Covering Ag since 1981. The faces, places, markets and issues of dairy and livestock production. Hard-hitting topics, market updates and inspirational stories from the notebook of a veteran ag journalist. Contributing reporter for Farmshine since 1987; Editor of former Livestock Reporter 1981-1998; Before that I milked cows. @Agmoos on Twitter, @AgmoosInsight on FB #MilkMarketMoos
HARRISBURG, Pa. – During the Pennsylvania Senate budget hearings in April, in a question-and-answer exchange with Senator David Argall, representing Berks and Schuylkill counties, Agriculture Secretary Russell Redding talked about advocating for trade agreements, pricing policies, dairy investment and nutrition in “the federal conversation.”
However, on the question of advocating to legalize whole milk choice in schools? Asked twice. Not answered.
In fact, the Secretary’s entire agriculture budget testimony included just one small paragraph about dairy — something Sen. Argall picked up on and questioned. He asked Redding what portion of overall Pennsylvania agriculture is represented by dairy, to which the Secretary replied “about 37%.”
When pushed on what the department is doing, Redding said: “I can tell you dairy is about 37% of my conversations — even though the testimony doesn’t reflect that.”
“We have made real progress in dairy and have been part of that conversation, but there is still more to do for dairy to remain viable and remain at 37%,” said Redding, citing the work of the Dairy Futures Commission, but few details.
Asked to look five to 10 years down the road, the Secretary said the dairy industry has had some “really incredible years in the last five and some incredibly bad years in the last five. It is always going to be sustainable,” he said, “but the question is: Are we going to have those good years to make up for the bad years?”
(It has been seven years since a truly good year was experienced by dairy producers.)
The Secretary pinned the hopes of the future for dairy in Pennsylvania on “getting new processing.”
Redding stated: “We can compete on the farm. We can compete as a state. But we have to compete at the marketplace too. I remain encouraged by what we’re doing, but we have to keep pressing to make sure we get the right state and federal policies.”
However, there is one federal policy at the core of fluid milk marketing that the Secretary evaded.
Sen. Argall pointed out the 2010 federal policy that removed whole milk from schools.
“Do you see a solution to that issue, and is that really a big part of the overall problem?” the Senator asked.
“I think it is certainly a contributor, and I hear it all the time about whole milk. But what I try to encourage the dairy industry is to look at where total dairy consumption is — the 1%, the 2%, the whole milk — and can you get more cheese, get more yogurt in, can you get more dairy products into that school diet,” Redding replied.
“I think that’s probably what we have to keep our eye on,” he continued. “It’s going to take all of that product mix for us to turn this trend around of just dairy consumption generally. It’s a complicated equation. All of us need to keep pressing on the Congress to do more, to keep our trade agreements in place, and I can tell you… we’ve had some difficult (trade) steps for the last several years.”
(The last several years saw record volumes of exports. Tom Vilsack, current U.S. Ag Secretary and former U.S. Dairy Export Council president wrote in a blog post that 2018 was “a banner year for dairy exporters.” We all recall what 2018 was like for dairy farmers.)
Sec. Redding also referenced the negative PPDs on milk checks as an issue. He stated that, “The price difference between Class III and IV has cost Pennsylvania dearly, so that’s also part of the federal conversation.”
Sen. Argall picked up on the Secretary’s mention of ‘federal conversation,’ asking a second time about whole milk in schools.
“Are you working with anyone across the country to try to repeal that portion of the (federal) act that has greatly reduced the number of students (allowed) to drink whole milk in the schools?” the Senator asked.
“We have not been engaged in repeal. We have been engaged in what I mentioned earlier, about making sure that the Dietary Guidelines include dairy, and they do continue the three a day,” said Redding. “We have continued to advocate for continued investment in dairy, making sure that we do the trade (exports), making sure we have the pricing pieces.”
The Secretary went on to say; “We are advocating at a lot of different levels for dairy on the nutrition side and also the dairy investment side.”
In regard to new processing, after years of discussion, two dairy bills were passed by the House in the 2019-20 session, only to die in the Senate Ag Committee. One was a dairy keystone opportunity zones bill and the other was a bill dealing with transparency and distribution of state-mandated over-order premiums. Both bills, sponsored by Rep. John Lawrence had passed unanimously or nearly unanimously in the House last session.
During a meeting last week of the Grassroots PA Dairy Advisory Committee, Berks County dairy farmer Nelson Troutman, a committee member, noted a dairy redevelopment project in his county that looked to be a sure thing, only to be dropped.
Meanwhile, Pennsylvania has dropped from fifth to seventh, and now eighth in the nation in dairy production.
“This has gone on as the dairy industry consolidates,” said Mike Eby, a Lancaster County farmer, member of the grassroots committee, chairman of National Dairy Producers Organization and executive director of Organization for Competitive Markets.
“The Secretary mentions the momentum we have from fluid milk consumption rising recently. Increased sales of whole milk are a key to that increase. Legalizing whole milk choice in schools makes sense for children and dairy farmers,” Eby explained.
“Everything is political in this. Why do we not have whole milk in schools? People have no clue how important this is for dairy farmers. We have already lost a generation of milk drinkers,” notes Dale Hoffman, a Potter County dairy producer and member of the grassroots committee having worked on this issue for several years.
Even the Pennsylvania Dairy Futures Commission, which was referenced by Sec. Redding in his comment about “making progress,” addressed the issue of whole milk in schools.
The Commission was established by the state assembly in 2019 and issued its lengthy report in Aug. 2020 on a broad range of dairy issues. In one area of the report, the Commission made recommendations to improve the school milk experience, specifically stating: “Federal school milk program standards should allow the flexibility to offer a choice in flavored and unflavored milk, including whole milk.”
While several key state lawmakers report they are looking for an opening to do something on this at the state level, Secretary Redding evades the question, even changing the subject when asked about whether he is advocating for this in the federal conversation.
Instead, the Secretary responded by saying the Department advocates in the federal conversation for trade agreements, pricing pieces, and on the nutrition side being satisfied to have the ‘3-a-day’ in the school diet.
Here are a few questions Pennsylvania dairy producers may want to ask Pa. Ag Secretary Redding, by contacting the Pa. Department of Agriculture at 717-787-4737.
— Why does the Secretary advocate for ‘trade’ while completely sidestepping the question about advocating for whole milk choice in schools?
— Will the Dept. of Agriculture advocate for the health of children and the Commonwealth’s ag community by advocating for the bipartisan efforts to bring the choice of whole milk back to schools?
— In the budget hearing, Sec. Redding again identified the need for more processing in Pennsylvania. With properties up for redevelopment over the past few years in the heart of dairy areas, what is being done to encourage redevelopment projects for dairy processing?
— Given at least one such project was underway and then abandoned, what are the influences and obstacles?
By Sherry Bunting, published weekly in Farmshine Newspaper
Cutting through consumer confusion
Consumers and producers of food and beverages — anything in the protein market — are going to see a disruptor explosion of new products. As I look through the food-related publications coming across my desk and into my email inbox — Culinology, Progressive Grocer, Food Navigator, Meat + Poultry, Dairy Foods, Food and Beverage, and the list goes on — the sudden onslaught of animal-free cellular agriculture, portrayed as dairy and meat without the animals, is stunning.
Even Facebook pop-up ads push Nick’s ice cream every day in my Facebook ‘newsfeed’ — with the tagline ‘dairy without the cow’ courtesy of Perfect Day Foods.
They use ‘climate’ to generate interest from companies wanting to reduce a carbon footprint by incorporating the excrement of genetically-altered yeast to replace a portion of real dairy protein in the dairy manufacturing space. It’s an easy swap, Perfect Day founders say, and according to the USDA Bio-engineered labeling regulations that became official last January, the stuff doesn’t have to be labeled BE because the genetically-altered yeast are not being consumed — just their excrement harvested from the fermentation vats.
“We ran the numbers, and if we partnered with the dairy industry to use Perfect Day protein in just 5% of their products, we’d save 12.3 million metric tons of greenhouse-gas emissions – equivalent to the carbon emitted from every single car registered in the city of Los Angeles,” says Nicki Briggs, Perfect Day’s vice president of corporate communications in a Berkeleyside online interview on the third day of June 2021. Ms. Briggs was formerly an employee of Chobani.
There are other dairy turncoats and straddlers moving between real and fake and seeking to blend them to some sort of climate / carbon standard. But data like that of Ms. Briggs doesn’t tell the whole cow story. Just like the data Impossible Foods is using to coax schools to replace 50% of their beef with Impossible Burger — now that it has the coveted USDA Child Nutrition Label — are figures that do not consider the entire cycle of cattle for a net figure on GHG.
It is maddening. This onslaught of bright packaging with new and clever names and claims populating the meat, dairy and seafood offerings — starting with plant-based concentrates and chemical combinations and leading to cells growing in bioreactors and yeast excreting protein in fermentation vats. Big Tech is the new wannabe farmer, and Big Ag, Big Food, Big Finance, and Big ole Uncle Sam are in for the deal.
