San Joaquin Farm Bureau Federation

By Craig W. Anderson

California dairy farmers have had to deal with price fluctuations for years while dealing with challenges with labor, water, feed and regulations. Photo by Goff Photography

San Joaquin County dairies face a number of issues and, said Manteca dairyman Raymond Quaresma, "Dairy farmers have to pay attention to what's happening such as disease, labor, prices and more. It's hard to invest without a green light. In dairy, an old rule applies: keep costs down and your head up and stay involved."

And there is a lot to stay involved with, including the eminent official arrival of California's Federal Milk Marketing Order (FMMO) in November. But, what other important concerns are dairy farmers considering at the mid-point of 2018?

"Dairy is an extremely important industry to San Joaquin County," said SJFB Executive Director Bruce Blodgett. "And Farm Bureau hopes it stays that way as one of the top four commodities in value produced in the county."

Blodgett went on to say, "Some dairies have gone out of business and the industry grows and contracts at the same time but the cows are still here." With the upcoming implementation of California's Federal Milk Marketing Order, Blodgett said, "The bottom line is: does it help dairy farmers who've had to deal with every regulation the state comes up with. This industry needs to catch a break from government."

Feed an important part of the equation
Lodi dairyman Jack Hamm said, "50 percent of our income goes to feed our cows and higher milk prices and higher feed prices coincide with each other. Feed prices potentially could go either way and the dairy industry has to adapt."

Milk Production
Being able to endure price fluctuations over the years has tested the mettle of dairy farmers who have also dealt with feed prices increasing and water and labor issues to name a few. In spite of the near constant challenges, milk production has increased in the West, according to a USDA National Agricultural Statistics reportwhich noted, "California's increased production was a bit of a surprise [as] the state had 1,700 fewer cows than last year." And in a recent Dairy Situation and Outlook podcast, economist Bob Cropp said, "Production per cow was very strong, so they had a 3.4 percent increase."

California's production per cow was up 80 pounds from February 2017 compared to an average increase of 24 pounds nationwide, the USDA's report said, adding that milk production is slowing in the Midwest and Northeast.

Products and Prices
Depending on location, it appears dairy products and prices are generally on an upswing and the international trade marketplace is doing good business and "Trade is a huge issue," said Hamm. "California's biggest trading partner for dairy products is China and with all of these trade issues out there being debated, the USA and China's trade policies could fall into place and this could be a decent year. On the other hand we could get into a real pissing contest with them regarding trade, this could become a real problem."

More prices
The Dairy Market News said international cheese buyers searching for favorable price spreads have aided movement of U.S. cheese into international markets. "The upsurge in higher international prices are boosting U.S. export demand." And the convoluted price/demand/international influence dance goes on, to the benefit of milk producers.

And just when the international marketplace seemed to be driving milk prices upward, economists at the University of Wisconsin predicted that while U.S. prices "showed some improvement [it's] going to be a long road to recovery, largely dependent on domestic milk production this summer."

Elements affecting milk prices nationally and internationally include rising milk production in the U.S. and Europe, relatively high stocks of dairy products and trade uncertainties. Whatever the cause, Hamm said, "2018 will be remembered for the way we priced our milk. But if there's a drought in the Midwest, all bets are off."

Water
It's a sure bet that water issues will continue as headline news as long as the California Water Fix, i.e., the Twin Tunnels that will siphon fresh water out of the Sac-Joaquin Delta and ship it to the Southern part of the Valley and to the rest of Southern California.
"The water situation remains ongoing and a threat to the Delta," said Hamm. "And whatever's going to happen the dairy industry will have to find a place in how to deal with the water situation."

Quaresma said, "Water, labor and feed are huge issues and the industry will have to cope with them for years to come."
Dairy farms once were plentiful in California, Quaresma said, "But now there are only 1,100 to 1,400 but we produce more milk that we did then. There has been a lot of struggle but the industry will usually find a way."

Labor
The big issue of labor becomes more intense with every growing season and since dairy's "growing" season is year-round the source of workers becomes a serious matter, as Hamm says, "Just keeping our crew at full capacity is a real challenge."

"This is a big issue, especially for big dairies for both inside and outside workers," Quaresma said. "The entry level workforce is just not coming. We, and the industry, are going to robot, going bigger with machines."

Western United Dairymen has implemented a program to, hopefully, encourage more people and families to enter into long-term employment with dairies, Lecheros Unidos de California! (LUC), an initiative designed to emphasize the advantages of working for dairy families in California.

"The goal of this program is to connect with the communities we serve and inform the dairy employees and their families on issues they care about," said Anja Raudabaugh, Western United Dairymen CEO.

A plethora of issues
Nationwide, dairy farmers can consider a seemingly unending range of legislation and regulation that affect them. Here are a few: U.S. dairy groups are concerned about preliminary information that Mexico is poised to place new restrictions on common cheese names such as "parmesan" and "feta" for products sold in Mexico; the U.S. dairy industry claims discriminatory policies and exorbitant tariffs have been levied against it by the North American Free Trade Agreement, but not against other U.S. agricultural commodities exported to Canada. On a positive note, the animal ag sector is encouraged about a bipartisan bill recently introduced in the House that would exempt livestock producers from reporting manure emissions.