups off less often, move through the dairy easily and produce less adrenalin and, thus, better milk letdown than stressed and anxious cows.

Increased cure rates

Early detection of mastitis increases the chance and speed of cure.

Reducing the risk

  • In early lactation, foremilk strip regularly, initially, then implement strategic stripping. Monitor the bulk milk SCC and filter sock, and strip more regularly when suspicious about mastitis.
  • Use gloves when foremilk stripping cows. Gloves have a smooth surface, which are easier to clean and harbour less dirt and bacteria than bare hands.
  • Review teat-spraying procedures. Teat spraying after milking reduces bacteria left behind on the teats, which can include those left behind by foremilk stripping.
  • Check teat spray coverage. To be effective, teat spray needs to cover all sides of the teats, as well as the teat tip; this can be achieved by manual and automatic spraying systems.

Touching teats will increase the incidence of mastitis in cows.

Not if hands and teats are kept clean. Foremilk stripping, to find new cases, and teat spraying after milking, to prevent new cases, provide effective control of mastitis.

Learn more about mastitis management at


$555 million dairy processing plant taking shape on 146 acres in St. Johns

The $555 million dairy processing operation taking shape just north of the city’s downtown isn’t expected to be operational until November 2020, but the 375,000-square-foot facility where 8 million pounds a milk a day will be processed into cheese and whey is already taking shape.

It sits in the St. Johns industrial park, amid construction trailers and equipment, one of three structures being built on 146 acres as part of what is expected to be the largest food-processing plant in Michigan.

Glanbia, an Irish food and nutrition company, announced plans for the $470 million cheese plant last August. The project also includes an adjacent $85 million adjacent facility belonging to Proliant Dairy Ingredients, an Iowa company. 

Glanbia will own 50% of the milk processing facility. Dairy Farmers of America and Select Milk Producers, large dairy cooperative investors, will own the other half.

It will be state-of-the-art, and employ about 250 people, said John Dardis, senior vice president of U.S. corporate affairs for Glanbia.

The new St. Johns operation is modeled after a Glanbia and Dairy Farmers of America and Select Milk Producers partnership in New Mexico, Southwest Cheese Company LLC.

The latest expansion of that operation was last year, Dardis said.

Today the plant in New Mexico, which also produces cheese and whey, processes 14 million pounds of milk daily and employs more than 400 people, more than doubling the milk it processed since it opened in 2006.

Its success is a reassurance, Dardis said, that there’s demand for the operation under construction in St. Johns.

It is also a good sign that the facility could grow in the future, he said.

“Cheese demand is strong, and the dairy ingredient stream has become a real value product,” Dardis said. “It’s the same dynamic that’s driving Southwest Cheese, so we’re confident about those dynamics into the future. We wouldn’t be building it with our partners if we weren’t.”

Making progress

When it’s finished the St. Johns milk processing facility will capture about 20% of Michigan’s milk, said Glanbia Project Manager John Murphy. Right now, however, it’s an active build site, where an estimated 350 to 400 people go to work every day. 

The walls of the milk processing facility went up in February, Murphy said. Since then crews have been building out its refrigeration area, installing 50-foot storage tanks, laying tile flooring and building an intricate pipe system that will run throughout the building transporting milk and water.

Glanbia’s 75,000-square-foot cheese-making area is taking shape too. A large cheese-belt, where milk curds will be separated from whey, was installed in August. 

“These rooms look enormous but they fill up pretty quickly,” Murphy said during a recent walk-through of the building.

Roughly 800,000 pounds of American-style cheddar cheese will be made on site every day when the facility opens. Most of it will be cut into 40-pound blocks, packaged and shipped to retailers and food service and ingredient companies.

“From the moment the milk is pumped out of the silos (and comes) in to be pasteurized, and comes out as cheese in a package is a couple hours,” Murphy said. “It’s very quick.”

Glanbia will concentrate the protein from the whey, creating another byproduct called permeate. Proliant, the Iowa company, will dry the permeate into powdered dairy solids used in making baked goods, confectionery products, beverages and animal feed.

The Glanbia facility will operate 24 hours a day, seven days a week, Murphy said. Between 100 to 125 trucks carrying milk each day will get to the facility on Walker Road.

“The milk never really stops coming,” he said.

The milk processing plant is being built under the assumption it will expand, Murphy said.

“You can’t make predictions, but we have designed and built this with the assumption that it will,” he said. 

The plant won’t have the capacity to process more than 8 million pounds of milk a day, Dardis said, so increasing production would require an expanded footprint.

The dairy operation currently occupies 30% of the city’s industrial park, St. Johns Community Development Director Dave Kudwa said. There are an additional 20 acres of land within it that hasn’t be developed yet.


Hopes for the future

Right now milk from Kevin Weber’s third-generation dairy farm in Leslie is trucked as far away as Wisconsin and Pennsylvania to be processed.

Milk from his cows will go to Clinton County when the milk processing operation opens, he said.

“It will benefit us by keeping our milk more local and it will reduce some of the hauling to get our milk processed,” Weber, 53, said. 

He isn’t the only one with high hopes for the St. Johns operation.

Murphy gives two or three site tours a week at the property, to local and state officials, legislators and dairy farmers.

He’s “lost count” of how many there have been, he said.

St. Johns City Manager Jon Stoppels got a closer look at the operation on a recent tour.

“Anytime you go into it for the first time you’re impressed,” he said. The scale of the operation and the efficient, precise way it will operate is encouraging, Stoppels said. So is its potential to boost the city’s economy and population.

“I hope that people will not only work there but live here,” he said. “I would love to see our town grow. This is the swan song. St. Johns is known as the mint city, but I’d like to see it be known as the cheese city as well.”

Glanbia operates a cheese innovation center in Idaho, Dardis said, and a few years ago opened Glanbia Cheese Marketplace, a store that offers different types of cheeses the company has developed there.

Is a cheese store possible in Michigan?

“I don’t know, is the answer,” Dardis said.

When the St. Johns operation opens the company will first be focused on ensuring an efficient operation, he said. It’s how the company handled Southwest Cheese when it opened more than a decade ago.

“If you get that fundamentally right then you expand the market and you add in to meet that demand,” Dardis said. 

“Please God, that’s how things will turn out in Michigan too.”  


New Research: Milking Three Times in Two Days?

Looking for information on milking three times in two days? This research programme will investigate the human, animal and pasture response to milking three times in two days (3-in-2).

Started in July 2019, Flexible Milking for Healthier People and Cows is a three-year project, led by DairyNZ and funded by $499,536 from the Sustainable Farming Fund and $306,914 from the DairyNZ levy.

Project goals

  • Farmers and advisers will have the confidence to adopt, optimise, and support the use of 3-in-2 milking.
  • Enhanced wellbeing (less hours spent working on farm and greater flexibility).
  • Increased economic sustainability of farming businesses using 3-in-2 milking (through people and cow health).

Year one

The first year of the study will focus on learning from farmers already using 3-in-2 strategically. This will help guide development of resources and information. A farmlet trial will also be set up at Lincoln University Research Farm. Four milking frequency scenarios will be tested:

  • Full season twice-a-day (TAD) (the baseline for comparison, i.e. ‘control’ scenario).
  • 3-in-2 from March.
  • 3-in-2 from December.
  • Full season 3-in-2.
  • The impact on milk production, body condition, animal behaviour, pasture production and grazing management will be measured.

Trial details

  • Farmlet set-up

Each farmlet will be managed independently, using the same set of decision rules.

Each farmlet consists of 11 paddocks of 0.75 ha and 29 cows, resulting in a stocking rate of 3.5 cows/ha (estimated comparative stocking rate of 81).

Each farmlet will receive 150-180 kg N/ha, applied over 7 applications.

  • Grazing management

Between planned start of calving and balance date the rotation length will be determined by the spring rotation planner.

After balance date a 22 day rotation will be targeted until mid-Feb, this means each herd grazes a paddock every 2 days.

Herds will be allocated a fresh break after each milking, so for herds milking TAD there will be four beaks per paddock, and for herds milking 3in2 there will be three breaks per paddock.

Paddocks will considered for silage if forecast residuals above target for more than 3 days or if pre-grazing cover is above 3100 kg DM/ha (and feed wedge allows).

A 28-29 day rotation will be targeted mid-Feb to mid-April, and 44 d from mid-April to the end of May.

  • Milking times

Weekly farm walk for pasture cover.

Milk volume, flow properties and liveweight will be recorded at each milking

Fortnightly herd test for milk composition.

Monthly body condition score.

Monthly pasture quality, botanical composition, calibration cuts.

Activity monitoring on all cows in the full-season 3in2 and full-season TAD herds via IceQube devices to identify time to first heat.

Activity monitoring on 10 cows per herd via CowManager ear tags for grazing behaviour.

  •  Measurements

After calving cows are milked once-a-day for the colostrum period and then enter their allocated herd.

Milking intervals are 12-18-18 for 3in2 and 10-14 for TAD.

For 3in2 this means milking times of 5am, 5pm and then 11am the following day.

For TAD this means milking times of 5am and 3pm.

Year two

The project will expand to piloting 3-in-2 on commercial farms, including measures to evaluate the effects on people of moving to a 3-in-2 system. A second trial will be conducted to investigate the effect of different intervals used with 3-in-2, (as well as TAD and OAD) on milk production.

Originally, 3-in-2 started as milking every 16 hours (16-16-16), but this has a night milking associated with it. It was then adapted to 14-16-18 and now to 12-18-18 (which will be tested in the farmlets) to suit staff.

This second trial will also look at whether milking intervals could be extended to 21-hour intervals once a week. This would enable two milkings to be completed on Monday, Wednesday and Friday, with one milking each on Tuesday, Thursday, Saturday and Sunday.

Year three

The focus in this stage will be on modelling to predict outcomes in different flexible milking scenarios. For example, if a farmer wanted to go once-a-day (OAD) milking during calving (to reduce work at a busy time); then go TAD through peak lactation; then 3-in-2 through mid-lactation; and OAD near dry-off.

Dairy farmers will be given results from the project regularly and resources will be developed to help farmers make informed decisions regarding the use of 3-in-2 milking.

Dairy farmers that subscribe will be given results from the project regularly.


Milk Futures Mixed in Chicago Thursday

On the Chicago Mercantile Exchange milk futures were mixed Thursday as declines in cash markets caught up with traders.  Class III was more stable with a mixed reaction to the cheese trade. November finished unchanged at 20.19, December fell 9 to 18.70, and 2020 saw Jan – March trade 1-2 higher averaging at 17.35/cwt. Class IV was unchanged in November at 16.73, gained 5 in December to 16.98 and gained 2 in January to 17.19/cwt. The remainder of 2020 was unchanged. 

Dry whey up $0.0075 at $0.2975. Blocks down $0.01 at $1.90. Barrels down $0.0475 at $2.2325. One sale was made at that price. Butter up $0.0025 at $2.0675. Six trades were made on a range of $2.0625 to $2.0750. Nonfat dry milk unchanged at $1.2175.

America’s No. 1 milk company declares bankruptcy amid drop in demand

Dean Foods, America’s biggest milk processor, filed for bankruptcy Tuesday amid a steep, decades-long drop-off in U.S. milk consumption blamed on soda, juices and, more recently, nondairy substitutes.

The Dallas company said it may sell itself to the Dairy Farmers of America, a marketing cooperative owned by thousands of farmers.

“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,” CEO Eric Berigause said in a statement.

Since 1975, the amount of milk consumed per capita in America has tumbled more than 40%, a slide attributed to a number of reasons but mostly the rise of so many other choices, including teas, sodas, juices and almond and soy milk.

That has hit dairy farms and milk sellers hard, leading some smaller family farmers to quit the business.