Consumers will begin to feel like they are stuck inside a pinball machine, or to be more current with my analogy, a warp-speed version of a video game bombarded by bangs, pops and whistles.
That’s what Gen Z wants, they all say. And yet, a survey by the Hartman Group recently showed Gen Z — just like the Millennials before them — are most comfortable with the food choices they grew up with, but unlike Millennials who still had a preference for local, seasonal and farm-to-table, Gen Z-ers have a preference for fast food and foods with familiar tastes.
We’ve got some work to do to navigate all of this with a straight forward message that cuts through the climate half-truths and outright lies about cows, that penetrates the government dietary restrictions based on outdated and incomplete reviews of the scientific literature on dietary fat.
We’ve got our work cut out for us to keep educating others, giving them the facts that are being ignored and bullied out of the national, even global, conversation about food as the industry grows its margins for investors through consumer confusion at the expense of consumer’s knowing what’s real.
USDA joins global school lunch deal
USDA can’t even get U.S. school lunch right, but now plans to lead America’s joining into a “global coalition” called the “School Meals: Nutrition, Health and Education for Every Child.” There’s also a bill before Congress seeking to make three meals and a snack universal for all children through school.
As for the global coalition, this is right up Secretary Vilsack’s alley. In a press release Wed., June 23 about USDA’s leadership in joining the global deal, Vilsack talked about “powerful incentives” and “building resilience to future shocks” by focusing on improving the nutrition, health, and education of vulnerable children and adolescents worldwide. Sounds good, right? Who can argue with words like that? But like everything else out of USDA these days, where’s the details? And what’s it really mean?
The global coalition is centered around education and school meals and will launch at the United Nations’ Food Systems Summit in September. Like the 30 x 30, the Net Zero initiatives, and everything else coming through the pipeline from World Economic Forum, the goal line for this, too, is 2030 — making nutritious meals available for all children by 2030, with other benchmarks set for 2022.
Who can argue with nutritious meals for all children? There’s not a single person who doesn’t want all children to have nutritious meals. The problem is this: Who defines what is nutritious? How will the systemization child-feeding change the future of food and agriculture?
“We look forward to bringing our expertise to bear, expanding our reach, and benefiting millions more vulnerable children by partnering with the World Food Program and other like-minded countries as part of this important coalition,” said Vilsack in Wednesday’s press release.
Okay, let’s hear those details.
Will USDA do dairy?
In a June 15 press release about previously authorized aid for dairy, USDA announced $580 million for Dairy Margin Coverage base changes and $400 million for Dairy Donation Program would be implemented within the next 60 days, but we’ve yet to see the details.
As part of that news release, USDA also noted that, “Additional Pandemic Assistance for Producers (PAP) payments would be targeted to dairy farmers who have demonstrated losses not covered by previous payments.” No details on that either.
However, on the same day of that press release — June 15 — Senator Patrick Leahy, Chairman of the Senate Appropriations Committee, asked USDA Secretary Tom Vilsack about delivering urgently needed relief to dairy farmers. Vilsack replied to say that USDA was announcing that day (again without details).
In the exchange between Vilsack and Leahy during a Senate hearing, Vilsack said: “We are creating a program to help reduce the differential that occurred between Class I and Class III milk pricing because of the disproportionate number of purchases of cheese during the Food Box effort. That distorted the market, and it caused a lot of harm to smaller producers. We’re putting resources in to reimburse those producers for some of the loss they incurred.”
Those ‘differential’ discrepancies have not been outlined yet by USDA, but here are several manifestations Farmshine and other publications have been documenting:
As much as $3.5 billion was potentially withheld or represented as inequitable transmission of milk value when massive volumes of Class III milk were withdrawn from FMMOs, as further reflected in severely negative PPDs. This would be a net loss after months of positive PPDs are applied; however, even positive PPDs in some months were smaller than normal.
Both 1 and 2 contributed to the inequitable transmission of Class III value to many producer milk checks
These losses affected the performance of purchased risk management tools, meaning that a change in Class I pricing that was supposed to help dairy processors manage their risk, had the resulting effect of making it more difficult or impossible for dairy farmers to manage their risk — during a time when they needed it most.
Conundrum: U.S. milk production up4.6% in May
But here is the conundrum in regard to USDA dragging its feet on details for ‘dairy aid’: May milk production nationwide was up a whopping 4.6% over year ago — so says the USDA report released June 22. April production was up over 3% vs. year ago.
USDA looks at this as though dairy producers are doing so well that they are expanding their herds. In fact, in May, there were 145,000 more milk cows in the U.S. than a year ago. Could this be another sign of the inequitable transfer of value in the milk pricing formulas?
More insight on the production report next week’s Market Moos.
July Class Iadvance $17.42
The July advance Class I base price, or ‘mover,’ was announced Wednesday (June 23) at $17.42. This is 87 cents lower than June’s Class I base price and 86 cents higher than a year ago. The July 2021 Class I base price at $17.42 — using the current formula of average plus 74 cents — is 34 cents higher than it would have been if figured using the previous ‘higher of’ method at $17.08.
July 2021 marks the first time in 12 straight months that the new calculation method resulted in a higher Class I base price than the old method. However, there’s a lot of ground to make up, considering that for 16 of the 27 months since the new method was implemented, the difference between the new ‘average plus’ and the old ‘higher of’ was lower and only 11 months were higher.
In fact, the Class I base value losses for 16 months averages to $3.28 per hundredweight while the value gains (including upcoming July 2021) for 11 months averages to just 39 cents.
Class III/IV milk futures plunge
Class III and IV milk futures were all lower across the board this week. The only green in the sea of red, was the Class III current month gained a dime heading into the last week of June contract trading, but the Class III July contract lost 15 cents and August plunged by $1.00 below week ago, with the rest of the board on Class III milk ranging 10 to 50 cents lower. On the Class IV board, the losses were more evenly spread ranging 20 to 50 cents lower across all 12 months.
As all four dairy commodities trended lower on the CME spot market this week, the 12-month futures average lost 29 cents on both classes, equally, by midweek, so the spread between Class III and IV 12-month future contract averages remained exactly at 67 cents on Wednesday, June 23 — right where it was a week ago and still well below the $1.48 mark.
On Wed., June 23, Class III milk futures for the next 12 months averaged $17.67, down 29 cents from the previous Wednesday’s average, the 7th straight week the 12-month Class III futures price average was lower than the prior week. Class IV contracts averaged $17.00 — down 29 cents from the 12-month average on the previous Wednesday.
Dairy commodities all lower
Butter slid lower almost daily, on the CME daily spot market. By Wed., June 23, the price was pegged at $1.73/lb — down 7 cents from the previous Wednesday with 6 loads trading.
Grade A nonfat dry milk (NFDM) also slipped this week. On Wed., June 23, the CME spot market price was pegged at $1.2575/lb, a penny lower than a week ago with a single load trading.
Cheddar trade plunged lower on the CME, then firmed up a penny or two at midweek. Barrels took the brunt of the decline and by Wed., June 23, both the 40-lb block Cheddar and 500-lb barrel cheese were pegged at $1.49/lb on the spot market with 2 loads of blocks and a single load of barrels changing hands. This was a net 3-cent loss for the week on blocks and a 15-cent loss on barrels.
Whey price was firm on the CME spot market, pegged at 59 1/2 cents with zero loads trading.
So says Rohan Oza, an American businessman, investor, and marketing expert behind several large brands. He was with Coca Cola until 2002 and in the past 19 years has the distinction of being a brand mastermind behind Vitaminwater, Smartwater and Bai beverages, among others, and he has been a recurring guest on Shark Tank, a television show where entrepreneurs pitch their fledgling businesses to several investor “sharks” in hopes of getting an investment deal for a percentage of equity in their businesses.
In an archived episode of Shark Tank from 2018 when a husband and wife pitched their apple cider drink, known today as Poppi, Oza had other pearls of wisdom to share about the beverage industry.
He said the largest companies aren’t creating the drinks, they’ve perfected the manufacturing and distribution. Instead, they rely on entrepreneurs to have the vision to bring a new beverage to market.
Packaging and marketing matter. Information is power. Flavor is king.
Oza said consumers want beverages they can feel good about.
That’s what has been missing over four decades in the milk industry, especially the past decade since 2010 when fluid milk sales took the sharpest nosedive. This has stabilized a bit in the past two years as whole milk sales rose 1% and 2.6% in 2019 and 2020, respectively, providing a bit of a safety net to overall fluid milk losses.
There is an innovative and entrepreneurial trend in bringing to market new dairy-based beverages that contain dairy protein, or ultrafiltered low-fat milk as an ingredient. However, MILK, itself, as a beverage, lost its power to make people feel good because people were not empowered with good information, and children were robbed of opportunities to choose the good milk — whole milk — at schools and daycares.
What milk itself lost as a beverage was the power to make people feel good about drinking it — because people lost touch with what they were getting from milk, what whole milk actually does for them. One big reason? GenZ-ers (and to some degree millennials) have grown up drinking (or tossing) the low-fat or fat-free milk as their only choices in school, and then found themselves searching for something else to drink in the a la carte line.
