October 2009 Archive for On the Udder Hand

It was quite a coincidence, but a chance encounter of headlines nonetheless:  on the same day (the 27^th) that Cooperatives Working Together announced the results of its third herd retirement of 2009, the Associated Press ran a story nationwide reporting that dairy farmers are killing cows to make ends meet.

I know some producers are upset about the headline attached to that story, which if you just read it and had no other context, makes it sound like some avenging angel or Terminator is offing cows in their parlors.  The story itself, once you read it, is more balanced, and in fact provides a reasonable rationale for how the accelerated culling of the past 12 months has been necessary to help bring supply into balance with demand, and give farmers the chance to make money again, someday. (Disclaimer note:  I did speak to the reporter, Michael Crumb, at least twice this month to explain dairy economics and the function of CWT).

The fact is that poultry and pork sectors have essentially been doing the same thing as the dairy sector this year:  reducing the size of their breeding herds and flocks in order to stop the flow of red ink.  The entire livestock industry’s balance sheet has also been upended by recession-driven economics.  The vertically-integrated chicken and pig businesses adjust their production in a different way than dairy, because the levers that control production and marketing decisions are much simpler.  Precisely because dairy is still made up of individual independent business men (and women), they have to collaborate on an industry-funded program, CWT, to help accelerate the trends that need to happen.

When 2009 started, the gap between supply and demand was at least five billion pounds of milk.  CWT has narrowed, and depending on October’s tally, actually eliminated most all of that imbalance.  The marketplace is catching up to that reality, and I am willing to wager that the headlines next year will be much more positive about dairy economics than all of the doom and gloom of 2009.

To listen to some of the reaction, the announcement recently by Cargill that it has created a new form of fake cheese called Lygomme was tantamount to the end of the world.   How dare a major feed company, with its stake in supplying a growing dairy sector, come up with a form of imitation cheese that would compete with something not made on a chemist’s bench?

I understand that the dairy farmers don’t need any more bad news in 2009, but is it really news of any kind that imitation cheese exists as a competitor to real cheese?  Let’s face it:  fake cheese, typically made with vegetable oils and starches, has been around more than 30 years.  Perhaps Lygomme is a quantum leap forward in artificiality, but the reality is that we’ve had this contest in dairy for many decades.  You can go to any major retailer today and already find a hunk of veggie cheese for sale that wouldn’t know a cow from a corn stalk.

Those who were around in the 1970s will remember that the increased use of imitation cheese on frozen pizzas was the key reason why the dairy Real Seal was developed, so that the marketers of milk-based cheese could distinguish themselves from fake fromage.  Even if Lygomme turns out to be a better mousetrap than other fake cheeses, it’s not like mousetraps are a new concept.

Cargill certainly is guilty of poor timing of this big news.  My guess is that the chemistry geeks there convinced someone in marketing that this new formula is going to be the biggest thing since…sliced cheese, maybe?  What this episode really illustrates is the value in having an industry-lead effort to keep the marketing chain honest if and when imitation dairy products are deployed. 

Back in 2001, NMPF asked the FDA to stop soy beverage makers from using the term “milk,” but it’s obvious from their indifference that the FDA can’t be bothered to get involved in this spat.  Don’t look for them to get concerned about the appearance of just one more imitator.  This type of competition from non-dairy or semi-dairy sources has been around since the days of oleomargarine. 

OK, I’ve been a bad AgWeb blogger and let my postings lapse the past three weeks.  I’ve been on the road every week of September, and haven’t had time to collect my thoughts about things going on in farming, in Washington, and in the world.  So I’m going to do a rapid-fire roundup of some recent developments related to the usual things I cover here at the Udder Hand, with links to, and thoughts about, each:

PETA Video

We always knew it was just a matter of time before the insidious undercover investigators at PETA trained their hidden cameras on a dairy farm.  Last week, they released some unsettling images from a farm in Pennsylvania, which is still the lead item on their website.  Today, in fact, they’re staging a protest in Albany to add more fuel to the fire.

PETA doesn’t have any credibility, but they sure are good at drawing attention to themselves. The best way to fight them is through a proactive demonstration of the commitment that dairy farmers have to proper animal care.  No one wants to be judged by our worst day, or by the worst apple in the barrel.  But in the future, as regulators and consumers direct more attention to animal care on farms, we need to be up-front about deploying best practices on our farms.  That’s why I was at the World Dairy Expo last week to unveil the new National Dairy FARM program.  This project has been in the works for over a year, but if there was ever a demonstration of why it’s needed, PETA provided it last week.

CSPI Top 10 List

And here’s another activist group with its latest agitprop, featuring information about dairy that is way out of context.  The Center for Science in the Public Interest issued a report Tuesday listing the 10 riskiest foods.  Cheese and ice cream were right up there with sprouts and spinach.  What they didn’t tell you is that almost all of the cheese-related illnesses are from homemade bathtub cheeses that are literally made with unpasteurized milk in people’s backyards.  It’s a little like saying Sudafed is risky because some criminals make it into meth.  And the example they cited about ice cream is because of a 15 year old foul-up involving mixing raw eggs with ice cream mix.  If that’s the worst case they can make against dairy, they’re pretty lame.  If CSPI is really concerned about dairy food safety, they need to help push for a federal ban on raw milk sales…that would demonstrate their commitment to the issue.

 Dairy Aid

Congress is now planning on spending $350 million on dairy aid in the annual ag appropriations bill.  The spending package is supposed to be voted on any day in the House.  In the Senate, California’s Barbara Boxer is raising heck because only $60 million of that total is going to cheese purchases, while the larger balance is going to direct payments.  Back at the end of the summer, NMPF had urged congressional leaders to spend all the money on cheese, as it would help clear markets, and be a rising tide that lifts all prices.  Direct payments are always a lightning rod that upsets someone in the industry, as explained well by dairy blogger Dino Giacomazzi.  In the end, compromises in Washington are about politics more than economics, but it would have been nice if they would have just heeded NMPF’s advice in the first place to buy cheese.

CWT

Also in the realm of short-term help for farmers, Cooperatives Working Together is in the middle of collecting bids for its ninth herd retirement round since 2003, and the third just in 2009.  The cows removed later this year should put the finishing touches on efforts to align supply and demand.  Everyone from the Ag Secretary on down recognizes the need to get that done so 2010 starts on a better note than 2009.