Another blow to Dean Foods came when Walmart opened its own milk processing plant in Indiana last year.

Dean Foods has lost money in eight of its last 10 quarters and posted declining sales in seven of the last eight.

The company said it will continue operating normally while it puts its finances in order under Chapter 11 bankruptcy. It has lined up about $850 million in financing from lenders.

Its stock rose 2.3% in morning trading.


America’s biggest dairy co-op may buy Dean Foods. Milk monopoly?

After Dean announced it had filed for bankruptcy, Dairy Farmers of America said it was in “advanced discussions” on an acquisition. A merger would all but guarantee lower income for struggling farmers.

One of America’s biggest dairy companies, Dean Foods, filed for Chapter 11 bankruptcy on Tuesday, leaving the future uncertain for its milk suppliers, some of whom don’t know whether they can stay in business if their major buyer goes belly up.

It’s no secret that the timing is terrible. Federally established milk prices remain low, dairy exports are down thanks to the trade war, and domestic milk consumption has fallen steadily since 1970. But one of the most pressing issues posed by Dean Foods’s bankruptcy is the possibility that farmers won’t be able to find anywhere else to sell their product.

Companies like Dean Foods buy fluid milk from dairy farms, which they then process and distribute to retailers across the country. Farmers can sell directly to processors, or they can sell to dairy cooperatives, which in turn, negotiate with processors and retailers on members’ behalf. However, rapid consolidation among dairy co-ops limits the number of options for farmers.

In addition to representing more than 13,000 dairy farmers, DFA controls 30 percent of milk production in the U.S.

“We really have not had any significant options to sell our milk in the last 10 years,” says Ernie Jones, who runs a 300-cow dairy farm in Tennessee with his daughter. Jones has sold directly to Dean Foods for the past two decades.

In its announcement, Dean Foods said that it was “engaged in advanced discussions” with Dairy Farmers of America (DFA), the country’s biggest dairy co-op, regarding a possible acquisition. For one antitrust expert, however, that raises concerns about anti-competitive activity.

Though it’s supposed to advocate for dairy farmers, DFA’s involvement in processing also means it has an incentive to keep prices of inputs (read: milk) as low as possible.

“The problem with DFA is the conflict of interest that will result from [trying] to lower prices to farmers in order to increase their revenue as a milk processor,” says Peter C. Carstensen, a professor emeritus at the University of Wisconsin Law School and a former attorney for the antitrust division of the United States Department of Justice (DOJ). 

Carstensen isn’t the only one concerned. Some farmers have accused the co-op of conspiring to suppress milk prices in order to maximize its own profits. And a recent government watchdog report found that competing interests within co-ops can impact farmers’ earnings. 

Though it’s supposed to advocate for dairy farmers, DFA also has an incentive to keep milk prices as low as possible.

In addition to representing more than 13,000 dairy farmers, DFA controls 30 percent of milk production in the U.S. Carstensen warns that a DFA buyout of Dean Foods could give it monopoly-like power over the milk market. “What you’re going to see is increased risk of tacit collusion on the consumer side, raising the price of milk for consumers,” he says.

In 2007, dairy farmers in the southeast U.S. filed a class-action lawsuit against Dean Foods and DFA, claiming that the two had conspired to keep milk prices low. According to the complaint, Dean Foods agreed to make DFA its sole dairy supplier in exchange for a guarantee of low milk prices. The lawsuit was later split, with Dean Foods settling for $140 million in 2011, DFA settling for $168 million in 2013, and neither company admitting to wrongdoing. In 2009, farmers in the northeast filed a separate class action on similar grounds, which Dean Foods settled for $30 million in 2011 and DFA for $50 million in 2014.

Farmers I spoke with for this story had another reason for feeling pessimistic about a DFA buyout: Unlike Dean Foods, cooperatives aren’t required to pay farmers federally set minimum milk prices.

“We could very well be in for quite a bit of a substantial decrease in our price for milk,” Jones says. “And we’re already teeter-tottering on low prices.”

Jones adds that he wouldn’t be able to afford lower milk prices at this point: “I’ve about had all I can stand.”

“It was one of those things we knew could likely happen but were hoping wouldn’t.”

In the 24 hours since Dean Foods filed for bankruptcy, news outlets—including CNN, Fast Company, Associated Press, and Barron’s—have been quick to blame the company’s downfall on decades of decline in American milk consumption and consumer interest in plant-based alternatives. 

But Andrew Novakovic, professor of agricultural economics at Cornell University, says the narrative here is more complicated than that.

“The decline in beverage milk sales is not the same story as the failure of this company,” Novakovic says, listing off the names of countless other milk processors that haven’t filed for bankruptcy. “I don’t think you can lay all the blame for their problems on the fact that they’re heavily invested in a declining sector.” But, he says, “it sure as hell didn’t help them.”

Last year, some farmers caught a preview of what it would mean to sever ties with Dean Foods, after the company terminated 100 dairy contracts in eight states in a purported effort to balance its supply with retail demand. Among current suppliers, Tuesday’s news wasn’t particularly a surprise. Speculation that Dean Foods would file for bankruptcy had been circulating for months.

“It was one of those things we knew could likely happen but were hoping wouldn’t,” says Milton Beard, another Tennessee-based dairy farmer. “There’s not a whole lot we can do about it at this point. We just hope we’re able to get paid.”


The milk, the whole milk and nothing but the milk: the story behind our Australia’s dairy woes

The plight of Australia’s dairy farmers is on the political agenda this week, after One Nation leader Pauline Hanson narrowly failed in her Senate bid for a minimum milk price. But getting fair payment for their goods is far from the only challenge dairy farmers face.

Pressure has been mounting on the industry for the past decade. Existing milk alternatives are growing their market share, helped by a rise in veganism and public concern around animal welfare. The agriculture sector is under pressure to reduce its contribution to climate change, and technology advances mean milk may one day be produced without cows at all.

All this has been compounded by devastating and prolonged drought. So here’s the full story of the hurdles farmers face, now and in the future, to get milk into your fridge.

Dairy cattle at milking time at a farm in Rochester, Victoria.AAP/Tracey Nearmy

Fluctuating farm gate price

The rate at which processors pay farmers for milk is known as the farm gate price. The prices are not regulated and are set by market forces.

In 2016 the milk price crashed when Australia’s two largest dairy processors, Murray Goulburn and Fonterra, lowered the price they would pay from about 48 cents a litre to as low as 40 cents.

This dramatically cut the incomes of milk suppliers. The number of dairy farmers in Australia fell by 600, or 9% over four years. This exit has been exacerbated by drought.

Since then, the farm gate milk price has increased and in 2019–20 is expected to be 51 cents per litre, due to a weaker Australian dollar and demand from export markets. But forecast global prices for butter, cheese and whole milk powder this financial year remain below that of previous years.

Methane, and milk alternatives

Methane and other livestock emissions comprise about 10% of Australia’s greenhouse gas emissions.

As the Intergovernmental Panel on Climate Change made clear in its land use report in August, changes must be made across the food production chain if the world is to keep global warming below the critical 1.5℃ threshold. For beef and dairy livestock, this means changes such as land and manure management, higher-quality feed and genetic improvements. Meeting this challenge cost-effectively, while improving productivity, is no small task.

Technology may help in curbing greenhouse gas emissions from cows, but it also threatens to replace the dairy industry altogether. Advances in biotech may enable liquid analogous to milk to be produced through bioculture systems, without a cow in sight.

Elsewhere, the rise of plant-based alternatives derived from soybeans, almonds, oats and other sources threatens traditional milk products. This can partly be attributed to increasing numbers of people adopting a vegan diet.

Farmers must overcome a host of challenges to deliver milk to consumers.Paul Miller/AAP

Taking calves away from cows

For a mammal to produce milk, it must usually become pregnant and produce offspring. Female calves generally go into a farm’s pool of replacement animals, while male dairy calves are sold.

Pure-breed male dairy calves do not naturally lay down a lot of muscle and so do not generally make good beef livestock. Many are sent to the abattoir for slaughter, typically between 5 and 30 days of age. This practice has prompted welfare concerns and means the industry must carefully manage the handling and transport of vulnerable young calves.

Potential solutions include artificial insemination of cows using only semen that will produce female calves. The use of this technology is limited because it reduces conception rates.

There is also growing public concern about the separation of cows and calves not sent to the abbatoir. The calves are typically taken within the first 12-24 hours and reared together in a shed, where they are fed milk or milk replacer. This is thought to maximise the amount of saleable milk and minimise disease transfer from cow to calf, particularly Johne’s Disease. However, recent research has found little evidence to support these practices.

Research has shown that calf-cow separation in the first day of life causes lower distress than abrupt separation at a few weeks of age or older, when the bond is stronger. This is not to say that early separation is not a concern. Rather, in the face of consumer demands for certain ethical standards, simple fixes may be hard to implement.

Topless animal welfare activists protest in Melbourne in February 2019 to raise awareness of what they claim is cruelty within the dairy industry.Ellen Smith/AAP

The message for consumers

Challenges to the dairy industry will take time and effort to address. Some, such as drought, are out of farmers’ control. Dry conditions and high cost of water, fodder and electricity have forced farmers to cull less productive dairy cows, leading to a decline in production.

The pressures, and associated debt, create intense stress for farmers, increase family tensions, and have negative flow-on effects throughout rural communities.Putting aside the political push for a regulated milk price, the key message for dairy consumers is clear. If we want our milk produced in a certain way, we must pay a fair market-based price to cover the costs to farmers of fulfilling our wants.


Trump’s trade wars are hurting farmers. Can Sonny Perdue keep them happy?

The remark reverberated across the country, prompting calls for his resignation from farm groups, angry editorials and even criticism from his own party. Critics said Perdue’s “go big or get out” line played into existing fears that the Trump administration is more interested in helping large corporations than the little guys. Perdue later said he was only acknowledging the current market reality.

Over the last year, Perdue has emerged as President Trump’s key evangelist in bruising trade wars, traveling the country to give folksy pep talks to frustrated farmers who have seen their incomes drop and exports hit hard by tariff disputes.

As talks between China and the United States on a possible first phase of a trade deal continue, Perdue could have some welcome news for this key constituency that helped elect Trump — a third round of bailout payments on top of the more than $26 billion already being spent.

Two economists at the Agriculture Department, who spoke on the condition of anonymity because they were not authorized to speak publicly, said a third round of payments for farmers increasingly is seen as inevitable, particularly if a trade deal with China is not reached soon. The amount has not been determined.

Perdue said Thursday he was “hopeful” that the pending trade deal would “supplant any type of farm aid needed in 2020.” But a third round of aid could be crucial to shoring up Trump’s support in rural America as the election looms, analysts say.

In more than two years in office, Perdue, a former Georgia governor, has perfected the art of flattering the president — a must for any high-ranking Trump official. He spent more time in a recent podcast with Trump’s former press secretary Sarah Sanders lauding Trump than discussing farmer woes. Trump has said that what he doesn’t know about farming, “Sonny teaches me.”

Mick Mulvaney, Trump’s acting chief of staff, said the White House thinks its support within the farming community is “overwhelmingly solid” in large part because of Perdue’s efforts.

“The president really likes people who know their stuff. And it’s been very clear from very early on that Sonny knows this industry, that Sonny knows the people, Sonny knows the issues, he knows how to communicate the issues,” Mulvaney said in an interview. “So there’s a certain level of expertise that immediately sort of, you know, moved him to the head of the class.”

As the head of the USDA, Perdue has been a disrupter in the Trump mold. He has worked to transform the sprawling $140 billion agency of nearly 100,000 employees by cutting staff, jettisoning research and rolling back directives on forest preservation and food safety.

