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Dairy Talk: A Brave, New, Volatile World

April 2, 2014
By: Jim Dickrell, Dairy Today Editor
 
 

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The passage of the farm bill marks a radical departure from some seven decades of dairy price supports and reliance on government.

Those dairy farmers who choose to go it alone, or opt for minimal levels of margin insurance, will now be at the mercy of global markets. As we enter this brave, new, volatile world, we thought it prudent to look at the U.S. dairy industry’s strengths, weaknesses, opportunities and threats (SWOT).

We queried National Milk’s Jim Mulhern and International Dairy Food Association’s Connie Tipton for our domestic SWOT analysis (pages 8 and 10). We then sat down with Tom Suber, U.S. Dairy Export Council president, on U.S. export future prospects (page 12).

Then we take it a step further, doing a SWOT analysis for each of the top 10 dairy states. At the local level, rubber meets the road. This analysis shows how local market conditions and issues impact a state’s competitiveness.


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National rankings are more than bragging rights. They are an indicator of whether a state is maintaining its produc­tion momentum, processing capacity and infrastructure.

Although California’s milk production dipped 1.3% last year, the Golden State retains its No. 1 market share at 20.5%. (No. 2 Wisconsin has 13.7% share.)

California dairy farmers have been battered by less than competitive milk prices, high feed costs and mountains of debt since 2009. Now they are facing record drought.

Given more normal feed costs, however, they are fast becoming competitive with New Zealand. California processors also see growth potential. Hilmar Cheese is building a whole milk powder plant, gearing up for more exports. California Dairies Inc. just announced that it is adding a third evaporator at its Visalia plant, again to fine-tune products for export.

Idaho lost its No. 3 ranking to New York, largely because 7,000 Idaho cows were culled in 2013. Most of that culling was the result of high feed prices. Forage prices could be a challenge again this year as prices get bid up because of California’s drought.

But the addition of the Chobani Greek yogurt plant in Twin Falls has made Idaho milk prices again competitive. Although they typically lag Midwest prices by $1 per cwt., Idaho prices are now well above $20. Given good margins, it’s likely Idaho could add cows and regain No. 3 status.

 

Minnesota has also dropped rank to No. 8. Cow numbers here have remained steady during the past decade, and while milk production per cow has climbed, it still lags the U.S. average by almost 10%.

Michigan, which leap-frogged  over Minnesota to No. 7, did it on the strength of milk production per cow. (Michigan has 84,000 fewer cows.) Its milk per cow number is 10% above the national average.

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FEATURED IN: Dairy Today - April 2014
RELATED TOPICS: Dairy, Policy, Issues

 
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