That’s changing. Research, studies and scientific papers keep coming forward, identifying the benefits of whole milk. When people try it, a common reaction is, “this is the good milk.”
Yes, whole milk is winning customers. Efforts by dairy producers — at large and through organizations like 97 Milk — have been focusing lately on giving the public the information they need about whole milk to make informed choices. It’s about giving people the opportunity to know what whole milk can do for them, and we hope that bills in the United States Congress as well as conversations with the Pennsylvania State Senate bear fruit in the ongoing effort to legalize the choice of whole milk in schools… so future generations can feel good about milk too.
We notice that if USDA can give the coveted Child Nutrition label to the Impossible Burger — a fake meat product with more saturated fat (8 grams) in a 4 ounce patty than whole milk (5 grams) in an 8 ounce glass and more sodium (370 mg for Impossible vs. 120 for whole milk) and more calories, then surely USDA can loosen its grip on the fat content of the milk choices for children in schools. Incidentally, the USDA approval of Impossible for school lunch is really a head scratcher next to 85/15 real beef because the real thing has less saturated fat, less sodium, and fewer calories.
Yes, USDA qualified Impossible Burger for reimbursement with taxpayer funds in the National School Lunch Program, but still outright forbids the choice of whole milk in schools.
USDA and Congress are moving toward universal free lunch and breakfast (even supper and snack) for all kids. FDA is in the procedural phase of developing a “healthy” symbol for foods that “earn” it — according to whom? Dietary Guidelines! The trend in government is toward giving consumers less information on a label, not more.
This is why milk education and freedom of choice are more important than ever. Even the Hartman Group young consumer insights cited at PepsiCo’s K-12 foodservice website state that GenZ-ers show a preference for ‘fast food’ and ‘familiar tastes.’ Millennials and GenZ-ers both show high preference for foods they grew up with.
Kids need to grow up able to choose the good milk — whole milk — not have that choice forbidden. That’s why the milk kids get to choose at school where they get 1, 2, even 3 meals a day is so important.
Give them the choice of the good milk that is good for them, and the power of information, and they’ll remember feeling good about milk.
Happy June Dairy Month! A big thanks to dairy farmers for all they do.
WASHINGTON — Long on transformation framework and short on meaningful details, USDA announced this week (June 8) that it will invest more than $4 billion to strengthen critical supply chains. This follows the June 4 announcement of over $1 billion for ‘healthy food’ and security infrastructure.
What these words mean is still the subject of USDA gathering input through public comments due June 21 and a series of stakeholder meetings. The first one was a 30-minute webinar attended virtually by over 3000 people representing food and agriculture organizations the day after the funding announcement (June 9).
These announcements are billed by Agriculture Secretary Tom Vilsack as part of the “Build Back Better” initiative to be funded by the Consolidated Appropriations Act of 2021 (passed by the 116th Congress and signed by President Trump in January) and the American Rescue Plan Act (passed by the 117th Congress and signed by President Biden in March.)
Vilsack will co-chair, along with Secretaries of Commerce and Transportation, the Biden administration’s new Supply Chain Disruptions Task Force for a “whole of government response.”
According to USDA, its investment announcements will include a mix of grants, loans and “innovative financing mechanisms” for the food production, processing, distribution and market access priorities that will “tackle the climate crisis and help communities that have been left behind.”
It has been six months since CAA funds were appropriated and three months since ARPA funding was authorized. These relief and support funds passed by two sessions of Congress and signed by two Presidents are now sitting in wait of a task force establishing supply chain transformation priorities after public comments and industry stakeholder meetings.
Meanwhile, dairy producers and other sectors of agriculture are still waiting for details about relief that was to some degree spelled out in the prior congressional language of these Acts.
This includes waiting for USDA’s implementation of what was supposed to be an expanded base option for dairy producers in the Dairy Margin Coverage program; waiting for participation details for the Dairy Donation Program that is supposed to be retroactive; and waiting for a response from USDA to the bipartisan request by Senators seeking relief payments for dairy farmers for the first half of 2021 retroactive to January 1.
In the detailed request for public comment, USDA is making it clear that the CAA and ARPA funds will be spent on transformation, not relief. Guiding the transformation is President Biden’s February Executive Order 14017 America’s Supply Chain.
USDA says it is interested in comments spanning everything from animal, soil, plant and climate health, traceability, monitoring and technologies to agricultural inputs, energy, markets, storage, distribution, and digital security.
“We always knew this, but the pandemic really highlighted it for the rest of the country: Our food system is brittle, and any shock to it can have devastating effects down the chain. Now is the time — not to go back to normal — but to build a new normal,” said Mae Wu, Deputy Under Secretary of Marketing and Regulatory Programs during the first stakeholder webinar this week.
“Before we dealt with the pandemic, we had a food system in which nearly 90% of our farms did not generate the majority of the income for the farm families operating those farms. We had a food and farm system in which soil erosion was occurring at 10 times the rate that soil was being replenished,” said Vilsack as the first stakeholder webinar kicked off.
“We all know we have a substantial number of waterways that are currently impaired, and we also appreciate the fact that we had a food system that was prepared to address climate change but not yet fully embracing the opportunity side of that claim,” Vilsack continued. “So we had a system that needed help. We had a system that also was seeing rapid consolidation and a lack of competition. Then Covid hit and by virtue of Covid we learned that what we thought was a resilient system, really wasn’t resilient at all and had a difficult time shifting from food going into foodservice to going into food assistance.”
Citing the President’s February Executive Order, Vilsack said the focus of the new task force, he co-chairs, is to strengthen supply chains by “beginning the process of transformation.”
In the Federal Register document, USDA states: “(Our) initial thinking includes, but is not limited to, funding, through a combination of grants or loans, for needs such as: supply chain retooling to address multiple needs at once (i.e., achieving both climate benefits and addressing supply gaps or vulnerabilities concurrently), expansion of local and regional food capacity and distribution (e.g., hubs, cooperative development, cold chain improvements, infrastructure), development of local and regional meat and poultry processing and seafood processing and distribution, and food supply chain capacity, building for socially disadvantaged communities.”
In one subsection, USDA notes that it is interested in comments on “the availability of substitutes or alternative sources for critical goods and materials…” For example, USDA says it “encourages commenters to consider agricultural products that could be domestically grown but are not practically available today for various reasons, and to describe whether and how such products (or their alternatives) could be made available through supply chain resilience efforts.”
To-date, there are 297 public comments on the docket. A quick look through 55 that are viewable presently includes many food banks and feeding programs, some mentioning dairy, but few comments are logged from dairy organizations to-date.
For its part, the National Farmers Organization attached a document and stated: “The farmer dumping milk needs a market today, not in the long run. The person standing in a food line needs something to eat today, not in the long run. We need to look more carefully at what is going on if we are to understand, and effectively address, the dilemma of too much milk on one end of the supply chain and not enough dairy products on the other.”
Vilsack (who worked as a dairy checkoff executive for the four years between being Ag Secretary in the Obama and Biden administrations) also referenced milk dumping, saying the dairy industry had bottlenecks as foodservice demand shut down while retail demand for consumer-packaged goods skyrocketed.
In fact, in a recent Fortune magazine interview, Vilsack said the cost of $1.50 per gallon to put milk in a jug created a disincentive to donate excess milk instead of dumping it.
However, in reality, there was more to it than that in parts of the country where Governors brought the curtain down on the economy to strict degrees of people ordered to stay home, while also scolding them in public service announcements for buying too much food. Retailers hit the brakes by putting purchase limits on milk, butter and other dairy products, just as processors loaded up the silos with milk for the retail surge, only to find their retail orders came to a screeching halt as the purchase limits contributed to backing milk up from plant storage into farm pipelines faster than donation efforts could get organized or find facilities to bottle or process.
Facility issues were also cited at the time, in terms of separated cream filling storage silos with nowhere to go as butter capacity was busy switching to pull bulk butter from storage and convert it to print butter, and butter imports skyrocketed. It took a while to unwind the institutional governance of low-fat milk into making more whole milk available as consumers could choose. And it took a while for governments to allow institutions (like schools) to temporarily give whole milk. The result, in the Northeast especially, was a huge volume of dumped milk.
Among the viewable comments to USDA at the Federal Register, so far, are groups citing industry concentration and consolidation.
In its comments, the Montana Cattlemen’s Association pointed out that Secretary Vilsack, along with then Attorney General Eric Holder, held concentration and antitrust listening sessions across the U.S. during the Obama administration, and nothing ever came of it. One of those USDA / DOJ national listening sessions was on dairy, specifically, in Madison, Wisconsin in 2009.
The National Grocers Association echoed these concerns, detailing the way a few global companies already control food retail, foodservice, food processing and distribution, and how this affects farmers and ranchers, independent retailers and restaurants, and thereby affects regional food supply chains, and ultimately consumers and America’s security.