Perdue has run afoul of Democrats in Congress, child poverty advocates and science groups, who worry about his skepticism of climate change — “I think it’s weather patterns, frankly,” he said recently — and moves they say have weakened the agency’s research wings.

Internally he’s been praised for his relentless promotion of the administration’s agenda. In recent days he’s been out touting China’s alleged commitment to more than double its agriculture purchases from the United States — a trade agreement celebrated by Trump but not yet committed to paper, much less signed.

But patience with Perdue’s sunny bromides is waning in rural America, where farm bankruptcies and loan delinquencies are rising. Before the “big get bigger” misstep, Perdue was booed in August in Minnesota over an ill-timed joke that suggested farmers were whiners.

“He’s supposed to be the head of the Agriculture Department, a true representative of farmers, but it felt like he was pretty out of touch with what was going on here in farm country,” said Darvin Bentlage, 63, a cattle producer in Golden City, Mo. A third trade bailout would help, he said, “but it won’t make us whole and we don’t want to be making our money at the mailbox. We’d rather be making it at the marketplace.”

Farmers worried

When he arrived at an early morning breakfast recently with produce growers just blocks from the White House, Perdue, 72, was all smiles, backslapping greetings and posing for photos. “Y’all know President Trump is trying to stand up [against] some of the practices that China has been engaged in for a number of years,” Perdue told them.

China and the United States have imposed tariffs on billions of dollars worth of goods since Trump imposed the first round of tariffs on China for allegedly unfair trade practices in July 2018, profoundly impacting the global economy.

Some of the farmers who had gathered to see Perdue said they were worried and they can’t hold out forever. Agriculture exports to China fell from nearly $20 billion in 2017 to $9 billion last year, according to the American Farm Bureau Federation, with farm bankruptcies rising 24 percent.

The USDA said in an August report that net farm income is forecast to increase slightly this year, but it’s still down more than 35 percent of its high of $136 billion in 2013.

Bob Mast, president of CMI Orchards, which grows apples, pears and cherries in Washington state, said that because of the trade war, he’s been able to ship only a quarter of the cherries he normally would to China.

“China typically takes the largest amount we grow, and they’re willing to pay premium for it,” Mast said. “We have gotten some relief money from government. That’s helped, but we need a resolution to it by cherry season next year.”

Experts say that many large farm operations — whom critics say benefited more from the first round of trade aid than mom-and-pop operations — may be able to hold out longer by tapping into their equity. Others won’t be as fortunate.

As Perdue himself often says, “You can’t pay the bills with patriotism.”

Still, most farmers remain in Trump’s camp. Trump’s job approval rating among rural Americans remains higher than the country as a whole — by 54 to 38 percent — according to a Washington Post-ABC News poll in September.

During his first speech to the USDA staff in April 2017, Perdue made a point of stripping off his suit jacket, tossing away his tie and rolling up his sleeves.

“Y’all need to know I was a farmer first,” he said to applause. “We’re going to get comfortable in working clothes.”

The next day, he rushed to the White House to help convince Trump not to immediately withdraw from the North American Free Trade Agreement, clutching charts and graphs to explain how farmers would be hurt.

“Secretary Perdue sat down with him and explained how important this agreement was to farmers,” said Zippy Duvall, president of the Farm Bureau and a fellow Georgian who has known Perdue for more than a decade. “That had a huge influence on the president.”

Perdue oversees an agency whose work affects almost every part of people’s lives — feeding millions through its food stamp program, advising farmers when and how much to plant, protecting America’s forests, formulating nutrition guidelines for schoolchildren and safeguarding the nation’s food supply.

He declined to be interviewed, but his staff sent a list of accomplishments, including deregulatory moves they said saved $157 million; opening new markets for beef in China, pork in Argentina and rice in Colombia; and a reorganization they say places a greater emphasis on trade and rural development. Farmers have praised his efforts to expand rural broadband and push for simpler rules for guest worker visas.

Critics have said there is a revolving door at Perdue’s USDA in which industry employees move in and out of the department. He has filled his agency’s upper ranks with lobbyists, industry executives and people with whom he has done business (Perdue is worth well over $5 million).

Perdue’s chief of staff until last year, Heidi Green, was a partner in Perdue’s shipping business. His undersecretary for trade worked for agricultural conglomerates. His senior adviser worked as a lobbyist for the pesticide industry association.

Meanwhile, morale at USDA, as measured by a respected survey, has plummeted amid staff shrinkage. Perdue especially angered employees with a plan to uproot workers at the agency’s National Institute of Food and Agriculture and the Economic Research Service and force them to either move to Kansas City or quit their jobs. Many voted to unionize, and at a meeting with Perdue this summer, they stood and turned their backs on him in protest.

Since taking over the USDA, Perdue’s mantra has been “Do right and feed everyone.” At the same time, his agency has tried to cut funding for Supplemental Nutrition Assistance Program, also known as food stamps, which helps feed 9.5 million families with children.

The proposal to limit SNAP beneficiaries has not gone over well with Democrats, who see it as an end run around Congress, which did not make such cuts when it passed the mammoth farm bill late last year.

“I’m not sure what the motivation was, but it’s wrong. Why would you address something we purposefully did not take up in the farm bill?” said Rep. Marcia L. Fudge (D-Ohio), chair of the House Agriculture subcommittee on nutrition, oversight and department operations.

Perdue’s staff said that the proposed changes would “make major strides in reining in dependence on government assistance.”

Chief consoler

As Trump’s reelection campaign looms, Perdue is expected to continue to play his role as Trump’s chief consoler to struggling farmers as well as pushing passage of the new U.S.-Mexico-Canada trade agreement. “They recognize that there’s going to be some short-term difficulties as we try and hammer out these agreements, to get fair trade with China,” Mulvaney said.

Perdue’s close relationship with the president paid off politically last year when Trump surprise-tweeted his endorsement of Brian Kemp, a Perdue ally, in Georgia’s gubernatorial primary. Kemp later won a narrow victory over Democrat Stacey Abrams.

Perdue remains a popular and a powerful force in Georgia politics, said Charles S. Bullock III, a University of Georgia political science professor. Perdue’s cousin, David, was elected to the U.S. Senate in 2014, and Sonny Perdue is likely to have a say as Kemp moves to fill the seat of Sen. Johnny Isakson, who is stepping down.

During his tenure as governor from 2003 to 2011, Perdue was an aggressive free-trade exponent, with the state opening trade offices in China, Brazil and France. Exports grew 77 percent, according to the state’s office of economic development.

Ethics questions followed him throughout his time as governor. He refused to put his agribusiness assets in a blind trust, and he was twice cited by the state’s ethics board — once for failing to report a trip on a private airplane owned by one of his family businesses, and once for $18,000 in excessive campaign donations.

Critics also point to a last-minute retroactive tax break that saved him $100,000 in 2005, as reported then by the Atlanta Journal-Constitution. Perdue and his supporters have said that the ethics criticism was politically motivated and the tax break benefited all Georgians, not just him.

“That he and Donald Trump would be close does not surprise anybody,” said DuBose Porter, a former state legislator and former chairman of the Democratic Party of Georgia. “I think their personalities and their vision of the world is very similar. They don’t think the rules apply to them and they see government as a way to enrich themselves and their friends.”

When he left Georgia for Washington, Perdue, a Baptist who once prayed for rain on the State House steps during a drought, was given a missionary’s send-off at a church where his son is now a pastor, according to an account in the Baptist Press. Perdue had told worshipers a few days before that God spoke to him and his wife and called them “to serve Trump in his Cabinet.”

Given how frequently Trump fires his Cabinet secretaries, it is no small political feat that Perdue has managed to hold on so far, said former agriculture secretary Dan Glickman.

“This is an administration where day-to-day no one knows what’s going to happen, and yet, there’s been no scandals. No talk of Sonny leaving. He seems secure in his job. And the president actually listens to him,” said Glickman, who headed the USDA for six years in the Clinton administration.

“The way he’s presented himself to Trump is as a problem solver on renewable fuel, on the trade war. I know Sonny’s not thrilled about how this impacted farmers. But he’s not been disloyal to Trump when talking about it. It’s a tight rope to walk.”


Wisconsin’s statehouse is at war over its dairy crisis.

In April 2019, Ryan Dunham sold the 50 dairy cows on his farm in Westby, Wis. Dunham, due to the challenging finances he faced from low milk prices.Peter Thomson/AP Photo/La Crosse Tribune

In April 2019, Ryan Dunham sold the 50 dairy cows on his farm in Westby, Wis. Dunham, due to the challenging finances he faced from low milk prices.Peter Thomson/AP Photo/La Crosse Tribune

In Wisconsin, one of the nation’s key battleground states for the 2020 presidential election, dairy is big business. But low milk prices and chronic overproduction are squeezing small- and mid-sized dairy farms, which are shutting down at a rate of more than two per day. Massive dairy operations, meanwhile, continue to proliferate, concentrating manure and causing tension with neighbors over putrid odors and fouled water. This week, these twin crises have inflamed a long-simmering squabble between Democratic Gov. Tony Evers and the GOP-controlled Wisconsin Senate.

 In January, Evers’ appointed Brad Pfaff to lead the state’s department of agriculture, trade, and consumer protection. Pfaff, who grew up on a Wisconsin dairy farm, had previously served as an administrator in President Barack Obama’s Department of Agriculture and deputy chief of staff to US Rep. Ron Kind (D-Wis.).

But in Wisconsin, the governor’s choices for cabinet posts like ag department chief are subject to approval by the full senate. And Evers faces a senate still stinging from the midterms: In 2018, he narrowly defeated GOP stalwart Scott Walker, who had served as governor from 2011 to 2018, and had gained national fame for his attacks on public-sector unions and his hot pursuit of the anti-tax and deregulatory agenda favored by his financial backers, the Koch brothers.

Still under GOP control, the senate has refused to vote on most of Evers’ cabinet picks, leaving them to serve as acting heads of their departments. And on Tuesday, the senate effectively fired Pfaff. It voted Pfaff out along party lines, 19-14—the first time the legislative body has voted to remove a governor’s cabinet pick in at least three decades. For now, Pfaff’s deputy agriculture director, who isn’t subject to approval by the senate, will run the department.

The Republicans’ complaints with Pfaff were two-fold. In July, Pfaff rebuked the senate for refusing to release $100,000 in allocated state funding for mental health services for farmers. Since milk prices started to slide in 2015, America’s Dairyland (Wisconsin’s official nickname) has seen about a quarter of its dairy farms fold. As the attrition grinds on, calls to a mental-health hotline for farmers have spiked, and there’s evidence of an uptick in farmer suicides (though precise data is hard to come by). “There’s no two ways about it: Republicans have chosen to leave farmers behind,” Pfaff said back in July, after Republican lawmakers declined to release the funds. Senate Majority Leader Scott Fitzgerald shot back that Pfaff’s comments were “flippant” and “beneath your position.” The senate ultimately released the funds in September. 

Pfaff had also been pushing through new rules on large dairy farms, forcing them to keep manure pits at least 600 feet from neighbors’ property lines (current regulations require a 350 foot setback). The dairy industry vigorously opposed by the changes, and the senate Republicans declared them “burdensome.” 

The Wisconsin Farmers Union, which represents small- and mid-sized farms, supports manure reform. According to Kara O’Connor, the union’s government relations director, the state’s manure pit regulations have not changed since 2006 and “are desperately in need of an update, because they’re deeply out of touch with the reality that’s unfolding in rural communities.” The number of massive dairies that confine several thousand cows has expanded steadily since the current rules were formulated, and “we have a lot of members who have expressed deep concerns about odor from these operations,” she said. 

