New York Buoyed By Yogurt Surge

April 1, 2014 08:47 PM
New York Buoyed  By Yogurt Surge

By Shirley Chapman

Despite the inherent volatility of milk and feed costs, dairy farmers and processors in New York have shown steady growth the past few years.

Total milk production has climbed 2% to 4% each year since 2006. Add in the "recent unprecedented growth in dairy manufacturing, and it’s an exciting time to be a part of the dairy industry in New York," says Tom Overton, director of the PRO-DAIRY program at Cornell University.

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Class I fluid milk has been the dominant market here. However, new and expanding yogurt and cheese plants are helping grow total milk utilization, which should lead to a more competitive milk market.

Overall, the outlook is positive for dairy. "We won’t grow explosively, but we will have steady, solid growth," Overton says.

Strengths. New York dairy producers grow excellent forages, and some are able to shift acres to grow more corn and soybeans to help offset higher costs of purchased feed. That allows them to better control their cost of production. 

Most New York producers are progressive, business-minded and early adopters of new technology. They benefit from a strong allied industry and university infrastructure that work well together.
Recent investment in dairy manufacturing improves the outlook. These new and expanding plants produce yogurt, cheese and milk ingredients. Increased consumer demand for these products at home and internationally will help grow opportunities for dairy.

State support for the dairy industry is another big plus. Producer groups and the state have worked together to develop environmental policies that protect the environment and are workable for producers. New York has also launched the Dairy Acceleration Program, which provides money to help producers write a business plan, develop a comprehensive nutrient management plan or both, if needed.

Weaknesses. Land is a limiting factor in many parts of the state. Without land to expand, producers might not be able to grow. Producers must weigh the best use of every acre of land. Some producers add cows or develop a second dairy at another site.

But many progressive producers rely on the latest information on nutrition, animal care and new technologies to help them produce the most milk from the cows they have.

However, being a traditional dairy state, some producers cling to the past. To succeed in this business going forward, each must decide if the business models currently used will allow for continued success or lead to their exit.

Opportunities. The current outlook for milk prices is good, feed costs have moderated and cow prices are strong. Now is the time for producers to execute their plans to pad their balance sheets. Whether your plan calls for you to grow, bring in the next generation, retire or pay down debt doesn’t matter. Conditions are favorable for you to execute that plan.

"It’s time for the industry to invest in modernizing facilities and management practices to ensure efficient, profitable production of high-quality milk to meet the growing demands for dairy products led by the increases in dairy manufacturing," Overton says.

Threats. "We need immigration reform," Overton says. "Producers here face a daily threat from
Immigration and Customs Enforcement [ICE]."

Dairies face mounting paperwork concerns to be able to comply with ICE audits. Sometimes, paperwork that appears real is proven otherwise. Without a clear path for immigration reform, the labor supply will continue to be a limiting factor.

In addition, the Occupational Health and Safety Administration (OSHA) will begin implementing a Local Emphasis Program in New York. Starting June 1, dairy producers could face additional inspections and possible fines for safety infractions. 

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