Both the cattlemen and grocers call for specific actions that would increase competition, regional processing and market access and thereby make the U.S. food system more secure and critical supply chains more resilient.
During the stakeholder webinar, Vilsack addressed a question on market competition by saying USDA will “first make sure the markets that do exist are as open and transparent as possible” by looking at the current rules along with other federal agencies and taking any steps to rectify. But he also pointed to developing new markets.
At the other end of the public comment spectrum, groups like the Good Food Institute, a lobbying organization for plant-based and cell-cultured replacements for animal-sourced foods, paint a picture of how their streamlined lab-style production through pop-up bioreactors and fermentation vats in rural, suburban and urban areas can be built to provide supply chain resiliency and food security. GFI also claims that their models would be a climate mitigation strategy.
GFI addressed each of the USDA bullet points on supply chain resilience, climate action and new market opportunities to describe why the CAA and ARPA funds should be used for research and infrastructure that shifts away from animal agriculture to plant-based and cell-cultured through digital and genetic technologies that are already within the USDA Agricultural Research Service wheelhouse.
GFI lays out their description of how recombinant proteins and GMOs, along with the storability of frozen cells and dry plant-based powders, can be turned into food quickly, and in exact amounts needed, and can be grown and manufactured anywhere — without waiting for animals to grow — leaving land available for so-called ‘climate strategies’ and biodiversity.
But, they say, research and infrastructure are needed to make their science-fiction novel come true. This, despite the huge investments of tech industry billionaires in these replacement technologies, and the way the largest meat and dairy processors are diversifying, to brand – and blend – such alternatives to look, taste, and feel like the real thing.
Interestingly, the food economy is, right now, dealing with supply chain disruptions and inflationary price hikes on animal-sourced products from eggs and milk to bacon, beef, and chicken wings. The price squeeze is having a big impact on independent grocers, independent restaurants, and consumers. At the same time, prices paid to dairy and livestock producers are turning lower just as farmers and ranchers were hoping to get back on their collective feet.
That paradox is not sustainable nor resilient for producers or consumers, but growing cells in bioreactors or harvesting yeast-excrement from fermentation vats — instead of animals on farms —simply gives even more control of food to even fewer entities that would control the genetic alterations that make it scientifically possible.
USDA states in its press release that it wants to address competition and small and medium sized processing capacity and that it wants fairness, competition, equity, and access for producers and consumers, while accomplishing climate mitigation at the same time.
The question is: What do these buzz words actually mean? The June 9 stakeholder webinar gave a glimpse.
Vilsack explained that USDA is putting the series of funding announcements into a series of four supply chain ‘buckets’: production, processing, distribution / aggregation and markets / consumers.
He said USDA will begin by providing assistance for beginning farmers and socially disadvantaged farmers, including the debt relief for farmers of color.
“We’ll look for ways to provide assistance for those who work on the farms and those who work in the processing facilities. We’ll look for how we can encourage those transitioning from conventional to organic agriculture if they choose to do so,” said Vilsack. “All of this will be designed to create greater resilience in terms of the number of people available to farm and the types of farming systems that we have. You’ll also see investments in urban agriculture.”
Vilsack said on the food processing side, USDA is “very focused” on ways to create more options for farmers by “shoring up and expanding” existing small and medium size processing to create more markets for farmers.
He highlighted “food hubs” in the distribution bucket and “access to healthy foods” in the consumer bucket.
Answering a question later about how government grant-writing is beyond the scope of most farms, especially small farms, Vilsack said: “One way for folks to get expertise and capacity is to join with others who are similarly situated to form a food hub to aggregate products. There is money for food hubs in this.”
Calling the Dairy Donation Program an investment in the production / producer bucket, and referencing it four times in the webinar, Vilsack said the DDP “will enable producers to more quickly shift in the event of a disruption from foodservice or retail that might not be available for whatever reason into food assistance mode.”
He identified the need to “significantly invest in storage and refrigeration infrastructure to accept significant quantities of food to be stored for a period of time and distributed over a period of time. Right now, we are not equipped to handle a great influx of meat, and produce all at one time, and as a result, animals were destroyed and milk was dumped,” he said.
Vilsack said another way to look at USDA’s incremental roll out of the CAA and ARPA funds is that it reflects “how we are going about the transformation of our food and farm system. We need to continue to invest to make sure there are multiple ways for people to get into the farming business and to stay in business.”
To be profitable, he said, “means we need to develop more new and better markets to be invested in. We want to make sure it is sustainable, circular, regenerative in its approach. We want to make sure it is equitable in its application so that people of all races, ethnicities, gender and so forth are able to access the programs completely at USDA,” said Vilsack.
For producers, allied industry, consumers and organizations, now is the time to visit the USDA Federal Register Docket at https://www.regulations.gov/document/AMS-TM-21-0034-0001 to read the guidelines for commenting and submit a “Supply Chain Comment” referencing Docket AMS-TM-21-0034-001 by June 21, 2021.
Comments may also be sent to Dr. Melissa R. Bailey, Agricultural Marketing Service, USDA, Room 2055-S, STOP 0201, 1400 Independence Avenue SW, Washington, DC 20250-0201. For further information about how to comment and the guidelines for commenting, contact Dr. Bailey by phone at 202-205-9356 or email email@example.com
(Author’s Note: The pandemic revealed that the institutional feeding models replete with anti-fat rules based on un-scientific Dietary Guidelines are part of the supply chain disruption problem. Governmental and non-governmental organizations continue to try to systemize food distribution into dietary lanes that don’t reflect the science or consumer attitudes about healthy fat and animal protein. Now ‘climate’ is being used as a potential animal-dilution driver. When someone wants to give families a gallon of whole milk (instead of fat-free or low-fat) when they pick up the school lunches for their children during a pandemic, the last thing any governmental or non-governmental organization should be telling them is “you can’t do that, it’s against the rules,” or pushing them into an adjacent parking lot so they aren’t “next to” the institutionally rule-inundated food. That is just one aspect I plan to write about in commenting to the USDA. Loosen those dietary restraints that give all the power to the global consolidators in foodservice, processing and distribution. Let free-enterprise and good will work for good.)
‘Grant’ will start ‘measuring’ air, soil arounddairy cropping practices in nine U.S. regions
This is the third and final part of the multi-part series about DMI’s Net Zero Initiative and Dairy Scale for Good implementation. Parts one and two in Farmshine covered some of the 12- to 13-year history, the ‘scale’ approach for getting the industry to net zero faster, and the impact of manure processing, digester models, and renewable energy policies and technologies in the NZI scheme.
By Sherry Bunting, Farmshine, May 7, 2021
ROSEMONT, Ill. — How dairy feed and forage are produced are the “biggest hammers” that are “ripe for innovation in dairy emissions reduction,” said Caleb Harper, executive director of DMI’s Net Zero Initiative (NZI) Dairy Scale for Good (DS4G) implementation.
He and Dr. Mike McCloskey, chairman of the DMI Innovation Center for U.S. Dairy’s Sustainability Initiative, presented information about the Net Zero Initiative (NZI) and ‘implementation on the farm’ during last month’s Balchem real science lecture series.
Much of the presentation used the ‘spreadsheet exercise’ of the World Wildlife Fund (WWF) white paper laying out the “business case for getting to net zero faster”, based on a 3500 cow dairy (a Fair Oaks site with 3000 milking and 500 dry). In fact, Harper’s DS4G work will exclusively pilot and model on dairies about this size.
After explaining that the DS4G goal is to make maximum impact on the entire supply of milk in the short-term using “the consolidation going on in the industry” and the idea of “scale to drive down the risk … and spread the benefit across the industry,” Harper dug into each area and showed how the models tend to work best when multiple areas are combined.
Harper said no till farming, cover crops, innovative crop rotations, renewable fertilizer, precision agriculture all fall into this feed production area of emissions.
“It all boils down to measuring the emissions,” he said, showing a slide of boxes in potato fields in Idaho, where USDA ARS has a project that monitors the air around the crop to show the emissions from a field and mitigation that can be attributed to cropping practices. He said DMI has a grant to do the same thing with dairy cropping practices beginning this year.
The key, according to Harper, is to show that the emissions are being reduced. In addition to boxes in fields measuring emissions around crops, Harper said soil core samples will be taken to determine carbon sequestration of dairy feed cropping strategies.
“This is open science, (meaning still in the proving stage),” said Harper, known for his Open Ag science project growing food in computer controlled boxes at M.I.T. That project ended amid controversy last April a few weeks before Harper was hired by DMI to lead its NZI DS4G.
During the real science lecture in April, Harper said DMI has a grant program starting this year, along with Foundation for Food and Agriculture, to do this type of field box emissions monitoring and soil core sequestration monitoring across nine different U.S. geographies to test conservation tillage practices in terms of carbon emissions and sequestration over the next five years.
Harper said he sees this area as “huge” for innovation and for generating carbon credits that are valued by markets and for reducing one-third of dairy’s ‘field to farm’ emissions while improving soil health and the ability of soil to hold water.