The tension between Wisconsin’s governor and his legislature is playing out in the hothouse of national presidential politics. Sen. Fitzgerald, who spearheaded Pfaff’s firing, is now running for Congress. He has denounced impeachment proceedings against President Donald Trump as a “political witch hunt” and a desperate attempt to deny Trump a second term.

And a top Trump official has weighed in on Wisconsin’s dairy crisis. Responding to a reporter’s question about the plight of the state’s farms at the World Dairy Expo in Madison in early October, US Department of Agriculture Secretary Sonny Perdue declared that “in America, the big get bigger and the small go out…I don’t think in America we, for any small business, we have a guaranteed income or guaranteed profitability.”

Days later, Gov. Evers lashed out at Perdue. “He kind of put the pox on small farming in the state,” Evers told reporters, according to the Journal Sentinel. “Are they struggling? Absolutely. But I think at the end of the day we need to get behind them rather than saying, ah maybe you should go larger… I, frankly, resent that the Department of Agriculture secretary from the federal government came in and kind of lambasted them.”

Back in 2016, Trump won Wisconsin by fewer than 23,000 votes. Four years earlier, then-President Barack Obama took the state by more than 200,000 votes. According to New York Times electoral analyst Nate Cohn, Wisconsin is a toss-up for 2020, with former vice president Joe Biden and Sen. Bernie Sanders (D-Vt.) holding slim leads in polls over Trump, and Sen. Elizabeth Warren (D-Mass.) locked in a dead heat with the president. Warren and Sanders  have both called for policies that stabilize prices for farmers, an idea that’s increasingly popular in Wisconsin dairy country. Over the past two years, members of the Wisconsin Farmers Union and the more more industry-aligned Wisconsin Farm Bureau both voted to express tentative support for supply management—an idea embraced by Canadian dairy farmers but widely seen as radical in the United States.   

“Until recently, dairy farmers have been hesitant to support supply management because of this thought that ‘getting government involved’ was going to put them out of business,” O’Connor of the Wisconsin Farmers Union said. “But dairy farmers are walking up to the fact that the economic climate will put them out of business a lot more swiftly and efficiently than any government policy every has.” 


What caused plane crash that killed Kewaunee County dairy-owner John Pagel? NTSB can’t be sure

Investigators can’t say with certainty what caused the 2018 airplane crash that killed a prominent Kewaunee County business-owner and two other northeastern Wisconsin men.

Dairy-owner John Pagel, his son-in-law, Steve Witcpalek of Kewaunee, and pilot Nathan Saari of Bellevue died Feb. 22, 2018, when their twin-engine Cessna slammed into the ground east of Lafayette, Indiana.

The National Transportation Safety Board’s final report on the crash, made public last week, blamed “an in-flight-loss of control.” But investigators could not determine if mechanical or human factors caused the loss.

The report marks the end of NTSB’s investigation of the crash, said Terry Williams, a spokesman for the board.

Saari was a 35-year-old professional pilot who was raised in Marquette, Michigan. He had reported the aircraft “a little out of control” shortly after takeoff from Eagle Creek Airpark in Indianapolis, the NTSB report says.

The pilot radioed that he was able to get the plane straight and level. But upon reaching an altitude of 18,300 feet, he reported the aircraft’s trim — it’s ability to remain stable — “is kind of going out on me,” the report says.

Air-traffic controllers then lost contact with the aircraft. An NTSB animation shows the plane flew in a tight circle above rural Rossville, Indiana, then crashed into a muddy field just north of Rossville about 20 minutes after takeoff.

The group was flying to Green Bay Austin Straubel International Airport after a brief business trip to central Indiana. The Cessna 411 Conquest II was owned by Ponderosa Aviation, another of Pagel’s businesses.

With his family, the 58-year-old Pagel operated Pagel’s Ponderosa Dairy, a farm with more than 5,300 cows, 100 employees and 8,500 acres. Pagel also owned The Cannery Public Market in downtown Green Bay, represented Casco on the Kewaunee County Board, and had been a Kewaunee School Board member.

He was well-known in the Kewaunee area for philanthropic efforts that included a “boot camp” where local students could learn about working on a farm, and playing a major role in designing and building the agricultural sciences center at Kewaunee High School, his alma mater.

Witcpalek, who was married to Pagel’s daughter Jamie, also was active in the community. He was instrumental in planning and building an inclusive playground for children with special needs in Kewaunee.


Australian dairy industry needs political intervention

We need our politicians to intervene and fix the market imbalance and lack of profit in our industry.

Politicians across the country now feel it necessary to intervene and yes, interfere with the way the dairy industry is structured, how it is managed and how it is run.

Nobody wants to ask for outside help. Certainly, our farmers would much prefer to fix their own problems and have in the past expected their leaders to do so.

But the time for hoping for the dairy industry to be fixed internally has passed.

In the past few weeks, QDO has submitted three separate submissions to the Australian Government – a review into the Research Development Corporation (RDC) system; the Senate Inquiry into the performance of the dairy industry and its profitability since deregulation, and feedback on the exposure draft of the Mandatory Code of Conduct.

Three major reviews and notices to remedy that tells us that the government no longer has faith in the nation’s dairy industry to fix itself.

The Australian Dairy Key Directions Statement released by the Dairy Plan Committee on November 1 should have unequivocally shown that the dairy industry has got itself together.

The five key priority statements in this document are meant to show us that our industry leaders have taken exactly what they were told in consultation and are addressing the key issues that were blatantly obvious to everyone involved.

I’m yet to be convinced.

An awful lot of money and resources have been poured into getting the Dairy Plan to this point. However, the Key Directions Statements do not tell us anything new.

They certainly don’t give any clue as to how the lead organisations intend to put plans into actions that can turn our industry around.

So, if the Dairy Plan is not our industry’s silver bullet, then we need our politicians to intervene and fix the market imbalance and lack of profit in our industry.


Dean Foods announcement causes more worry for Wisconsin dairy farmers

Farmers across southern Wisconsin sell their milk to Dean Foods’ De Pere plant in Brown County and Dean’s plants in northern Illinois. The state’s dairy industry is closely watching Dean’s bankruptcy developments because Dean is the largest dairy processor in the country. It owns famous brands like Deans, Land O’Lakes, and DairyPure.

Early on in the process experts say nothing is likely to drastically change. Dean says it isn’t looking to close plants and is still honoring partnerships with other dairy companies. But the news is just another sign dairy farming is changing quickly.

People are drinking less milk and many processors and vendors are struggling to find new markets and develop new products.

Mark Stephenson, Director of Dairy Policy Analysis at UW-Madison believes Dean will focus on new markets and products as it restructures. He says if Dean closes plants as a part of that process, Wisconsin farmers will struggle to find new places to sell their product.

“If that happens, then milk will still be sold but it will have to go to another plant farther away and those plants would be paying more in transportation costs to get that milk from their farm to the plants,” Stephenson explained.

John Judd, a Mount Horeb farmer, says he used to sell to Dean Foods and knows several farmers who still do. He says there’s no reason to make drastic decisions based on today’s news but he’s telling friends who work exclusively with Dean to find backup customers.

“Better be in touch with their market, their field reps and management to make sure they have a market for their milk,” Judd said.

As for Dean’s announcement, Judd says he’s not surprised. He said he knows the dairy industry is struggling at all levels because the demand for milk is falling while farmers continue to produce large amounts of milk.

Dairy experts say the best case scenario for local farmers would be if Dean Foods either sells to a company that will keep its plants, or if Dean finds a way to keep its operations normal while it restructures.


U.S. dairy farmers praise the power of collaboration in Mexico

On a week-long governance mission, DMI board members saw how USDEC facilitates business partnerships in Mexico that benefit farmers back home.

Trade agreements, as critical as they are, do not in themselves create trade.

Trade happens when people connect with people, a reality five Dairy Management Inc. board members, all dairy farmers, witnessed on an October 20-25 governance mission to Mexico, organized by the U.S. Dairy Export Council.

Simply put, one-to-one business connections matter. They always have. They always will.

“That was my biggest takeaway, my aha moment, realizing how valuable the relationships are,” said Marilyn Hershey, a Pennsylvania dairy farmer who chairs the DMI board that oversees USDEC, a nonprofit subsidiary.

“It’s not something that’s accomplished in one year. It’s something that happens over the years through developing relationships and increasing collaboration. That’s when the payoff comes, when you see that collaboration.”

Other DMI board members seeing what nearly 25 years of USDEC work in Mexico has accomplished had the same takeaway.

“Relationships are vital,” said Larry Hancock, a Texas dairy farmer with 4,200 cows who was recently elected USDEC’s new chairman. “The thing I want to really get across to the DMI and USDEC boards after this trip is how important relationships are and how well USDEC facilitates those relationships. It was a really cool and amazing for me to see.”

USDEC sells no products. Its mission is to see U.S. dairy exporting companies do the exporting, benefiting farmers and the entire industry. In 2018,  sales to Mexico reached $1.4 billion, about one-fourth of all U.S. dairy exports around the world.

Because value is dependent on world prices, which go up and down, volume may be a more reliable indicator of year-after-year progress. The chart below shows the results of sustained effort — a 450% increase in 25 years.

Consistent export volume growth means more and more U.S. milk has crossed the border to Mexico through dairy products and ingredients. 

Two-way relationship

Twenty-five years ago, the North American Free Trade Agreement (NAFTA)  opened a door of opportunity for tariff-free trade with Mexico. Processors and farmers alike were united in the belief that an organization was needed to facilitate U.S. dairy exports not just to Mexico, but the world.

DMI founded USDEC 24 years ago. Through the dairy checkoff, farmers continue to fund USDEC, accounting for about three-fourths of USDEC’s budget. 

Missions to Mexico and other U.S. dairy markets give DMI board members an opportunity to assess with their own eyes and ears USDEC programs and activities, the ROI for farmers and the potential for continued growth.

“This is a two-way relationship,” said Evan Hillan, who milks 350 cows and farms 1,400 acres in Ladysmith, Wis. “We’re not just exporting our products to them. We are also importing their knowledge to us. What they have done in the fluid market and the yogurt market has just been tremendous. You see it walking down the aisles of supermarkets like Walmart and H-E-B. It’s an eye-opening experience.”

Kathleen Skiba, who runs a 180-cow dairy in North Branch, Minn., was equally impressed by the dairy products on display in Mexico. Skiba shared her insight into the post below on Facebook. 

Economic impact 

“The Impact of NAFTA on U.S. Dairy Exports to Mexico” by Informa Economics is a 35-page analysis commissioned by the U.S. Dairy Export Council and the National Milk Producers Federation in 2017.

One of the most striking findings of the Informa study is this: Every $1 of U.S. dairy exports to Mexico generates $2.50 of economic activity in the United States.

Put another way, the U.S. dairy industry’s investment in Mexico has yielded more than “double the bang for the buck” in the U.S. economy, with benefits spread out not just to farmers, but the broader U.S. economy.

“The biggest aha moment for me was seeing how the U.S. and Mexican dairy industries need each other,” said Chace Fullmer, who runs a 2,500-cow dairy in Sigurd, Utah.

Dairy industries unite on common causes

Over the years, the dairy industries of the U.S. and Mexico have found ways to cement their common interests with partnerships.

In 2016, USDEC and the National Milk Producers Federation created the U.S.-Mexico Dairy Alliance with ANGLAC, the Confederación Nacional de Organizaciones Ganaderas (CNOG), and Cámara Nacional de Industriales de la Leche (CANILEC).

On Oct. 21, dairy leaders from both countries met in Torreón, Mexico. They issued a statement agreeing to work collaboratively on 12 issues that will benefit the dairy sectors of both countries. It was the fourth annual meeting between U.S. and Mexican dairy leaders.

