Dairy’s Changing Role

May 29, 2014 08:02 PM
 

Pete Wiersma

Pete Wiersma
Buhl, Idaho

In addition to helping manage 1,500 cows on his family’s two dairies in Idaho’s Magic Valley, Wiersma serves on the boards of United Dairymen of Idaho and Independent Milk Producers.
 


When we look at dairy demand, the first thing that often comes to mind is the decrease in fluid milk consumption.

While that is a very real and persistent issue--and not one that we should give up on--demand for dairy products is very strong and growing because of its inclusion in all kinds of other foods.

Just look at the popularity of specialty coffee drinks, fitness and protein drinks, energy bars, etc., and then consider that dairy products in some form are contained in all of these and many more. We can see a whole new market that has been developed for milk that didn’t exist a decade or two ago.

Here in southern Idaho, we have benefited from the popularity of Greek yogurt by having a large processor [Chobani] build a Greek yogurt plant--the largest one in the world, we’re told--right here. The resulting increased competition for milk has benefited all of us locally in the form of higher milk prices, whether our milk goes there or to another processor.

And we can’t ignore the demand from overseas--most notably China. Dairy products are becoming more important to them as a source of nutrition for their children, but their dairy industry cannot supply the demand. On top of that, they don’t trust their own dairy companies to supply a quality product, so they look to the U.S. and others to meet that demand.

Closer to home, about eight years ago we were invited, along with several other like-minded dairy farmers, to form a milk marketing co-op. The intent was to have a more active role in the marketing and pricing of our milk. Are we more profitable? I can’t say that we are, but I and the other members like having an active role in the process.

All things considered, the demand for dairy products appears to be good and growing, but dairy’s role has changed. Instead of a glass of milk at every meal, dairy is going to play more of a supporting role as an ingredient in a host of other foods that people love and need.

But again, let’s not give up on fluid milk sales. Let’s market it to specific demographics: Kids don’t care that it’s good for them; they want it to be fun and loud and colorful. Moms like it because it’s a great source of nutrition. Let’s market it to them in that way.

Finally, anytime you talk about demand, you cannot ignore the flip side, which is supply. We can be filled with optimism because demand is strong and increasing, but if we oversupply that demand (and we will), the punishment will be sure and swift in the form of lower milk prices.

The greatest challenge for our industry is not in finding new markets for our products, it’s in keeping the milk supply in balance with demand. When we figure that one out, we’ll really be on to something.

Wiersma’s recent prices

 

Milk
$23.27 (3.63 bf, 3.21 prt)

Cull cows
$82-$100/cwt.

Springing heifers
$1,800 - $2,300/head

Alfalfa hay
$240-$260/ton

Cottonseed
$510/ton

Ground corn
$237/ton

Wheat ddg
$387/ton
 

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Comments

 
Spell Check

Anonymous
6/6/2014 03:19 AM
 

  Pete-- Don't worry about shorting the market . If supply isn't kept in check , the industry will lower the prices .. There are some trying every day to bust the price . With the herd size of nine million cows we can keep fair prices . You and I read every day of how these prices can't last because the processors are not making enough . All they have to do charge more on their end and not worry about Wal-mart trying to beat the price down .

 
 

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