He projects the bottom line potential annual farm revenue on this at $70,000, saying the industry will have to combine this with other strategies, like manure processing, renewable energy generation and such to get the combination of environmental impact toward ‘net-zero’ GHG and the economic revenue stream impact for the dairies.
“Some strategies are more impactful than others,” he said about the WWF models.
In this diagram, which was also shared by DMI leaders in a Pa. Dairy Summit breakout session about what dairy checkoff has done for producers lately, Harper illustrated how WWF models show farms will have to combine areas to merge emissions reduction potential with revenue potential. This shows feed production represents 26% of field to farm emissions reduction potential but just 3% of farm revenue potential; Cow care encompassing feed additives, efficient rations and genetics represents 33% of emissions reduction potential and just 5% of farm revenue potential; but conversely, renewable energy production on the farm represents just 5% of emissions reduction potential and 23% of farm revenue potential.
The ‘hammers’ on the emissions side do not line up with hammers on the revenue side, and the question remains, where will individual dairy farms sit in terms of decision-making as supply chains scale these combinations.
Yet again, the question arises around selling or monetizing the carbon credits generated by the farm once these cropping practices are “measured” and added to models. How does the sale of these credits, or bundling with sales of milk, then change the carbon profile of the farm selling the credits vs. the buyer in the dairy supply chain. Again, as mentioned in Part II on manure technologies and energy generation, this is an important detail that the WWF, NZI and DS4G modeling has not dealt with or worked through.
So, while discussions have already progressed to model how carbon credits and milk could be bundled to milk buyers, with pilots funded by supply chain grants to model how scale can spread impact over the industry and the entire milk supply, the holes in the value proposition are more obvious in this area where farms are already doing great things for land, air and water, by keeping something green and growing on the land as part of dairy feed production: How do farmers get credit for what they are already doing?
Harper also said “amazing things” are happening in the feed additive aspect of reducing enteric emissions, but he acknowledged “it’s early” on the carbon credit side for that.
This area of feed production and feed additives in the DS4G ‘value proposition’ has been spreadsheet-modeled to account for one-third of dairy’s field to farm CO2 equivalent emissions, and yet, at the same time, carbon credits based on this area are still in the research and measurement stage, needing documentation to be ‘monetized.’
Harper cited an example paper from University of California-Davis showing significant reductions in enteric emissions in beef cattle with certain feed additives.
As this work in the area of feed production and feed additives continues, said Harper: “Continuing to optimize rations (for production efficiency) remains important, while feed additives and selecting genetics for lower emissions will become important.”
The WWF Markets Institute released the dairy business ‘case study’ for scaling to net-zero faster on Jan. 27, 2021. A mid-February Farmshinereport revealed the WWF mathematical error that had inflated the magnitude of CO2 equivalent pounds contributed by all U.S. milk production. WWF on Feb. 25, 2021, corrected its baseline to show the much smaller collective impact of 268 billion pounds CO2 equivalent (not 2.3 trillion pounds).
Both Harper and McCloskey serve on the WWF Market Institute’s Thought Leadership Group.
DMI confirms that dairy checkoff had a memorandum of understanding (MOU) with WWF from the inception of the Innovation Center for U.S. Dairy around 2008 through 2019. McCloskey has chaired the Innovation Center’s Sustainability Initiative since 2008.
In 2008-09, two MOU’s were signed between DMI and USDA via former U.S. Ag Secretary Tom Vilsack — the Sustainability Initiative and GENYOUth. At the end of the Obama administration, Sec. Vilsack was hired by DMI dairy checkoff to serve as president and CEO of USDEC 2016-2021, and earlier this year he became Secretary of Agriculture again after President Joe Biden said Vilsack ‘practically wrote his rural platform and now he can implement it.”
Aside from both serving on the WWF Market Institute’s Thought Leadership Group, McCloskey and Harper have another connection. According to the Sept. 2019 Chronicles of Higher Education, Caleb Harper’s father, Steve Harper, was a grocery executive. He was senior vice-president of marketing and fresh product development, procurement and merchandising from 1993 to 2010 for the H-E-B supermarket chain based in Texas. According to a 2020 presentation by Sue McCloskey, H-E-B was their first partner in the fluid milk business in the 1990s, followed by Kroger. According to the Houston Chronicle, the McCloskeys also partnered with H-E-B in 1996 during Steve Harper’s tenure to produce Mootopia ultrafiltered milk, an H-E-B brand. This was the pre-cursor to fairlife, the ultrafiltered milk beverage line in which DMI invested tens of millions of dollars in checkoff funds through the Innovation Center for U.S. Dairy partnering with the McCloskeys, Select, and Coca Cola.
Author’s Note: This is part two in a multi-part series about DMI’s Net Zero Initiative and Dairy Scale for Good implementation. Part one previously covered some of the 12- to 13-year history as well as the ‘scale’ approach for getting the industry to net zero faster.
By Sherry Bunting, Farmshine, April 30, 2021
ROSEMONT, Ill. — The official launch of DMI’s Net Zero Initiative (NZI) in October 2020, and World Wildlife Fund’s (WWF) dairy net zero case study published in January 2021 (and corrected in February for a math error that overestimated the industry’s total CO2 equivalent emissions) are two of the mile-markers in farm visits and partnership development since Caleb Harper was hired by checkoff in May 2020 as executive director of Dairy Scale for Good (DS4G).
In those 11 months, Harper reports visiting 100 dairy farms representing over 500,000 cows in 17 states, processing 350 manure samples, and gathering over 8000 ‘data points.’
Earlier this month, Harper, along with Dr. Mike McCloskey, presented a “value proposition” for the dairy industry during a Balchem real science lecture about ‘net zero carbon emissions implementation on the farm.’
McCloskey of Fair Oaks Farm, Fairlife and Select Milk Producers has chaired the DMI Innovation Center for U.S. Dairy’s Sustainability Initiative since inception 12 to 13 years ago.
In short, DS4G pilots are setting up through “sponsorships” from large dairy-buying partners on large farms within their own supply chains. DMI’s former MOU sustainability partner, the WWF, makes the case in its report that “achieving net zero for large farms is possible with the right practices, incentives and policies within five years (by reducing) emissions in enteric fermentation, manure management, feed production and efficiency, and energy generation and use.”
“This value proposition for dairy cuts two ways,” said Harper. Farms of 2500 cows or more can go toward digesters tied to renewable fuel production, while farms 2500 cows and fewer can move toward a digester model that handles food waste, receives tipping fees and generates electricity.
Both models will depend on a combination of government subsidies, low carbon renewable fuel standards, electrification of the U.S., supply chain sponsorship and sale of resulting carbon-credits, according to information presented by Harper and McCloskey.
NZI aligns with climate policies announced and anticipated from the Biden administration, which mirrors what is coming out of the United Nations’ Food Summit, and World Economic Forum (WEF) Great Reset.
WWF has long been tied closely with WEF setting a global agenda and with the World Resources Institute (WRI) that evaluates science-based targets for companies making net zero commitments to “transform” food and agriculture.
“Innovative models are just now starting to bear fruit,” said Harper, citing McCloskey as a forerunner of “building out” the anaerobic digester concept.
For his part, McCloskey said they “counted on incentives” back in 2008 to be able to grow and “be the catalyst.” He talked about a future sustained by marketing the new products created as substitutes for fossil fuels, mined fertilizers and other products, as well as continuing to take in other carbon sources instead of landfills.
“We have the vision to set this all up, to perfect the technology and get it cheaper… so when we’re all doing the same things, incentives won’t be needed,” said McCloskey looking 10 to 20 years down the road when he sees this “surviving on its own.”
Harper described distributive models from the WWF report. One “being born” in California incorporates separate large scale dairies in a cluster – up to 20 or 30 farms within a 20-mile radius — each with its own digester that can “drop compressed methane into a transmission line to a centralized gas cleaning facility.” In this model, dairies either have a manure or land lease contract or an equity position in the operation.
This model, he said, relies on “societal values of green energy.”
Another distributive model being born in Wisconsin is described as a central digester with adjacent gas cleaning and upgrading. In this model, the manure from multiple farms is sent to the centralized digester by pipe or truck.
“These dairy clusters become ‘green’ clusters,” Harper elaborated. “So, it’s not just about the milk. They become a primary source of green energy inside of a state or nation.”
Food waste co-digestion is part of a different DS4G model driven by states adopting regulatory policy to keep organic material out of landfills. Harper said dairy farms can take advantage of such policies by centralizing waste collection for co-digestion.
“As we think about reducing emissions… a big part of that is bringing things grown off farm on farm, destroying their greenhouse gas potential, and taking credit for that ‘sink,’” Harper explained.
However, in this example, the co-digestion is what gives the dairy its carbon credits, so technology that can handle higher waste-to-manure ratios and state / local regulations allowing farms to handle the off-farm waste are necessary. Such details were not discussed by Harper, and are presumed to be what large scale dairy pilots address.
The WWF case study showed bottom line profit and loss of $500,000 annually for a 3500-cow dairy. Harper believes this is a “conservative” estimate based on electricity production. With the right policies in place, the renewable natural gas value proposition would produce higher returns, according to Harper.