2019 programs and activities in Mexico

Among other efforts so far this year, USDEC has:

  • Represented U.S. Dairy in the United States-Mexico-Canada trade agreement. Funded by membership dues, not checkoff resources, USDEC trade policy staff played a critical role in providing technical input to U.S. negotiators about U.S. Dairy’s needs in USMCA. That input is critical because USMCA will replace NAFTA if and when approved by the U.S. Congress and the legislative bodies of Canada and Mexico.  
  • Fought for common cheese names. The Consortium for Common Food Names, founded by USDEC, battled the EU’s campaign to monopolize common cheese names through geographical indications (GIs). 
  • Helped keep the border open. USDEC addressed a threat to close the U.S. border with Mexico over immigration through swift and far-reaching communication efforts. 
  • Worked to eliminate tariffs. USDEC stressed the need to remove Section 232 tariffs on Mexico that triggered retaliatory tariffs on U.S. cheese. The U.S. lifted its tariffs and Mexico eliminated its retaliatory tariffs on cheese.
  • Promoted dairy ingredients. USDEC launched two ingredient seminars aimed at increasing dairy utilization by the Mexican food processing industry. 
  • Formed new retail partnerships. USDEC launched partnerships with two major Mexican retailers this year: Costco Mexico and Chedraui.
  • Explored new opportunities. USDEC held two seminars for Mexican feed manufacturers to highlight the benefits of using permeate and lactose in swine feeding programs.
  • Put more boots on the ground. Edgar Garcia is USDEC’s new business development manager in Mexico to bolster in-country representation and get closer to buyers and consumers.

Mexico remains número uno

The U.S. dairy industry has seen exports grow in other parts of the world, particularly Asia, but the mission showed DMI board members that USDEC does not take its No. 1 market for granted.

It’s about maintaining and building relationships.

“You can’t just come in to a different country, slap down a trade agreement and expect people to buy your product,” said Hershey. “There has to be this back and forth. There has to be respect by both parties and I really feel like we are making headway with that.”

Source: U.S. Dairy Export Council.

Midweek Sees Milk Markets Higher in Chicago

On the Chicago Mercantile Exchange milk futures turned back higher at midweek despite the continued decline in cheese markets. Class III moved higher with a short-term rally during trading. November Class finished 15 higher to $20.19, December saw a 40-cent swing during trading to finish 10 higher at $18.79, and 2020 saw Jan – March trade 9-12 higher with an average price of $17.33 per cwt. Class IV was unchanged across the board, November at $16.73, December at $16.93, and January – March averaging at $17.30 per cwt. 

The CME spot trade was weaker with the exception of dry whey, Dry whey up $0.0075 at $0.29. Six sales were made at $0.2875 and $0.29. Blocks down $0.03 at $1.91. Four sales were made ranging from $1.8850 to $1.91. Barrels down $0.0350 at $2.38. Two trades were made at $2.27 and $2.28. Butter down $0.0025 at $2.0650. One trade was made at that price. Nonfat dry milk unchanged at $1.2175. Ten trades were made at that price.

Grain markets saw December corn fall 2 ¼ to $3.75 ¼, November soybeans fell 3 ¼ to $9.02 ½, and December soybean meal gained $1.80 to $304.10 per ton.

Top Dairy Industry News Stories from November 2nd to November 12th 2019

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Best Practices For Manure Management

As fall has arrived and the time to empty manure  pits  in  preparation  for winter storage is nearly upon us, there’s no better time to think about manure management strategies. Research has demonstrated that there is a greater risk for phosphorus  (P) and nitrogen (N) loss when manure is applied to fields in the fall rather than the spring. Therefore, while time can be short during the fall harvest season, it’s especially important to follow best practices.

This is particularly true in the Northeast  where  more   than   half   of annual precipitation can occur during the nongrowing season. This precipitation, combined with limited water uptake by plants, low rates of evaporation, and extended periods of frozen soils, leads to a higher rate of both surface runoff and tile drainage during fall, winter, and early spring. Research at Miner Institute has found that   approximately    three-quarters of annual runoff occurs between November 1 and April 30.  Not  only is the risk of runoff greater, but there will be a long delay between when the manure is applied and plants will once again require those nutrients.

Cover crops can help bridge this gap by sequestering fall-applied nutrients during the nongrowing season, but another key to nutrient retention is incorporating the manure  into  the soil. This can significantly reduce N volatilization losses to the atmosphere. Perhaps more importantly, greater manure-soil contact increases the amount of P bound to the soil, resulting in a lower risk of transport  in subsequent runoff (especially as dissolved, bioavailable P). This can be accomplished by injecting the manure, but in the absence of manure injection equipment, tilling in a broadcast manure application can achieve the same objective.

A recent two-year study in Wisconsin found additional benefits from tillage following late fall/early winter applications of liquid dairy manure. Research plots were managed  either as no-till or fall chisel plowed with a spring soil finisher. The researchers surface-applied manure (4,000 gal/A) to the plots following fall corn harvest for silage and then either incorporated the manure with a  chisel  plow  or  left it on the surface. The study also looked at how the timing of manure applications impacted nutrient losses (no manure, December, or January applications).

Regardless of the timing of the manure application, the tilled plots experienced fewer  surface  runoff   events   and less total surface runoff than  plots  that didn’t receive tillage. This may sound somewhat counterintuitive, as one benefit of no-till can be greater infiltration rates due to a more extensive network of macropores.  However,  the ground was frozen for significant periods during the nongrowing season, reducing much of the impact that differences in soil structure between treatments may have imparted.

The decrease in surface runoff from the tilled plots had a significant impact on the level of nutrient export relative to the no-till plots. The no-till plots lost 200 times more P in the first year and a more moderate 3.4 times more  P in the second year compared to the tilled plots. Additionally, they found that early or late winter applications mattered less than whether the soil was frozen at the time of application. Applying manure to frozen soils, regardless of tillage treatment, resulted in greater nutrient loss because the manure had no opportunity to infiltrate and interact with the soil.

The researchers attributed the reductions in surface runoff and P loss to the much greater surface roughness in the tilled plots compared to the relatively smooth surface in the no-till plots. This can be especially important during the winter months, when a frost layer in the surface soils prevents water from immediately infiltrating the soil and increases the risk of surface runoff events. Due  to the surface roughness in the tilled plots, there was greater opportunity for water to pond and ultimately infiltrate  the  soil or evaporate, rather than leaving as runoff. In contrast, there was minimal opportunity for surface ponding in the no-till plots, leading to much more immediate runoff down the plot slope (5.8% slope). The drastic reduction  in P loss during the first year in the tilled plots occurred because there was only one runoff event, as opposed to nine events in the no-till plots.

The results of this study reinforce the need to incorporate surface-applied manure to decrease the risk of offsite P transport. For those who work in a no- till system, it’s an important reminder that leaving manure on the field surface poses a significant risk for nutrient loss. Investigate the different methods of manure injection that will increase the manure-soil interactions to help minimize nutrient losses from the field, while maintaining the soil health benefits of your no-till system.

− Laura Klaiber

Source: WH Miner Institute

‘Losing two farms a day’: Wisconsin is facing a serious dairy crisis

Wisconsin leads the nation in farm bankruptcies this year, and dairy farmers are carrying the brunt of the burden.

According to NPR, nearly 10% of Wisconsin dairy farmers may go out of business in 2019. And Wisconsin has seen an increase in suicide rates over the last few years. According to the Wisconsin State Journal, experts are attributing many of those deaths to farmers facing economic challenges.

“You look at the weather, you look at the crops you can’t get off the field, you look at the bills you can’t pay,” Patty Edelburg, vice president of the National Farmers Union, told Yahoo Finance. “Bankruptcies are up. Wisconsin is attributed as the No. 1 bankruptcy in the nation right now, when it comes to dairy farmers. That number is up, I think, 24% from last year already. We’re losing two farms a day.”

They’re literally being denied loans’

Over the past 15 years, there has been a 49% decrease in the number of dairy farms in Wisconsin. U.S. Courts data reveals that the Western District of Wisconsin had the highest number of Chapter 12 farm bankruptcies in 2017. And between 2016 and 2018, Wisconsin lost almost 1,200 dairy farms. (The USDA saw a 6.8% decrease in farms across the country in 2018.)

“Farming is such a stressful occupation by itself,” Edelburg said. “When you start adding financial stress on top of it, it’s just going to add more stress. Farmers can’t pay their bills, they have no extra money, they have people honing down their neck looking to pay bills. They’re going to banks and they can’t get loans. They’re literally being denied loans.”

She explained that the USDA farm agency trains its farm loan officers in how to look for warning signs as part of suicide prevention.

“The bankers are the first and the forefront to see a lot of these things,” Edelburg said. “They’re delivering the bad news, and these farmers are dealing with it on that level.”

Farming is in his DNA’

The plight of Wisconsin dairy farmers has come under the spotlight recently. On Tuesday night, Wisconsin’s agriculture secretary nominee, Brad Pfaff, was denied his post. This came after Pfaff criticized the state legislature’s budget committee for refusing to release funds towards farmer mental health.

He noted that the current budget of the Department of Agriculture, Trade and Consumer Protection (DATCP) had only enough money to help five farmers, and that the committee members had a choice to make: “Which five farmers will it be?” This didn’t sit well with the Senate GOP who voted successfully against Pfaff’s confirmation.

“Governor Evers is right about one thing: farmers are struggling,” Wisconsin Senate Majority Leader Scott Fitzgerald (R) said in a statement. “Unfortunately, his pick for DATCP secretary was part of the problem, not the solution. He tried to place burdensome rules on Wisconsin farmers at a time they can least afford it and repeatedly engaged in partisan political games targeting the Legislature. The liberal Evers Administration has been no friend to farmers. The Senate will continue to take its role of oversight seriously and will exercise our responsibility to hold them in check.”

Wisconsin’s Senate Democratic Leader Jennifer Shilling (D-La Crosse) was among those in support of Pfaff’s nomination.

“Brad was raised on a family farm in western Wisconsin and has dedicated his life to improving outcomes for our farmers,” she said in a statement. “Simply put, farming is in his DNA. At a time when Wisconsin in the middle of a dairy crisis, it is irresponsible and callous for Republicans to reject the appointment of Brad Pfaff. Wisconsin communities are sick and tired of these petty political theatrics. It’s time for Republicans to accept the results of the election last fall.”

Darin Von Ruden, the president of the Wisconsin Farmers Union, said that Pfaff was right in his comments on farmer mental health.

“The real struggle that a lot of farmers face is when you are that third, fourth, even fifth generation to be on the land and all of a sudden, you become insolvent,” he told Yahoo Finance. “The bankers or the creditors start coming after your farm and you end up losing it.”

He added: “In a lot of cases, it’s not any fault of that farmer themselves. It’s really the system we have here in the United States. We’re told on a monthly basis that we need to produce more to feed the world. More and more of the world is starting to feed themselves and that’s part of the reason that production in the United States is starting to affect our prices so much.”

‘We have no brakes on the system’

Although there are numerous factors at play, the “main underlying cause” is the fact that there is overproduction, according to Wisconsin dairy farmer Sarah Lloyd.

“Farmers get pretty stuck with unpredictable prices,” she told Yahoo Finance. “And so when the price is low and you’ve got a bunch of debt to service, the banker says, ‘Well, why don’t I lend you some more money and you can put some more cows on, and then you’ll be better able to service your debt?’ Then, when prices go high, obviously everyone scrambles to produce more to take advantage of the high prices. So, we have no brakes on the system.”

Lloyd added: “If you take an Econ 101 class, you would imagine that when prices were low, that would reduce production because people would be backing off in response to the low price signal from the market. But people don’t do that because they have to pay the bills. So, to me, it’s like we’re on a treadmill and we don’t have any brakes on the treadmill.” 

