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Dairy Today Expo Extra

RSS By: Catherine Merlo, Dairy Today

Dairy Today's Catherine Merlo brings you the latest from the World Dairy Expo.

Should California’s Dairy Survival Matter to You?

Sep 30, 2013

If California were to slip from being the No. 1 dairy state to No. 3 or No. 10 or No. 20, would you be better off?

The stress and fatigue were as widespread as the plaid shirts and baseball caps that filled the room at a recent meeting of about 25 dairy producers in Hanford, Calif., in the heart of the San Joaquin Valley.

There was less cheerful banter and more serious talk, fewer smiles and even tears from a dairy producer who had been forced to sell her dairy earlier this year after a lifetime of work.

Nearly five years of record losses and widespread dairy closures have wiped away the successful gleam that once shone from California’s dairy producer community. Two facts reported at the meeting told the story:

• California’s dairy cost of production for the first quarter of 2013 reached $19.16 per cwt. That compares to income of $18.01 per cwt. -- for a net loss of $1.15 per cwt.
• In 2012, 120 dairies went out of business, leaving 1,563 operations. Through mid-2013, another 54 dairies also appear to have closed down.

Now, with the very survival of the state’s dairies at stake, California producers and their representatives are pursuing measures at state and federal levels, which they desperately hope will keep them in business and put them on more competitive footing with dairies in other states.

Should all this matter to you? Does your dairy in Wisconsin or New York or Texas have a stake in California’s future? If California were to slip from being the No. 1 dairy state to No. 3 or No. 10 or No. 20, would you be better off?

These are questions Xavier Avila has pondered, not only as a California dairy producer but as a Land O’Lakes board member. Avila, who milks 400 cows near Caruthers, Calif., has had the California dairy survival discussion with producers from other states.

"Some care, some don’t," Avila says. "Some say, ‘You created your problem, now deal with it.’" Others, however, "do worry about California not only as fellow dairy producers but because these processing plants are theirs [as national co-op members]. Being short on milk would not be good for producers or processors."

Granted, there are those outside of California who would welcome the demise of a competitor. But others feel differently. With members and processing plants in California as well as several other states, Dairy Farmers of America (DFA) can see the situation from both producer and processor perspectives.

"The ability of California’s dairy industry to not only survive, but also to prosper, is important to producers, processors, retailers and consumers throughout the U.S. and around the globe," says Dennis Rodenbaugh, senior vice president and chief operating officer for DFA’s Western Fluid Group, which includes California. "The health of the entire U.S. dairy industry and our economy is now and forever linked to our ability to successfully participate in global markets. Diversified production from coast to coast demonstrates that the U.S. is willing and prepared to serve as a reliable supplier to feed a world that is hungry for a safe, quality source of dairy nutrition. As dairy exports climb to nearly 20% of our national production, California’s unique ability to efficiently serve growing markets along the Pacific Rim and elsewhere is critical to the entire industry."

"What we see happening in California is most likely a circumstance we’ll see in our own state in the not-too-distant future," says Darren Turley, executive director of Texas Association of Dairymen. "The survival of the California dairy industry is crucial not only to its state but to the nation. California is such a major player in production, environmental regulations, innovations and promotion, that its loss would be staggering and create a ripple effect across the country."

"Yes, we’re competitors, but the fact is we’re all in this game together," says Bob Grey with the Council of Northeast Farmer Cooperatives. "California contributes to dairy exports, which helps develop markets, which helps all dairy producers."

From Vermont, Ralph McNall also sees good reason for California to maintain a strong, healthy dairy industry. McNall is a dairy producer and president of St. Albans Cooperative Creamery, which takes in milk from 500 dairies in Vermont, New Hampshire and New York. "The biggest reason there should be a California dairy industry is that milk production should be spread out from coast to coast, in case of some catastrophe, whether environmental or from what some other country could do to us," McNall says.

Another thoughtful response comes from Bob Wellington, a senior vice president with Agri-Mark, the Massachusetts-based dairy cooperative. He doesn’t mince words.

"Usually I would say that we need all the dairy farms we have," says Wellington. "However, up until a year or two ago, we saw such production growth in California (and then Idaho, New Mexico, etc.) that it played a significant role in depressing overall farm milk prices nationally for the past two decades, including [for] our New England and New York farms. Some farmers in the West and Midwest expressed thoughts that our smaller farms in the Northeast should just go out of business and let them serve our consumers. I never heard any farmer in California worry about the survival of New England or Northeast dairy farmers. Survival of the fittest and last man standing were more common mantras.

"With that said," Wellington adds, "the U.S. dairy industry can be the milk pitcher for the world as well as its bread basket, and California is key to that. Agri-Mark was just named Dairy Exporter of the Year, but the industry could not grow the export market without the critical mass of production that California brings to the table and without the resources contributed by dairy farmer promotion dollars and cooperative efforts that have encouraged exports."

California’s dairy industry has taken its lickings and has been humbled. Lessons have been learned. But California’s importance and the thoughtful responses above ought to make any debate about the Golden State’s dairy survival more constructive. In-fighting rarely solves major problems. Unity and smart solutions do. 

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