The renewable natural gas market will still be building over the next five to 10 years, he said, so these models also rely on renewable fuel credits and other fixtures they expect to be part of the Biden administration’s climate policies.
Manure handling technologies apart from the digesters were also discussed, which according to the WWF case study, represent one-third of both emissions-reduction and income potential.
Harper is actively engaged in studying the differing chemical profiles of manure between farms, regions, and states — saying he wants to “understand manure” — with and without digester.
Looking at scale, Harper talked about adapting municipal human waste treatment systems for processing manure on large dairies. He highlighted what is called the “omni processor” — a Bill Gates investment to separate small scale municipal waste and create drinking water using a spindle with multiple discs heated to where nonvolatile solids are in the dry matter and the rest are captured as they volatize.
One “off the shelf technology” Harper is focusing on is already in use to produce discharge quality water. It is the membrane system of ultrafiltration (UF) and reverse osmosis (RO) — the same UF RO technology McCloskey pioneered in milk processing to remove water from milk for transport and refine elements for value-added products.
Stressing the large amount of water in dairy manure, Harper said UF RO “is a process designed exactly for de-watering.” Whether this process occurs before or after the digester, he said it is part of “the technology train, so whatever you are tagging onto is working more efficiently, processing less water and more nutrients and refining more things to find value in.”
All of these technologies, according to Harper, can build on each other and tie together with “electrifying” the United States, strengthening low carbon renewable fuel standards, adopting renewable fertilizer standards, and monetizing carbon.
One unsettled aspect in this regard, however, appears on page 9 of the WWF case study and was not mentioned by McCloskey or Harper in their presentation.
What happens to farmers when their carbon reductions and removals become part of the supply chain in which they sell their milk, or are sold to companies as part of a milk contract?
The WWF report makes this observation: “There could be significant interest from large dairy buyers in reducing embedded carbon in their products by purchasing value-added carbon ‘insets’ directly from farmers or cooperatives within their supply chains. Were companies to work closely with the dairy industry to advance these initiatives and enable greater GHG reductions, they could potentially use these measures toward meeting their own reduction targets … and incentivize dairies to embrace net zero practices through long-term contracts or other purchase or offtake agreements.”
That’s an aspect of the tens of millions of dollars in dairy pilot partnerships pledged by Nestle, Starbucks and potentially others for their own supply chains through DMI’s NZI DS4G.
WWF explains further in its report that, “Such agreements could provide stability and collateral as dairies consider investing in technology like anaerobic digesters. Some of these companies might even be interested in finding ways to bundle and purchase carbon credits produced on dairy farms where they buy milk.”
Such incentives, contracts and bundling – starting with DS4G pilots — leave dairy farms exactly where in the supply chain?
The WWF report states it this way: “Such purchases would shift the emissions reductions from the farmer to the company. This would result in the dairy essentially selling the credits that would enable its net zero status, as the emissions reductions cannot be double counted.
“So, if the reductions are sold, the farmer can no longer be considered net-zero. This is a conundrum that is beyond the scope of this paper,” the WWF report admits.
This important detail in the NZI DS4G implementation was not mentioned by Harper or McCloskey.
Meanwhile, these initiatives also rely on climate policy, with former DMI executive Tom Vilsack now having crossed back over into government as U.S. Ag Secretary just 20 months after seeking pilot farm funding and Net Zero target policies when he testified before the Senate Ag Committee in June of 2019 while employed by checkoff as CEO of the U.S. Dairy Export Council.
President Joe Biden has said USDA is a key department in his administration’s climate action policies.
WASHINGTON, D.C. — Senator Kirsten Gillibrand (D-NY), chair of the Senate Agriculture Subcommittee on Dairy, Livestock and Poultry, told reporters last week that she is working on milk pricing legislation and wants to have dairy pricing hearings before the August congressional break.
She also said she believes a thorough review and recommendations are needed regarding her concerns about corruption and antitrust activity in milk pricing.
After sending a bipartisan letter with 21 Senate co-signers to Agriculture Secretary Tom Vilsack, Sen. Gillibrand called a press conference by zoom on May 26 to cite dairy farm losses and push for use of existing funds to provide direct payments to dairy farmers for the first half of 2021, retroactive to Jan. 1.
“I’m working on legislation right now to change how we do dairy pricing in America, but ultimately we need something like a 9/11 style commission to actually investigate the industry. You’ve seen it in New York. We’ve had dairy farmers that have committed suicide. We’ve seen the dairy industry steadily decline over the last 20 years,” said Gillibrand, calling food production an issue of national security.
“We cannot lose the ability to feed our own people. If you have a market that’s fundamentally flawed and constantly are leaving producers unable to survive in the industry, there’s a problem. So I think we need a very thorough investigation of my concerns of corruption and antitrust activity,” she said.
Gillibrand told reporters that her office has “already asked to hold hearings. on dairy pricing to start the ball rolling on an investigation and have not been given permission yet from the larger committee,” she said, noting the Senate subcommittee she chairs would be appropriate to hold the hearings.
“I want to hear from producers, I want to hear from the middlemen, I want to hear from retailers. I want to figure out where this corruption lies, and then perhaps, based on the information we get, set up the commission, and I want it ready for the next farm bill,” Gillibrand explained.
Right from the outset of the press conference, the Senator raised concerns about the Class I milk pricing change in the last farm bill that has had devastating effects in dairy farm income losses when hundreds of millions of dollars in collective Class I price devaluation occurred, contributing to de-pooling of milk, negative Producer Price Differentials (PPDs) and failure of risk management tools amid the volatility of pandemic market disruptions.
Referencing the bipartisan letter from senators to Secretary Vilsack, Gillibrand said USDA has the funds available through the existing CFAP and Pandemic Assistance for Producers initiative to move right now to make direct payments to dairy farmers she said are necessary to help them recover.
“One of the few things that has helped dairy farmers offset some of their losses was the CFAP dairy payments,” she said. “This assistance was critical to farmers, but these payments were put on pause in January, when the administration announced it was doing a 60-day regulatory review. When the review was concluded, no further payments to dairy farmers were announced.”
Gillibrand noted that USDA announcements cite funding for purchases through the Dairy Donation Program within the new Pandemic Assistance for Producers, but USDA has failed to announce direct dairy farm payments in 2021.
“That’s why we sent the letter to Secretary Vilsack,” the senator said. “My colleagues and I outline the need for USDA to continue issuing payments to dairy farmers for the first six months of 2021 retroactive to January 1st.”
Senate Majority Leader Chuck Schumer (D-NY) also weighed in on dairy farm relief last week in a joint press release with Gillibrand. The two New York senators cited the importance the Empire State’s dairy farms and noted that U.S. dairy farmers collectively received a smaller and inequitable share of pandemic ag assistance payments to-date.
“For an industry that had razor thin margins before the pandemic, for some of our dairy farmers, receiving additional federal assistance is the difference between keeping their farms and losing their livelihoods,” Schumer said in a statement.
Asked how much money should be allocated for direct payments to dairy farmers, Gillibrand said it needs to be responsive to individual producers and their market conditions, to be flexible like the Paycheck Protection Program in being tailored to businesses that lost money during the pandemic.
“I’d like it to assess losses in any given market and what would make these dairy farmers whole. I’d like it to be nimble and specific,” she said. “The money’s there. This is in USDA’s hands, so we need to have a response from Secretary Vilsack.”
On dairy pricing, Senator Gillibrand was emphatic.
“Even before the pandemic, dairy farmers were struggling to receive a fair price for their milk,” she said, noting the change in the method of calculating the Class I mover “compounded this issue. That one change caused dairy farmers to lose out on $725 million in income since 2019.”
The 2018 Farm Bill changed the Class I price at the request of International Dairy Foods Association (IDFA) and National Milk Producers Federation (NMPF) to an averaging method plus 74 cents. This was implemented in May 2019.
Previously, the Class I base price ‘mover’ was calculated using the ‘higher of’ Class III or IV prices.
This Class I mover change not only resulted in net losses of now over $750 million from May 2019 through June 2021 but also contributed to negative PPDs across Federal Milk Marketing Orders for 17 of the past 24 months.
When government cheese purchases for food boxes and stop/start domestic and global economies during the pandemic created volatile shifts in demand, there were intervals of higher cheese and Class III milk prices that could have provided some much-needed milk-pricing relief for dairy farmers.
However, as the averaging method devalued Class I in relation to Class III, milk handlers depooled massive volumes of milk — changing the blend price equation. While a few handlers may have passed some of that value on to their own producers, most did not.
As previously reported in Farmshine, American Dairy Coalition has been facilitating grassroots phone conference calls since early March on the Class I pricing, depooling and negative PPD issues to foster industry dialog on solutions. One idea that came from those grassroots discussions was to return, temporarily at least, to the higher-of method for calculating the Class I mover until a future path can be properly vetted by what is normally a lengthy USDA FMMO hearing process.