Trade uncertainty is another factor at play for Wisconsin dairy farmers. As of June 2019, total U.S. dairy exports were down 8.1% year-to-date compared to 2018, according to data provided to Yahoo Finance by the U.S. Dairy Export Council.

Aside from the U.S.-China trade war, which has been a game of tit-for-tat tariffs since March 2018, dairy farmers are also still waiting for ratification of the U.S.-Mexico-Canada Agreement (USMCA), which some see as a gateway for more dairy markets.

However, Edelburg doesn’t think the USMCA is a “fix-all” for dairy farmer woes.

“The little bit of product that we’re going to trade with Canada is going to be minuscule compared to the amount of product that we need to get off the supply,” she said. “There’s only so much that you can trade to Canada. They already have enough milk. The amount of milk that we’re going to trade up there is going to be minuscule compared to what we need to get out of the country. We still have way too much supply in this country to think that Canada’s going to be a fix-all. We have to find more, better export markets. Canada’s not the fix-all for that.”


Trump to small farmers: Get lost

Donald Trump’s idea of a good farm program seems to be “Hee Haw.”

On a trip to Wisconsin, he drew guffaws from the state’s hard-hit dairy farmers by proclaiming that — thanks to his policies — the farm economy was looking good. “We’re over the hump,” he gloated.

Perhaps Trump thought that farmers are rubes, unable to do simple math.

But those dairy farmers were painfully aware that it costs them $1.90 to produce a gallon of milk, while the processing giants that control the milk market are paying them only $1.35 a gallon.

That 55-cent-a-gallon loss quickly adds up to a huge loss of income, and a devastating loss of farm families. Wisconsin lost 638 dairy farms last year and another 551 so far this year.

Far from “over the hump,” farm prices have been further depressed by Trump’s tariff clash with China: U.S. dairy sales to China fell by 54% in just the first half of this year.

Meanwhile, monopoly power is crushing prices. An $8 billion behemoth named Dean Foods now controls 90% of Wisconsin’s milk market, empowering it to commit daylight robbery, essentially stealing farmers’ product — and their farms.

Yet U.S. Agriculture Secretary Sonny Perdue — the one national official who’s supposed to stand up for farmers — nonchalantly kissed them off, smugly declaring it natural for the big to devour the small.

There’s nothing he can do for family operators, he says, except tell them to “go out” of agriculture.

Perdue and Trump are simply inept stewards of America’s farm economy. What we need is a different approach — a path to a revitalized, family-farm-based food system that will break the corporate stranglehold over U.S. agriculture.


China’s demand for dairy drives up prices worldwide

There was a time, like 25 years ago, when it was next to impossible to get dairy products in China. Now entire neighborhoods in Shanghai smell like butter. Since China is still not especially known for its booming dairy industry, it’s been importing milk from overseas, driving up prices worldwide. All this is summarized in an excellent Wall Street Journal headline: “Sweet Cheeses! The Milk Road to China Is Driving Dairy Prices Higher.”

The story describes how Chinese people have developed a taste for nai gai cha, or tea topped with cream cheese, and have been incorporating cheese into other traditional foods, such as glutinous rice balls, fried rice, and spring rolls. The rising demand hasn’t affected U.S. dairy producers yet, but analysts believe that it will, despite trade tensions between the U.S. and China, because of shortages in Europe and Australia.

What about the East Asian propensity toward lactose intolerance (70%-100% in some communities)? A little suffering is worth it, young Chinese people told the WSJ, especially if it comes from eating ice cream in hot weather.

Australia’s Record Farmgate Prices Weighed Down by High Costs

Dairy Australia’s October Situation and Outlook report for the first quarter of the season shows record high farmgate milk prices continue to be weighed down by high input costs and a dry weather outlook.

Another warm and dry winter has impacted feed cost and availability, while the cost of irrigated water has continued to increase for farmers in the Murray region. Feed supply is forecast to remain tight with a dry outlook for the remainder of the year and drought conditions persisting in some regions.

Australian milk production declined 6.9% in the season to August as a result of cost pressures, low rainfall in some regions and reductions in herd numbers. Dairy Australia retains its forecast of a 3-5% decrease in national milk production to 8.3-8.5 billion litres for the full season.

“Australian dairy farmers have entered a season of record farmgate milk prices, however milk production has continued to contract due to ongoing high production costs and dry conditions in many areas,” said Dairy Australia Senior Industry Analyst John Droppert.

“There is a mixed picture across the country. For many farmers in southern Australia, good early season rainfall has provided a head start on pasture growth and fodder conservation, but those in drought affected areas further north are facing a second season with few palatable options.”

Strong farmgate milk pricing is supported by buoyant international commodity prices (with subdued milk production in key dairy exporting regions and robust global demand) and intense competition for milk supply among processors due to reduced Australian milk production.

Higher retail prices have delivered value growth for all major dairy products in Australian supermarkets, mainly in private label and branded milk but also dairy spreads. Premium priced speciality products like health-style yoghurts and deli-cheeses have also experienced sales growth.

“This season’s farmgate milk price will provide some farmers with the chance to make up some ground financially, however, high costs of feed and water and ongoing drought will continue to hold back profitability. Whilst these challenges persist, milk production is likely to remain subdued,” Mr. Droppert said.

Dairy Australia Managing Director David Nation said the dry weather outlook for the remainder of the season was concerning:

“The outlook for continued dry conditions is likely to see ongoing pressure on feed costs. Conditions are favourable in some areas, but we’re urging all farmers to monitor their feed plans and use the resources available via Dairy Australia’s website to make informed decisions.”

An updated forecast will be published in a new December Situation and Outlook report. Feed planning resources are available via Dairy Australia’s website


U.S. dairy exports rebound in September

Improved sales of NDM/SMP and cheese push overall volume above year-ago levels.

A surge in nonfat dry milk/skim milk powder (NDM/SMP) exports to Mexico and Southeast Asia, plus increased cheese shipments to Mexico and United Arab Emirates (UAE) propelled total U.S. dairy exports above year-ago levels for the first time since October 2018.

U.S. suppliers shipped 170,731 tons of milk powders, cheese, whey products, lactose and butterfat in September, up 2% from last year. The value of all exports was $508.8 million, up 17% and the most since May.

Chart2 (2)-3

Exports of NDM/SMP were 65,328 tons in September, a 16-month high. This figure was up 25% from a year ago. With EU intervention stocks mostly moved through the supply chain, buyers increasingly turned to the United States for powder. Exports to Southeast Asia (primarily Indonesia and Vietnam) were up 36% during the month, while sales to Mexico were up 14%. Shipments to Peru and Pakistan also were higher.

Chart3 (2)-4

Cheese exports also rebounded in September, despite U.S. benchmark prices that sat well-above world indicators. Volume totaled 27,433 tons, 12% higher than the prior year. Gains were led by a 31% increase in shipments to Mexico. In addition, volume to UAE nearly tripled and sales to South Korea were up 9%.

Chart1 (2)-5

Total whey exports were 36,468 tons in September, down 11% from last year. Whey sales to China, particularly dry whey, remain depressed due to retaliatory tariffs and African swine fever. Suppliers sold 8,438 tons of whey products to China, down 23% from last year. Dry whey sales were down 66%, while shipments of whey protein concentrate (WPC) were up 60%.

Whey sales to Canada (-37%) and Mexico (-18%) also were lower in September. In contrast, shipments to Southeast Asia were 2% higher.

Lactose exports were 28,989 tons, down 7% and the lowest in seven months. Volume to Southeast Asia was particularly light, off 39% from a year ago and a four-year low. Exports to China were down 41%, and Japan (-25%) was lower as well. This was partially offset by a 74% rise in shipments to Mexico.

Shipments of fluid milk/cream continued to post double-digit increases. September volume was up 10% from last year, led by a 36% jump in shipments to Canada and increased sales to Southeast Asia and Taiwan.

Among other products, exports of whole milk powder (-49%), butterfat (-42%) and milk protein concentrate (-14%) all lagged prior-year levels.

Overall, in addition to increased dairy exports to Mexico, Southeast Asia and the Middle East/North Africa (MENA) region, suppliers moved greater volumes to South America – primarily milk powder to Peru and Colombia.

On a total milk solids basis, U.S. exports were equivalent to 15.3% of U.S. milk solids production in September. In the first nine months of the year, exports accounted for 14.2% of production.

To use interactive charts with current and historical trade data, see’s page on U.S. export data.

To download a printable PDF summary with charts showing September trade data in detail, click here.

Source: USEDC

UK dairy farms making average losses of 1p/litre

Falling feed costs have not been enough to pull dairy farmers back into profit-making territory this year, with producers forecast to make average losses of 1p/litre, analysts have warned.

Milk production costs are predicted to fall by nearly 1p/litre this year, as good grass and grain harvests have allowed dairy producers to buy less feed at a reduced cost, but they will still be losing money, said Kite analyst Edward Lott.

The average net cost of production is set to be 29.1p/litre in the year ending March 2020, down from 30.03p/litre the previous year, according to Kite benchmarking figures.

The figures include both variable and fixed costs, and allows for rent, finance and family labour, but also takes subsidy income into account.

A decline in the milk price from some processors, as well as a fall in income from cull cow and calf sales, have held back producers from recovering, said Mr Lott.

There have also been increased costs brought about by the continuing weakness of the pound.

Speak to banks early

Farmers who feel they will need additional financial support to get through the costly winter season need to rapidly gain an accurate idea of their costs and speak to their bank as early as possible, Mr Lott advised, as many are not as eager to lend as they were in the past.

“Efficiency at a cow level is absolutely key,” he said. “Output of milk per farm will still inevitably grow as the industry restructures, but environmental pressures mean we need to make sure every cow place is being maximised.”

The outlook comes after a challenging year for the sector, when nearly half of dairy farm businesses shrunk in value and the gulf widened between the best-managed enterprises and the rest, according to new research.


A2 Milk faces new China competition driving down share prices

The benchmark S&P/NZX 50 Index shed 82.36 points, or 0.8 percent, to 10,759.18. Within the index, 29 stocks fell, 14 rose and seven were unchanged. Turnover was $130.2 million.

A2 shares fell 46 cents, or 3.6 percent, to $12.30. About 646,000 shares hands, down from a daily average of about 740,000 the past three months.

“The biggest weight on the market was A2 – that share price has been trending down for a wee while now. It’s really come off the boil since August,” says Grant Williamson at Hamilton Hindin Greene.

A2 shares peaked at $18.04 on July 31, although they are still 22 percent higher than a year ago.

Broking firm Citi says domestic Chinese infant formula company Junlebao, controlled by the Hebei provincial government, has gained State Administration for Market Regulation – SAMR – registration for its infant formula, which also contains only the A2 protein, and will be allowed for sale in offline retail channels, such as mother and baby specialty supermarkets.

A2 is already competing against other foreign brands produced by Mead Johnson, Danone and Nestle, which also produce infant formula containing only the A2 protein – most milk contains both the A1 and A2 proteins.

Williamson says the A2 brand is still very strong in China “but any increase in competition will hurt to some degree. Personally, I think the market may have over-reacted a little.”

Bucking the negative trend, Pushpay shares jumped 12 cents, or 3.8 percent, to $3.29 after it reported a US$6.5 million net profit for the six months ended September, a turnaround from the previous first-half’s US$4.4 million net loss.

The digital church collection payment app maker started generating positive operating cash flow during the past 12 months, and that stepped up to US$8.9 million in the six months ended Sept. 30 from about US$2 million in the March period.

Church customer numbers rose to 7,905 from 7,420 a year earlier, while monthly average revenue per customer was up 20 percent at US$1,272.

Also bucking the trend, shares in Restaurant Brands rose 1.3 percent to $11.90 while shares in pharmaceuticals distributor Ebos climbed 2.8 percent to $25.45.

