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Need A New Approach

June 3, 2013
 
 

Art Schaap

Art Schaap
Clovis and Portales, N.M.

The Schaaps manage four dairies, including an organic operation, and milk 5,500 cows. They’re also partners in a cheese factory.

 


Today we all live in a constantly changing marketplace. The marketing of our milk and its associated products leaves a lot to be desired of our marketing agencies, and big changes should be pursued by our industry.

We can all agree that milk is a complete food. It is nutritious, wholesome, healthy and natural. So why are fluid sales declining month upon month?

Several years ago, I had an interesting discussion with a gentleman who told me of a conversation that he had in church with a representative of Anheuser-Busch. The representative from Anheuser-Busch was puzzled; he did not understand why the milk industry was not charging consumers more for a reduced-fat content in the milk that they were demanding.

He stated that when the consumer demanded that Anheuser-Busch and the other beer companies reduce the caloric content of their beer, they raised the price, even though the cost of the new products was less to manufacture. He also stated that typically when the consumer places new product demands on an industry, there should be compensation that accrues to that business.

It is easy to be in favor of promotion, improved quality, partnering with companies to promote and sell our products, and proposed legislation to eradicate the use of the word "milk" in drinks that do not contain milk.

The hurdle that needs to be overcome in our industry is for all of us to institute protocols and methods to ensure that there are direct lines of communication and liaisons between producer groups and processors to ensure that the marketing of our products have our input and support. Generally, it has been my experience that without oversight and input by the production side of the industry, innovation and profitability are compromised.

A final area of concern is the pricing of milk by classes. Milk is utilized to make many diverse products. How it is priced should be dependent upon consumer demand.

Greek yogurt and yogurt sales in general are fast becoming a huge growth sector in the dairy case. You would think that yogurt should not be priced at a discount relative to Class I or Class III products. However, that is exactly how Class II milk is sold to yogurt processors, which is a lesser value.

We all want more for our milk. There is a disconnection, however, between producers and end users. This must change. We are allowing minimal amounts of product to trade on the CME, and these daily trades are used to determine the price of all our milk.

In addition, someone needs to answer a simple question: If processors deserve a make allowance when their cost of production exceeds their input cost, then why does the dairyman not deserve the same consideration? In conclusion, we need to own our milk longer and assume more ownership all the way to the consumer.

Schaap’s recent prices

Milk
$18.40 (3.70 bf, 3.10 prt)

 

Cull cows
$72-$80/cwt.

Springing heifers
$1,250-$1,450/head

Alfalfa hay (milk cow)
$240-$290/ton

Cottonseed
$320/ton

Rolled milo
$265/ton

 

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