San Joaquin Farm Bureau Federation

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Escalon dairymen Gerard and Henry Van de Pol say 2014 is much better for the industry than 2013, but still face challenges like high feed costs. Photo by Goff Photography

By Craig W. Anderson

Even when the county’s dairies enjoy good fortune in 2014 – higher prices paid to milk producers, export markets booming, some feed prices coming down – there were challenges that carried over from 2013: hay prices stayed high and could go higher, and other feed crops were limited by lack of sufficient water as the drought refused to go away.

Some optimism, dairy farmers mostly wary

Still, some degree of optimism is the order of the day because, said SJFB President Jack Hamm, “It’s an economically better situation but there’s still not a lot of positive thinking in the industry. There is a more positive attitude in other ag sectors, so there are good feelings for them but not in dairy.”

 Escalon dairy farmer John Vander Schaaf said, “Dairy farmers aren’t looking at expanding their operations. We’re only a year away from selling heifer calves to slaughter. I think everyone’s adopted a very cautious, wait-and-see approach because we all realize that if the market goes south for some reason, it’ll go fast.”

Henry Van de Pol, Escalon dairyman (G & H Dairy with his brother Gerard), SJFB board member, said he is “optimistic that the dairy industry’s turned the corner. We have a superb product and the world wants it.”

Concerns remain

Hamm said some of the issues that still worry dairy farmers just behind the positive elements of the dairy upswing, include: people still putting up dairies for sale; California’s milk pricing system isn’t working – “Producers are paid $2 less per hundredweight than elsewhere in the country,” Hamm said; “We need more processors here”; and the drought-generated water challenges have “us robbing Peter to pay Paul with feed acreage being fallowed to use the water elsewhere,” he said.

New processing plants

According to Hamm, Hilmar Cheese is building a powder processing plant in Turlock and California Dairies, Inc. is building a plant “somewhere in the Central Valley.” When these facilities will be open for business is unknown.

Irrigation water is the big, basic issue for dairies and agriculture at the county and state level and a good, wet winter is definitely required to allow plantings to be planned and to help even out supply and demand. San Joaquin County dairy farmers don’t want to buy feed from out of state suppliers due to the additional cost.

Feed additives

If the drought continues, feed additives such as cottonseed, almond hulls and corn silage may fall by the wayside or become prohibitively expensive. Feed growers may shift to sorghum, less expensive than corn but it doesn’t have the nutritional value of corn that cows need. All of this potential adjusting of what’s available for feed will result in changing formulating the cow menu. 

And if beef cattle can’t find forage ranchers will be buying more feed and that thins the feed supply even more.

“It is what it is,” Van de Pol said. “Dairy farmers are experts at adjusting feed rations and like us, quite a few in the county grow a good portion of their own feed, which reduces their costs.”

Pennsylvania farm brews milk to California standards

Something unique has happened in Pennsylvania where Family Dairy Farms LLC of Denver, Penn., is hoping to boost milk sales by adopting California milk standards.  Company President Mike Eby said the “White Gold” brand “is the answer to the nation’s milk consumption problem. I believe people will spend the extra [money] to get a high quality product that has no growth hormones in it, is guaranteed 100 percent USA, and that tastes great.”

“This is an excellent testimonial to the quality of our milk,” Hamm said. “Now, if we could just receive better payments for this ‘White Gold’ here in California.”

Some say CDFA not much help

The state’s milk industry asked California Department of Food and Agriculture Secretary Karen Ross for temporary funds to help dairy farmers get through the extreme downturn in milk prices paid to producers, but Ross has denied a number of requests from the industry and created a task force to look into the issue.

According to Vander Schaaf, “Ross says the cheese processors need more money than we [producers] do.” The problem as he sees it is that when the marketability of whey was discovered and a value placed on it, the processors said they needed more money to pay for the research and development costs over the years that determined whey could be sold as a dairy product.

“We’re still being paid $2 less than the rest of the country because of our pricing system,” Vander Schaaf said.

State to join feds program?

There is a move afoot by the California Dairy Campaign (CDC) under the aegis of the California Farmers Union to “join the federal milk marketing order system to bring prices paid to dairy farmers in California in line with prices paid in other states” the groups said in a press release.

The campaign’s president, Joe Augusto, said, “California lost 67 dairies and more than 45,000 cows in 2013 [and] given that each cow generates more than $34,000 in economic activity annually, the closure of these dairies has caused the loss of more than $1.4 billion in economic activity and more than 11,000 jobs.”

Michael Marsh, CEO of Western United Dairymen, said, “Work is ongoing on a draft proposal” concerning California joining the federal milk marketing order system. “California’s pricing system is very, very different from the federal regulatory scheme and there are many challenges in making such a conversion to a system different from ours. But sharp people are working on this.”

Dairies gone

CDC Executive Director Lynne McBride commented, “Although producer prices are better this year, great concern remains about rising feed costs due to the historic drought. Joining the federal order [will] prevent more dairies from going out of business.” She said more than 170 dairies have gone out of business “in just the last two years” leaving just under 1,500 dairies still doing business statewide.

According to the recent USDA Agricultural Census, as of 2012 San Joaquin County had 111 dairies and more than 106,000 milk cows.

Hamm reiterated that California’s “current pricing system isn’t working and we’re receiving a significantly smaller payment per hundredweight than the rest of the country.”

Raw milk law canned in committee

Raw milk became a polarizing issue when a small dairy with four cows wanted to sell raw milk without any regulations and or pasteurizing. The “moonshine milk” was sold in unrefrigerated Mason jars at farmer’s markets but that was halted.

The Centers for Disease Control, FDA, USDA and other government organizations say raw milk poses serious health risks.

The Center for Disease Control determined that raw milk is the No. 1 preventable health risk in the United States, said Marsh. “People who’ve consumed it have become violently ill, been paralyzed and some, including children, will be on dialysis for the rest of their lives. This could be caused by Salmonella, E. coli, the parasite Giardia and the norovirus, all of which have been found in raw milk. Simply put, raw milk is just not safe.”

Assembly Bill 2505, if passed, would have allowed the sale of unregulated and unpasteurized raw milk in California. It died in committee.

Exports growing

“Exports are good now.” Van de Pol said. “The global market has grown with China, Russia and India significantly increasing their imports of our dairy products.” He said the county’s dairy industry “is in far better shape than it was in 2013.”

“Even though we’ve had a good spring it’s still wait and see,” said Hamm. “But there’s no dark cloud overhead at this time, for the first time in a long time.”