Williamson says Restaurant Brands shares are thinly traded since Mexico’s Finaccess Capital took control of the company in a partial takeover last year.

“But it continues to produce some very good numbers.” Last month, the fast-food restaurant operator said it anticipates net profit will be at least 10 percent higher next year as it continues to roll out new stores and looks at buying others.

Williamson says while Ebos used to be regarded as a yield stock, it is now viewed more as a growth stock.

Ebos is expecting a significant increase in earnings this year with the Chemist Warehouse Group supply contract kicking in from July 1, which is expected to add about $1 billion to annual sales.

The company’s revenue was $6.9 billion in the year ended June.

Meridian Energy shares were unchanged at $4.60 after earlier dipping as much as 2.4 percent. Almost 3.5 million shares changed hands, compared with its 1.5 million daily average the past three months.

Not only is Meridian and its fellow electricity generator/retailers prized for its high dividend yield, but the threat of closure of the Tiwai Point aluminium smelter by its majority owner, global mining giant Rio Tinto, is hanging over the entire sector.

Meridian is the smelter’s major electricity supplier but, since the smelter takes about 13 percent of New Zealand’s electricity, its closure would release excess power that would take some time to absorb.

Rio Tinto has said the plant is struggling with global aluminium prices near a three-year low.

Genesis Energy shares were down 0.8 percent at $3.155 and Mercury NZ shares sank 1.6 percent to $4.79.

Among other yield stocks, telecommunications network company Chorus shares shed 2.1 percent to $5.315, phone company Spark shares eased 1.9 percent to $4.38 and retirement village operator Ryman Healthcare fell 2.2 percent to $13.15.

The 10-year swap rate edged up to a bid price of 1.5025 percent from 1.4900 percent yesterday.


Former dairy farmer transitions into a new role as struggles continue for Wisconsin farmers

As dairy farms continue to shut down in the Badger State, Randy Gurski is finding a new way to bring in money.

The farm that Gurski lives on is one that’s full of rich family history.

“My grandpa had this since the 40’s,” Gurski said. “This farm has been around for generations.”

Dairy farming served as an identity for Gurski and his family.

“I started milking cows when I was 12-years-old,” Gurski said. “I’m in my 60’s now so pretty much all my life I’ve been milking cows.”

A few years ago, Randy had to step away from the dairy industry because of struggles agriculture experts say are creating difficult times for many farmers across the state and in central Wisconsin.

“Prices probably was a concern and battling the weather,” Gurski stated. “Trying to get the crops in, trying to get the crops off, trying to make hay in the summer time; it’s a combination of everything. A lot of people my age, it’s a change. Got to look at something different.”

After accepting that he could no longer do what he’d known his whole life, which was the dairy farming business, he decided to go into property maintenance.

“We are seeing more farms transition and get out of farming,” said Marathon County Agriculture Expert Heather Schlesser. “The mindset becomes if I have to continue to struggle and have this maintained stress, is there something else out there that’s a little bit less stressful or a lot less stressful?”

Gurski said transitioning into a 40-hour-a-week job was a little difficult as first, but it became much easier as time progressed.

“It’s hard if you haven’t had no experience doing nothing else,” Gurski added. “It’s hard to get into the workforce.”

Despite having to turn away from dairy farming, Randy is finding a positive in the situation.

“Not getting up at 4 o’clock is kind of a relief,” Gurski said. “You know the long hours that was kind of hard, but it was kind of sad to see the cows go.”

Gurski currently does beefing and cash cropping on the side as a way to make ends meet and to make more money. He mentioned for other farmers who find themselves having to leave the business they’ve known for so long; it gets better as time progresses, and starting off part-time could help build the new skills needed to jump into a new full-time job.

If you are a farmer facing challenging times you can click here for helpful resources.


Class III benchmark milk price hits five-year high

The October Federal order Class III benchmark milk price hit a five-year high this week at $18.72 per hundredweight, up 41 cents from September, $3.19 above October 2018, and the highest Class III since November 2014. It equates to about $1.61 per gallon, up from $1.57 in September and $1.34 a year ago.

It is $3.29 above what California’s October 2018 4b cheese milk price was. The nation’s largest milk producing state marks the one year anniversary of entering the Federal order Milk Marketing Order system on Nov. 1.

The 2019 Class III average stands at $16.37, up from $14.72 at this time a year ago and $16.18 in 2017.

The October Class IV milk price is $16.39, up 4 cents from September and $1.38 above a year ago. The 2019 average stands at $16.23, up from $14.06 a year ago and $15.44 in 2017.

Central cheesemakers continue to report steady, somewhat tight milk supplies, according to Dairy Market News. Spot milk markets were quiet early in the week, as prices continue to fall in the $1-over Class area. Cheese production is still slightly slower than this time in recent years. Producers report shifting production to current market needs, as more Cheddar is being produced regionally.

Cheese demand is good for short term needs. Barrel makers continue to report mostly bullish demand and some process cheese manufacturers say they are oversold week to week. Cheese market tones are “bullish,” says DMN, but cheesemakers are concerned about how bullish. They say $2+ cheese on the CME are “creating a short-term, or necessity-based, purchasing environment. Buyers are not looking for anything longer term currently.”

Looking westward, the CME barrel pricing topping the blocks is a surprise to many, according to DMN, and contacts credit a tightness of barrels compared to blocks. Increased governmental cheese purchases seem to be helping that trend. Demands for the holiday are surfacing “bit by bit,” says DMN, but domestic sales were close to the previous week’s levels. Export sales have improved slightly. Cheese inventories are sufficient, cheese output is active, prompted by stable to increasing milk availability throughout the West.

FC Stone reported in its Oct. 28 Early Morning Update that “Eurostat keeps revising up European Union butter production data. Each state submits data on their own schedule, so data drips in, along with revisions to historical data, but presently the data looks like EU butter stocks will be up 20% by year end.”

DMN says there was concern that cream availability for churning could dwindle as Class II and Class III producers took more cream for holiday-related manufacturing but butter makers say that was not the case this week. Bulk butter supplies are generally available and market tones are “maintaining a steadiness that market participants are accustomed to.” Some analysts expect to see a sub-$2 price point prior to seeing $2.25 again. Others expect continued steadiness, explaining that with Thanksgiving falling later, on November 28th this year, it will assist the market later into the season.

Chinese milk equivalent imports for September were very close to forecast, according to FC Stone, up 1.7% from last year, but they predicted: “The growth rate for October should pick up quite a bit (into the 5-10% range). Food-type imports are still doing pretty good, but feed-type items, especially lactose, are holding back total milk equivalent imports.”

“Milk equivalent imports aren’t growing like they were in 2013/2014. First quarter 2014 total milk equivalent imports were up 43% with feed up 14% and food-type products up 52% (on top of 25% growth in first quarter 2013, says FC Stone.

Cheese imports were down 58.7% from August and down 2.9% from September 2018. Butter imports were down 56.3% from August and 7.4% below a year ago. Combined whole milk and skim milk powder imports were down 25.4% from August but were up 25% from a year ago. Whey imports were off 9.7% from August and 12.6% below a year ago.

The Daily Dairy Report however, says the U.S.-China trade dispute likely has more to do with the smaller figure. The DDR stated; “The United States was China’s largest whey trading partner in September, accounting for 28% of whey imports, matching November 2018 as the lowest share since September 2007. European countries benefited from lower U.S. imports, with volumes increasing 76% over the previous year, suggesting that smaller year-over-year volumes from the United States are related more to the trade dispute than ASF.”

The November Asia-Pacific Economic Cooperation meeting in Chile, where President Trump and China’s Xi Jinping were to meet, was canceled due to unrest in Chile but HighGround Dairy’s Lucas Fuess reported in the Nov. 4 Dairy Radio Now broadcast that China reportedly invited Trump to meet in Macau, China instead.

Fuess says there is still hope that Phase 1 of the trade agreement between the U.S. and China can be implemented and that agricultural purchases, including dairy products, will be made by the Chinese. China has made several promises of increased ag purchases, primarily corn and soybeans, says Fuess, but HighGround hopes they will include dairy products.

“There is nothing yet in writing,” Fuess cautioned, and “China continues to hesitate to commit to exactly how many agricultural products they will purchase.” He adds there was a “good sign” in that President Trump has held off imposing additional tariffs on Chinese imports, as he had previously threated to do.

Fuess also reported on Japan’s September dairy imports, which included record levels of cheese due to Japan’s declining domestic dairy production. He said that a lot of Japan’s dairy imports are from the US however we continue to compete with Europe and New Zealand. “If the price is right and the U.S. can compete, we can ship product away from our shores and fulfill the needs of foreign countries and hopefully have a good impact on our U.S. domestic prices.”

Cooperatives Working Together member cooperatives accepted eight offers of export assistance this week to help capture sales contracts for 952,397 pounds of Cheddar and Gouda cheese and 224,872 pounds of cream cheese. The product is going to customers in Asia and Oceania and will be delivered from November through March 2020.

In politics, the National Milk Producers Federation announced its support for the Farm Workforce Modernization Act, which they termed “a bipartisan immigration bill that advances agriculture immigration reform.”

Sponsored by Judiciary Immigration Subcommittee Chair Zoe Lofgren, D-CA, and Congressman Dan Newhouse, R-WA, NMPF says, “The legislation would provide legal status to current agricultural workers and their families and reform the H2A guest-worker visa program to permit year-round agriculture to participate, a crucial need for dairy. The efforts of Chairman Lofgren and Representative Newhouse, both longtime champions for agricultural labor reform, are greatly appreciated by dairy farmers, who cannot wait any longer for action.”

“America’s dairy farmers are eager to advance and improve this legislation as it moves through the Congress,” said Mike McCloskey, a dairy farmer and chairman of NMPF’s Immigration Taskforce. “As producers of a year-round product, dairy farmers face a unique labor crisis because our jobs are not seasonal or temporary. From our years of work on these issues, we know first-hand just how hard immigration reform is. But we simply cannot and will not stop working to find a solution. Dairy needs workers for our industry to sustain itself. It’s that simple, and it’s that dire.”

Jim Mulhern, NMPF President and CEO, thanked the lawmakers for “putting forward this essential step for agriculture labor reform, saying the bill is a critical first step in the legislative process.”

“We have supported numerous efforts to address dairy’s acute labor needs. Passing legislation in the House is a critical step in the process. We urge the Senate to work with us on this important issue so we can get an ag worker bill across the finish line in this Congress,” Mulhern said. “The bipartisan Farm Workforce Modernization Act provides an important starting point for badly needed improvements to agriculture immigration policy. NMPF would like to thank Chairwoman Lofgren and Congressman Newhouse for their bipartisan leadership, and we look forward to continuing to work with them as this important legislation moves forward.”


Milk Futures Slide Big While Cash Dairy Mixed in Chicago Thursday

On the Chicago Mercantile Exchange milk futures had a big slide on Thursday following the first significant drop in cash cheese markets in some time. November Class III milk down 28 cents at $19.95. December down 58 cents at $19.09. January 26 cents lower at $17.81. February down 17 cents at $17.05. March through June contracts one to nine cents lower.

Dry whey up $0.0050 at $0.2825. Twenty-one sales were made ranging from $0.2775 to $0.2850. Blocks down $0.0775 at $2.07. One trade was made at that price. Barrels down $0.06 at $2.33. Seven trades were made at $2.3275 and $2.33. Butter down $0.0175 at $2.0375. Nonfat dry milk unchanged at $1.2050

45% of UK dairy farm businesses lose value after tough year

Nearly half of dairy farm businesses are shrinking in value as the gulf widens between the best-managed enterprises and the rest, according to new research.