On April 12, after collecting signatures from hundreds of producers and state and national organizations, ADC sent a letter to NMPF and IDFA seeking a seat at the table for producers to seek solutions.
On April 23, NMPF floated its proposed solution to adjust the average-of ‘adjuster’ every two years and publicly announced its intentions to ask USDA for an expedited emergency FMMO hearing.
On April 27, four midwestern dairy groups — Edge Cooperative, Minnesota Milk Producers, Wisconsin Dairy Business Association and the Nebraska State Dairy Assiciation — put forward a Class III-plus proposal for calculating Class I and were joined by the South Dakota Dairy Producers in a May 19 request that USDA broaden the scope should there be an emergency FMMO hearing.
On April 26, Ag Secretary Tom Vilsack told reporters during a meeting of the North American Agriculture Journalists that the issue is “very complex,” and that “conversations need to mature before anybody makes a decision that there’s going to be a significant change.”
On May 5, Farm-First cooperative, based in Madison, Wisconsin, announced it would submit a proposal to revert to the higher-of method of Class I mover calculation if a USDA FMMO hearing is held.
On May 15, producers in the Southeast FMMOs began circulating a letter addressed to Secretary Vilsack seeking payments to dairy farmers that reflected inequitable losses in high Class I FMMOs.
On May 18, the letter from senators to Secretary Vilsack called for assistance in the form of direct payments to U.S. dairy farmers.
In the absence of action or response from USDA on relief or solutions at the time of the May 26 press conference, Sen. Gillibrand described a potential “two-part” Senate subcommittee hearing on dairy pricing, where experts could give testimony on all aspects of the problem.
The bipartisan letter from senators to Sec. Vilsack noted more than a decade of decline in dairy, multiple consecutive years of milk prices below cost of production and even mentioned competition from plant-based dairy alternatives labeled as ‘milk’.
“Our dairy farmers have really been hit hard for the last six years,” said Gillibrand, stressing the critical role dairy farmers play in the food supply chain, the economy, their communities and national security.
ANGELICA, N.Y. — It feels like a no-win situation for Charlie Bares ever since Great Lakes Cheese set its sights on fertile Genesee River Valley land that is integral to growing forage and hauling manure for the 3000-cow Mallards Dairy.
The Allegany County (New York) Industrial Development Agency (ACIDA) has moved forward with eminent domain proceedings to condemn 321 acres of Bares’ land, identified in county documents as Marshland LLC, so the county can use the land to build a 480,000 square foot cheese manufacturing facility for Great Lakes Cheese.
The county has a deal with the Hiram, Ohio-based cheese company to give $220 million in tax savings and incentives to build the $500 million plant on Bares’ land.
The new plant would double the company’s current production at its Empire Cheese plant in nearby Cuba, New York.
According to documents in the public record, Great Lakes Cheese intends to close the Cuba plant after production would begin at the plant it seeks to build on Bares’ land.
ACIDA and the cheese company began working on this project in October 2019 and have set a timetable for groundbreaking later this year and operations to begin in January 2025.
The public record also indicates that 200 jobs at the Cuba plant, and additional jobs with the expansion, as well as milk markets, are “in jeopardy” if Great Lakes can’t build on this particular land.
Cows have been milked in this operation since 1860, according to Bares, who joined Joe Strzelec as a partner in the 1990s. As the ownership and business changed over the years — with Bares becoming the principle partner and expanding the operation — the Genesee River Valley land the county wants to take has become a key to the dairy business 20 miles away.
“IDA has begun the eminent domain process, and we are fighting it,” said Bares in a Farmshine phone interview. “We are arguing that this is not an overwhelming public benefit, but that it is an overwhelming private benefit.”
A few weeks ago, attorneys representing Bares and Marshacres LLC filed a petition challenging the county’s actions. The legal case is currently in the New York State Appellate Court.
Bares was approached a year ago about selling more than half of the 400 acres for the cheese plant.
“We didn’t want to sell, and we gave a price that reflected that. This land is the biggest and best field for us, and it is an integral part of our business. Selling it would weaken our dairy business,” he explained.
In addition, Bares is concerned about the environmental impact of losing land like this to concrete. While his operations are just outside of the Chesapeake Bay watershed, he is a supporter of the clean water blueprint for the Bay, and has invested over the years in technologies and best management practices profiled in 2015 in a Chesapeake Bay Foundation blog. Tree plantings and riparian buffers for water quality in the Genesee River Basin were also highlighted, among other things, in 2018.
The ‘market value’ of this land is irrelevant under these conditions. What is relevant is the value of the land to Mallards Dairy and its owners.
In fact, in a letter reported by the Olean Times-Herald, Bares’ attorney John Cappellini observes: “You are taking property from one company and giving it to another? You have decided that one commercial use, the farm, is somehow less important than a cheese factory.”
Explaining in the letter that the threats from Great Lakes Cheese to close all area facilities and leave the area have motivated officials against his client, Cappellini stated further that, “They are extorting from the taxpayers of Allegany County, and the County Legislature is complicit. They threaten to leave ‘unless you give us what we want.’”
The ACIDA notes that 80 sites were evaluated as Great Lakes Cheese had specific criteria to build a plant that would double its production after the Cuba plant is closed.
Of those 80 sites, the county says this is the only property that meets the company’s criteria.
Reports indicate the land meets three criteria: flat land, proximity to the river and being just off a major highway, I-86. The greenfield approach is the company and county’s least expensive build option with access to cheaper highway transportation.
Bares believes the company has not negotiated in good faith.
Answering questions about milk supply, Bares notes there has been no ‘provincial talk’ guaranteeing this project must use any percentage of its milk from New York State farms. No such stipulations are noted in the public record, except the ACIDA record includes a mention and link to Dairy Farmers of America (DFA).
Over the years, this region of New York has received milk from Michigan, Ohio and northern Indiana as it sits in a part of the state that falls just outside of Federal Milk Marketing Order maps — sitting as a bridge between the Northeast FMMO 1 and the Mideast FMMO 33.
The public record does show conditions that the over 200 employees at the existing Cuba plant would be offered jobs at the new plant.
Meanwhile, Mallards Dairy employs 35 to 40 people and feeds and milks 2500 cows with a total herd of 2900 mature animals. The land the county wants to take is key to that business.
At the March ACIDA meeting, officials noted publicly that they hope to break ground in the third quarter of 2021 and be fully operational by Jan. 1, 2025. If the ACIDA is successful in the eminent domain process it has begun, the county would own Bares’ land and lease it to Great Lakes Cheese.
At one point, early on, Bares notes that not only did the selling price he offered reflect the importance of the land to the dairy business, but also the idea of securing a milk market was mentioned to the company. He says Great Lakes Cheese declined, noting simply that they purchase their milk from cooperatives.
A prime supplier of Great Lakes Cheese is DFA, as the public record reflects. Bares markets his milk through a small independent cooperative.
Having been unable to reach an agreement that would reflect the impact to his dairy business, Bares hired a lawyer.
“This area is very hilly with narrow valleys. There’s not a lot of farmland. This Genesee River Valley land is very good, very fertile, non-erosive land,” said Bares of the land around the main dairy operation outside of Cuba, and the land the county wants to take 20 miles away. “We want to hang on to this land because it’s hard to replace. Every farmer has land that is their best land, that they aren’t going to let go unless they are done farming.”
He says going through this process over the past year has only strengthened his resolve to keep the land and fight the eminent domain process. He notes that his wife Elizabeth has helped him tremendously.
New York’s history of interpretation for ‘public use’ in eminent domain cases is a broader notion than for most states. Bares knows it will be an uphill battle to fight the county’s taking, but he is hoping that his battle will ultimately help others in the future facing a taking of their land.
“Our dairy jobs — and the cows — depend on this collection of land resources we have grown,” says Bares. “This whole thing is wrong for the profitability of our dairy to chip away at the best land. It’s wrong for the environment because this is a beautiful riparian river valley and land like this is disappearing fast. It’s wrong from the social aspect the way the government is using eminent domain to help one private enterprise while harming another.”
He says his attorney is confident and always believes he can win every case until he loses, so Bares is trying to stay positive.
Their petition was filed recently in New York State Appellate Court. The Allegany County IDA has reportedly petitioned the court to expedite proceedings. Bares had expected both sides to be writing briefs through the summer with oral arguments in October, but that could be expedited to August or September.
“I think everyone should take a dim view of this. Every farmer — everyone — has a property that is head and heels above their other land, their best fields,” Bares suggests. “If the state — under the auspices of the Industrial Development Agency — can decide how these properties can be used, I think as farmers, we need to realize we can lose our land through eminent domain takings. My case is just an example.”
This case is an example because the ‘taking’ is not for a public use. It is for a private business use that the county is using economics to declare as a public use.
Bares has had some support from the community. Some rallies with some turnout, especially in April. There has been support online, and he has received a few phone calls.
But largely, outside of the southern tier New York and northern tier Pennsylvania region, the story is not known.
“No one’s lining up (manure spreaders) at the county courthouse and threatening to open the valves, if that’s what you mean,” he answered.
