By TIM THORNBERRY
Kentucky Correspondent

FRANKFORT, Ky. — As National Dairy Month comes to a close, the dairy business has seen a bumpy ride over the past couple of years.

A year ago, milk prices had tanked and many dairies were struggling at best while others went out of business altogether.
Some of those included family businesses that had been around for generations. The USDA stepped in as Secretary Tom Vilsack announced an increase in the amount paid for dairy products through the Dairy Product Price Support Program (DPPSP) last July. Those increases were in place from August 2009 through October 2009.

“The price increase … will provide immediate relief to dairy farmers around the country and keep many on the farm while they weather one of the worst dairy crises in decades,” Vilsack said at the time.
Milk prices have come up to about a dollar above breakeven said Maury Cox, executive director of the Kentucky Dairy Development Council (KDDC), but some of that increase is due to fewer dairies being in operation.

“Unfortunately, the way things work or seems to be, as producers go out of business, there are a few less here and a few less to produce and that has had an effect on it,” he said.

Even with the increase, farmers across the country are complaining that the cost of producing milk isn’t keeping pace with the cost of milk in the supermarket.

Currently, the USDA and the Department of Justice (DOJ) are in the middle of five workshops “intended to promote dialogue among interested parties and foster learning with a diverse group of stakeholders regarding competition and regulatory issues in the agricultural marketplace,” according to information from the DOJ.
“The dairy industry has been hit particularly hard over the past 18 months, and, like other agricultural sectors, is experiencing consolidation and shrinking farm numbers. A fair and competitive marketplace is important not only for producers, but also for consumers, and today’s open and transparent dialogue with producers and experts will provide us with a understanding of the complex issues in this important industry and help us determine how we ensure competition and fairness in the dairy industry,” Vilsack said during a meeting held in Wisconsin last week.

The workshops are the first of their kind between the two agencies and will look at the dynamics of competition in agriculture markets and examine legal doctrines among other issues.

While the tendency in farming has seemed to edge toward the idea of bigger is better, that idea isn’t always realistic in Kentucky and has not necessarily played well in the dairy business according to Cox.
“In Kentucky, there are limitations on farm size and getting bigger isn’t always the answer,” he said. “A lot of the really large dairies had as much trouble or more because they purchase quite a bit of feed. I think that is one of the reasons you didn’t see more dairies going out of business (here) as many of those produce their own feed and they were able to sustain themselves a little bit better than maybe some of those super large dairies.”

There are a few things that have to happen in order for Kentucky dairies to survive. One is to get more milk per cow, said Cox.
“Even though Kentucky, since KDDC was started in 2005, has increased from 12,800 pounds of milk (per cow) to about 14,200 pounds of milk, the national average is over 20,000 pounds of milk per cow, so we’re going to have to focus on that.”

Cox added that a continued improvement of quality is another area of focus for state producers as the world market is demanding increased quality measures.

The dairy industry not only here, but across the nation is in a transition period said Cox and getting the word out about the industry by producers may be one of the keys to keeping families on the farm.
“Producers, I think if they are going to compete, they need to educate on milk marketing, they need to educate on milk pricing and begin to speak out about it more to their state representatives and to their cooperative leadership,” he said.

Cox also said that moving into the value-added microprocessing area, especially when multiple dairies work together, may be another way to provide relief to an ailing industry.

“It is an absolute possibility,” he said. “We’ve got that going on across the state already, and we’re seeing more of them. We had a microdairy processing workshop last December with over 100 in attendance and we’re looking at having a follow-up to that. Typically, if you have a 50-cow dairy, looking at a way to be a price maker, rather than a price receiver, is very important.”

Cox noted that the Kentucky Milk Commission, which came to be through legislation passed last year is looking at how to capitalize on Kentucky branded milk.

“We believe that consumers are very mindful of wanting to know where their milk comes from and are willing to pay more if that can be accomplished,” he said.

Cox said that the days of local milk being delivered to doorsteps or local markets may be coming back. “It’s important for dairy producers to look at their options and explore them,” he said.