Rather than increasing herd size, farmers should focus on improving the profitability of each cow to remedy this, said Neil Adams, from dairy consultancy business Promar.

“We have some farmers that are doing phenomenally well and we have some farmers that are doing phenomenally poorly,” said Mr Adams.

“It is management, more than anything, that determines the difference between top and bottom.”

Some 45% of milk producers saw a fall in the net worth of their business in the financial year ending March 2019, after rising feed and energy costs outstripped improvements in milk prices and production.

“The milk price is not going to save you. If you can’t make it work at these prices, you really need to have a sit down and figure out how you are going to make it work,” he said.

Better-performing businesses even took on the greatest amount of new debt, but were using it as capital investment, while poorer businesses had lower debt, but were using it to survive, said Mr Adams.

Average profit a cow across all 520 farms on Promar’s books fell by 13% as total variable costs increased by 1.3p/litre to 17.2p/litre, but farm income only increased by 0.84p/litre.

Best still making profits

However, the best farmers still managed to make significant profits and grow their net worth, despite the challenging year.

When ranked by operating profit (before rent and finance), the top 25% made £750 more a cow last year than the worst 25%, as yields were higher and management of costs was significantly better.

These highest-profit farms had milk yield a cow of 9,102 litres – 794 litres more than the poorest 25%.

This also helped to keep variable costs 17% lower and overhead costs 28% lower for each litre of milk produced, said Mr Adams.

Despite the challenging year, the best kept bought-in feed costs down to 9.86p/litre, compared with 11.5p/litre for the worst.


New Zealand dairy giant holds back global ambition

New Zealand dairy giant Fonterra has held back from its global ambition to avoid further loss, a strategy confirmed on the company’s annual meeting on Thursday.

At the meeting, Fonterra management admitted that company had dropped its volume-based ambition early on.

“Eighteen months ago, we may have said we’re a global diary giant here to make a difference in the lives of 2 billion people, through a volume ambition of 30 billion liters of milk by 2025. Today, we stand for value,” Fonterra Chairman John Monaghan said at the meeting.

Fonterra’s former CEO Theo Spierings set a goal for the company to achieve a 35-percent increase in milk volume over five years. In order to achieve this goal, Fonterra would have needed to spend large amounts on sourcing milk from overseas farmers.

“With that driver gone, we are prioritizing New Zealand milk and only looking to our global milk sources when needed,” Monaghan said.

Fonterra posted a record loss of 387 million U.S. dollars this year. The shift away from volume to value had helped cut its costs dramatically. Fonterra had shed more than 1,400 people, frozen salaries for our people earning over 64,000 U.S. dollars and decided not to pay performance bonuses for the financial year. Total staff numbers now are 20,000, down from a high of 22,000 in 2015.

The financial priority of the company set at Thursday’s meeting is to lower its debt and capital expenditure.

Fonterra has a heavy investment in China farms. It is understood that the company has invested around 0.64 billion U.S. dollars over the past 10 years, including establishment costs and operational losses.


Chinese dairy demand helps the sweet, wholesome cream rise to the top

Despite plant-based milk alternatives doing their best to curdle the dairy industry, milk prices are actually on the ups around the world.

And, as The Wall Street Journal reports, it has something to do with a little East Asian country whose name rhymes with angina.

While dairy has never traditionally been a go-to for Chinese paletes (people who descend from East Asian communities are heavily affected by adult lactose intolerance), a recent influx of milk, cream, and cheese is adding a whole new pizazz to Chinese cuisine.

Cream cheese tea… uhhh, yum?

Wholesale skim-milk and whole-milk powder prices have both risen toward the top as a spike in consumer demand has Chinese culinary establishments adding a new (hopefully) fresh take to classic goodies — like salted duck-egg yolk. This time adorned with cream. 

Skim-milk powder prices have increased by 26% to 47% across the US, Europe, and Oceania over the past year. According to the US Dairy Export Council, the average price in those 3 areas hit over $2.5k per metric ton in October — the highest average since October 2014.

Let’s not forget New Zealand

New Zealand-based Fonterra Dairy — the world’s largest dairy exporter — is really capitalizing on China’s coup for cream (China is one of Fonterra’s biggest customers). 

In October, the co-op said it’s selling skim-milk powder at even higher markups than companies in the US and Europe, and soon expects whole-milk powder sales to rise as well.

The US hasn’t profited as much off China’s dairy addiction as they have benefited from dairy consumption in other parts of Asia. But, according to the WSJ, European farms are on pace to produce less skim milk in 2020, which could present even moo’re dairy opportunities for the US (milked it).


Incumbents reclaim seats on Fonterra board

Fonterra shareholders have re-elected directors Donna Smit and Andy Macfarlane.

The final results of the Fonterra elections were announced on Tuesday afternoon.

Scott Montgomerie and Ellen Bartlett were elected unopposed to the directors’ remuneration committee.

Ian Brown was elected unopposed as the Fonterra Farmer Custodian Trustee.


IFCN publishes 2019 dairy report

The report covers 120 country profiles, which represent 98% of the total global milk production, and provides comparable, standardized data on development, trends and drivers of the last 20 years.

The report includes information on: farm comparison and farm economics, sustainability of farms, monitoring of global dairy economic indicators, status, and trends and drivers of milk production.

The 20th anniversary edition of the IFCN Dairy Report presents data and analysis from 176 typical farm types in 54 countries. It explains the development, trends and drivers of the last 20 years and gives a glimpse into milk production developments by region.

Globally, there are 116m farms with an average of 3.2 cows, but IFCN identifies a deep structural change that is often underestimated in terms of its speed. Since dairy farm structure dynamics drive milk supply, the report allows those in the dairy value chain to anticipate future developments.

India and Pakistan together with Western Europe accounted for 47% of milk production in 2018. Dynamics differed widely by region and IFCN observed that strong regions grew and weak regions declined by 3-5% every year between 2013 and 2018.

In 2019, researchers from more than 100 countries and more than 140 agribusiness companies are members of the global IFCN network. IFCN serves its members with annual conferences, data, tools and market intelligence.


Associated Milk Producers laying off 74; closing facility in Rochester

Associated Milk Producers Inc., Minnesota’s 17th-largest private company, is closing a facility in Rochester and laying off 74 employees in the process.

New Ulm-based AMPI said it will close its plant at 700 1st Ave. SE by early February 2020, according to a filing with Minnesota’s Department of Employment and Economic Development. AMPI, which is a dairy farmer owned cooperative, will be laying off mainly manufacturing and warehouse workers.

“Company leaders said the decision stems from the continued decline in dairy farm numbers and milk production in the region,” the cooperative said on a release on its website. “Since 2008, Minnesota has lost 40 percent of its dairy farms.” 

Another plant in northeast Iowa is also closing.

The cooperative has been hit hard by some tariffs. The cheese market has fallen by as much as 25 percent since U.S. trading partners imposed counter-tariffs on U.S.-made cheese in reaction to U.S. tariffs on their goods. AMPI is also paying more on shipping, because the U.S. has put a 25 percent tariff on Canadian-made cardboard.

Associated Milk Producers has roughly $1.6 billion in annual revenue, according to the Business Journal’s list of largest private companies.

Source: BIZ Journals

Milk Futures Give Back in Chicago Wednesday

On the Chicago Mercantile Exchange milk futures closed lower Wednesday as increased dairy product numbers caught up with markets at midweek.  Class III quietly gave back some of its gains. November fell 7 cents to $20.23, Dec fell 12 to $19.64 and 2020 saw Jan – March fall 3-8 cents and is averaging at $17.42 per cwt. Class IV milk saw gains in every month but November which held unchanged at $16.78. December gained 5 to $16.93, and January gained 1 to $17.06 per cwt

Cheddar barrels continued to move higher but again saw no loads come to the table. Blocks down $0.01 at $2.15. Three trades were made ranging from $2.15 to $2.1575. Dry whey unchanged at $0.2775. Butter down $0.0075 at $2.0550. Nonfat dry milk up $0.0125 at $1.12050. One trade was at that price.

Grain markets moved lower ahead of Friday’s World Supply and Demand report. December corn fell 3 to $3.78 ¾, November soybeans fell 6 ¾ cents to $9.15 even, and we see soybean meal fall below $300 once again, falling $3.80 to $298.90 per ton.

Plan for winter forage needs

This has been an interesting growing year, to say the least.

  • There are large areas of winterkill throughout the Midwest.
  • Hay prices have remained high, in spite of low milk prices.
  • The amount and quality of hay this year has been variable; and
  • Corn silage tonnage will be lower than average.

It’s common for hay prices to climb in late winter and spring due, in part, to an increase in demand caused by livestock producers not anticipating their forage needs. To maximize your profits, it is important to plan for the amount and quality of forage your farm will need. Forward planning minimizes the risk of running out of forage and having to buy at inopportune times.

Take a forage inventory

A total forage inventory should be done at least quarterly. After each specific crop is harvested, the forage inventory should be updated with the new amounts and inventoried by quality.

Going into the fall, it is especially important to determine and plan for winter forage purchasing needs. This will help avoid dramatic ration changes caused by the poor allocation of forage. It is better to make small adjustments in rations than to run out of forage and have to make a drastic change.

Cows do not adjust well to dramatic ration changes. Each summer I get calls from farmers that have run out of corn silage and are exploring their options or wanting to know the minimum time corn silage needs to be in storage before feeding.

  • Hay crop silages need at least three weeks to complete fermentation.
  • Corn silage should be in the silo at least 4 months to maximize the starch digestibility of the kernels.

Regularly calculating forage inventories allows for the anticipation of shortages and gives farmers time to explore their options. If shortages are discovered early, several options exist to remedy the situation. These include:

  • Purchase hay or other forage.
  • Reduce animal numbers.
  • Re-balance rations, substituting some high fiber co-products for a portion of the forage.
  • Re-balance rations, reallocating forages based on availability.

Determine forage quality

In addition to determining total amounts of forage, segregating forages by quality, especially in a year when forage is expensive, may help increase farm profitability. The best time to sample and analyze forages is during harvest. Bags or bales can be identified by the quality and cutting with spray paint on the bag.

Recommended forage quality for different classes of dairy animals by relative feed value (RFV):

  • Early lactation cow: 160 RFV
  • Dairy calf + middle and late lactation cow: 140 RFV
  • Heifer (12-18 months): 120 RFV
  • Dry cow + heifer (18-24 months): 100 RFV

Developing a forage inventory

Ask these five basic questions when developing a forage inventory:

  1. How much total forage do I have available?
  2. How much forage is required for all of my animals?
  3. How does the forage inventory quality match the requirement for my animals?
  4. Can a feeding program be developed based on the forage supply available and the forage needs of the animals?
  5. Should I change my cropping strategy next year to better match my forage requirements?

One challenge with getting accurate inventories is forage density. The University of Wisconsin sampled 87 hay crop bunkers that averaged 15 pounds of dry matter per cubic foot but the range was 6.6 to 27.1 pounds. Corn silage bunkers averaged 14.5 pounds of dry matter per cubic feet and the variation was 7.8-23.6 pounds.

Another challenge is accurately determining shrink. This also varies widely depending on the storage location, type, packing sealing and feed out management. These are important reasons why forage inventories need to be done frequently.

Software can help

Many excellent feed management software packages allow users to manage and monitor feeding accuracy as well as track feed inventories. Most nutritionists have spreadsheets and can help calculate forage inventory by the class of forage (hay and corn silage) and the forage requirement. Many are available for free online.

The purpose of regularly inventorying the forage is to determine the quantities of forage available on the farm. When matched with animal numbers, you can make decisions regarding an adequate supply of forage for the intended feeding period. Because there can be a large variation in forage density and dry matter intake, inventories should be updated every three months.


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