The change of season hasn’t ended the summer of discontent for dairy farmers – politically or economically. As the leaves change color, the question is, can dairy farmers come back from a long losing streak? 

Dairy Profit Weekly Editor Dave Natzke reported on Friday’s DairyLine that through August 2009, U.S. average milk prices have been running nearly 40 percent below the same period in 2008, taking a toll on dairy cash flows and cash reserves. The most recent USDA report showed August 2009 U.S. milk production was down slightly from a year ago, as economic factors continue to push cow culling higher.

“Like the changing weather, there are some regional differences,” Natzke said. Latest USDA estimates show California and Western cow numbers and milk production are down compared to a year earlier, while cow numbers and milk production are steady or growing in the Midwest and parts of the Northeast. 

According to Bruce Jones, dairy economist at the University of Wisconsin-Madison, the structure of California dairy farms and the need to buy more feed has resulted in far worse negative cash flows – forcing them to use cash reserves – at a faster rate than other regions. 

National and regional dairy leaders continue to discuss policy alternatives and strategies to address the dairy economy. The question, however, is whether dairy farmers can survive much longer. “I’ve heard from many dairy producers and organizations in the past couple of weeks who say things are on the verge of economic collapse, unless things improve dramatically, and quickly,” Natzke said.

The new season has brought some hope. Cheese and nonfat dry milk prices, as well as federal and California milk marketing order prices, have begun a slow climb from depressed levels. The outlook for large corn, soybean and hay crops has helped bring feed prices down. 

Wednesday’s DairyLine listeners heard the testimony of New York dairy and beef producer, Glen Taylor, who recently completed the beef checkoff’s online “Masters of Beef Advocacy” program. Taylor said the program equipped him to confidently speak with consumers about the things that are important to the beef industry.
Being able to present this message is becoming more and more important, according to Taylor, who will use his skills at an upcoming local consumer food group which invited him and others to talk about how beef producers operate and how they look out for consumers in their production efforts.

Two key issues that Taylor sees as important are animal husbandry, which addresses consumer concerns over animal welfare, and environmental stewardship, which addresses care for the land.

Without taking that course, Taylor said farmers don’t give them much thought because they are day-to-day activities that farmers do naturally and almost “take for granted,” but do practice them “as best we can.” It’s important to let consumers know this, he concluded.

Use of dairy ingrediants

The use of dairy ingredients is a growing part of the dairy industry and the dairy checkoff is working to keep it growing. Stan Erwine, DMI’s Vice President of Producer Relations, reminded DairyLine listeners in Monday’s “DMI Update” that over 1 billion pounds of milk are used each year as an ingredient in another food or beverage product.

He talked specifically about Starbucks, a company that uses over 2 billion pounds of fluid milk in their coffee products. Starbucks came to DMI about two years ago, seeking help with the development of some new menu items, Erwine explained, and one of the ideas that resulted from that was the use of dry whey protein with fiber in a new smoothie called Vivanno. Vivanno consists of fruit, milk, and a powder blend of dairy whey protein, according to Erwine.

Starbucks uses about 3.7 million pounds of whey protein, he said, which requires more than 550 million pounds of milk but “It’s been a successful launch of a healthy new product that adds to Starbuck’s menu.” And, a third flavor was just introduced so Vivanno is available in banana chocolate, orange mango, and now strawberry banana.

It’s important to come up with new and innovative ideas to spur dairy product use Erwine concluded, and it’s really a response to “a dramatically changing consumer who wants new flavors and new products and they want them conveniently.”

Milk production slides in August

August milk production in the top 23 states totaled 14.6 billion pounds, down 0.2 percent from August 2008, according to preliminary data in USDA’s latest Milk Production report. Extrapolated, the 50 state total was off 0.3 percent. Revisions lowered July output below a year ago as well making it the first decrease in U.S. milk output since April 2004.

August cow numbers totaled 8.4 million head, down 28,000 from July, and 143,000 less than a year ago. Output per cow averaged 1,743 pounds, up 25 from a year ago.

Checking the top five; California was down 4.5 percent, due to a drop of 64,000 cows and 20 pounds less per cow. Wisconsin offset some of that decline, up 3.7 percent, thanks to 5,000 more cows and a 55-pound gain per cow. New York was up 0.2 percent, despite a drop of 8,000 cows. Output per cow was up 25 pounds however. Idaho was down 2.7 percent, on a 7,000-cow loss and 30 pounds less per cow. Pennsylvania was up 0.7 percent on a 20-pound gain per cow although cow numbers were down 3,000 head. Minnesota was up 4.4 percent, on 4,000 more cows and a 55-pound gain per cow.

The biggest increase was in Illinois, up 5.4 percent on a 75-pound gain per cow. Cow numbers were unchanged. Indiana was next, up 4.9 percent on a 65-pound gain per cow and 1,000 more cows. Texas followed with a 3.5 percent increase despite a 5,000 head drop in the herd. Output per cow was up 75 pounds.

The biggest decline occurred in Arizona, down 7.4 percent on a 14,000-cow decline. Output per cow was up 5 pounds. Vermont was next, down 4.7 percent, on 5,000 few cows and a 15-pound loss per cow. California was next.


The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Lee Mielke may write to him in care of this publication.

Published on Sept. 30, 2009