After a long and quiet pause, he communicates just how difficult this situation has become for everyone.
“The farmers around me, my peers, they want this cheese plant and a stronger market. I believe that’s a big carrot, so it’s not easy. It seems there is little chance that I can come out ahead, either way. Either we chop off part of our business or the cheese plant will not expand here so everyone will view us as economic martyrs,” he explains.
“I feel like I cannot win.”
Even though each of two outcomes at the moment represent a different kind of difficult for Bares, he believes fighting the county’s eminent domain proceedings could help someone else — as untouched land like this that is important to agriculture and the environment is disappearing.
“Once it’s paved over in concrete, ” he says, “it’s not coming back.”
GORDONVILLE, Pa. — Empowerment. One word with power in it.
“I got to thinking about introducing this session and thought everyone knows what empowerment means, right? Give power. But then I looked up the opposite of empowerment,” said Kristine Ranger, a consultant in Michigan working with farms and writing and evaluates grants. She traveled to Gordonville, Pennsylvania with National Dairy Producers Organization board member Joe Arens to the farm of Mike Eby, NDPO chairman, for the ‘Empowering dairy farmers’ barn meeting Friday, April 23, 2021.
What is the opposite of empowerment?
“Here are the words in the dictionary,” said Ranger. “Disallow, forbid, hinder, inhibit, preclude, prevent and prohibit. Have any of you been experiencing any of that as you try to build a livelihood with your dairy farms?”
From there, the daylong barn meeting moved headlong into weighty topics, but stayed focus on the positive concept of encouraging producer involvement in seeking accountability and transparency in the systems that govern dairy.
Although the sunshine and spring planting kept in-person attendance low, the event was livestreamed on visual and audio with producers listening in from all over.
A thought that kept surfacing in this reporter’s mind listening to the panel of speakers was this: The longer something goes uninterrupted, the more vulnerable it is to become corrupted.
In fact, it tied in directly with Arens’ personal account following Gary Genske on the program. Arens urged producers to look at annual reports and ask questions. “That’s what NDPO is all about, to support your efforts to get to the cooperative boards of directors about what they should be doing at the co-op level,” said Arens, a member of the NDPO board for two years.
“Members own the milk. Members have the power, but the whole thing has been tipped upside down,” said Arens.
“If producers do not hold their co-ops accountable, then silence is your consent,” said Genske, a certified public accountant since 1974 based in California with a dairy in New Mexico.
He kicked things off at the barn meeting, presenting details about the roles and responsibilities of cooperatives, boards and members. He shared his insights into improving dairy farm milk prices.
Genske is a longtime member of the NDPO board. He highlighted the marketing concepts of 100% USA seal for milk and dairy products, returning to the true standards for fat and components in beverage milk that are still used today in California, and moving toward aligning milk production with profitable demand.
The Genske Mulder firm does the financial statements for 2500 dairy farms each year and 10,000 farm tax returns annually. He sees the numbers and knows the deal.
Walking attendees through the various aspects of USDA regulation and the Capper Volstead Act, Genske gave producers the tools and encouragement to accept their responsibilities as cooperative members.
In October, he had a successful lawsuit in Kansas City. After requesting documents from the cooperative in which he is a member, and being denied or provided documents that were mostly redacted, he took the issue to court.
After a two-day hearing, the judge ruled in Genske’s favor on his request for documents, as a cooperative member, with a stated purpose.
In short, Genske said, “We have to put people in the position of taking care of the members… We want to cull cows not dairy farmers.”
Bernie Morrissey, chairman of the Grassroots PA Dairy Advisory Committee talked after lunch about the 97 Milk effort when farmers empowered themselves to market whole milk, since no one else was; and all kinds of prohibiting, hindering, forbidding, preventing and precluding had been going on regarding whole milk availability and promotion.
“It started with Nelson Troutman who painted the first round bale, just like that sign: Drink Whole Milk 97% Fat Free,” said Morrissey pointing to the large banners and holding up the Drink Whole Milk School Lunch Choice Citizens for Immune Boosting Nutrition yard signs.
With a joint effort underway now for a little over two years – working to educate lawmakers and consumers about whole milk, and pushing efforts to legalize whole milk choice in schools — Morrissey said “It’s working. Things are happening.”
Dick Bylsma of National Farmers Organization (NFO) traveled from Indiana to brief producers on joint efforts between NFO, Farmers Union and Farm Bureau to empower dairy farmers by getting their individual votes back in Federal Order hearings. He traced the history of Federal Milk Marketing Orders, and the genesis of bloc voting at a time in history when there were hundreds of thousands of farmers and communication was slow.
“It’s time to end bloc voting,” said Bylsma, and he laid out some of the efforts underway around that proposition, also highlighting the purpose of the Federal Orders.
These are just some fast highlights from a day of deep learning. More from these speakers and additional speakers on co-op involvement, systems accountability, checkoff reforms and referendums, and other empowering topics — including more from Genske about ending the silence and exercising rights and responsibilities with communication tools that work for cooperative members — will be published in a future edition.
Similar in-person meetings recently encouraged producers in Michigan and northern Indiana, said Ranger.
For dairy producers who are interested in knowing more, want to get involved, but aren’t sure how, NDPO chairman Mike Eby suggests joining in on the NDPO weekly national Tuesday night call at 8:00 p.m. eastern time at 712-775-7035 Pin 330090#. Every dairy producer in America has a standing invitation.
By Sherry Bunting (updated since originally published in Farmshine in 2018)
LORETTO, Pa. — Take a step back to a simpler time. A time when dairy farmers were looked up to, not questioned. A time when the milkman delivered fresh dairy milk to the metal ice box on the doorstep. A time when milk’s good name was upheld. When milk was milk.
A visit to Vale Wood Farms, Loretto, Cambria County, Pennsylvania, is in some ways a step back in time, but it is also a bold look into the future — one that delivers fresh, local, real milk and dairy to consumers. One that develops farm-to-consumer relationships as everything old becomes new again.
It’s not easy to corral a few of the third and fourth generations of the Itle family as they go about their work here. Getting them to drop what they’re doing for a group photo? Forget about it. Everyone’s busy with three separate businesses under one sign. And they’re not keen on drawing attention to themselves, but rather draw attention to milk and dairy.
Converging trends shape their market, and consumer connections are critical. (For example, today, two years since this article was first published, people have rediscovered whole milk and cream and since the Coronavirus pandemic, local foods and home delivery are a trend.)
But in the overall dairy industry, there is a growing number of competing beverages marketing outside the lines of real milk’s FDA standard of identity — introducing a growing surge of competing imitations into the dairy case.
In these challenging times, many dairy farmers consider on-farm processing. Carissa Itle Westrick, director of business development at Vale Wood Farms, acknowledges the risk and insecurity of this business that relies on building consumer and community relationships.
She points out that in some of their sales – wholesale and institutional – they, too, are price takers.
“My great great grandfather (C.A. Itle) was grappling with difficult economic choices in 1933 when he hitched up his horse and wagon and went to town,” Carissa relates.
Today, the Itles have a window into seeing how milk production levels in excess of demand impact profits throughout the supply-chain.
In the dairy sector, we often hear the experts and consultants drive home the point that ‘the next pound of milk is the most profitable milk on the farm.’
“Our economics are different,” Carissa points out. “That next pound of milk is not necessarily the most profitable. If we can’t sell that next pound of milk, then making it means we just made less profit on all the milk. For us, that approach doesn’t make sense.”
What does make sense is adding processing efficiencies and capitalizing on consumer trends, while helping to shape them.
“We have to make sure what we do fits today’s families,” Carissa notes. “We are small enough to be fairly nimble, which is so important to our business model.” For example, customers can sign up and manage their home-delivery online.
Technology-driven, home-delivery — Valewood-style — still comes with a personal touch. Of their 50 employees, five are drivers.
“Our drivers cater to our customers. They might even be asked to let the cat out or pet the dog or put the product right in the fridge,” she says with a smile. “We are hyper-local, and it’s not just a selling point for us. We shake hands with whose buying our milk.”
Meanwhile, connecting consumer dots is very much a family affair as events like the mid-July Pasture Party draw in large numbers from the community and those members of the Itle family not involved daily in the business. They bring their friends and tell their neighbors.
“When people come to an event here and go on the crazy hay wagon ride, it’s us on that wagon. It’s my uncle Dan on that wagon,” she says. “That’s our one-on-one time to tell about our cows and how they are cared for. We focus our education on how much attention we pay to the cows. They are our livelihood, and we depend on them. The effort, time, energy and emotion we put into keeping them healthy and comfortable – that’s what we want people to understand.”
The nearby schools also bring classes to connect with the farm providing their milk. In fact, Carissa’s aunt, Jan Itle, developed the “Moo to You” formal school tour program that began with five teachers and today works with nearly 75 teachers and reaches up to 5000 students annually, in addition to the other community events hosted at the farm.
Jan was recognized as 2017 Pennsylvania Dairy Innovator of the Year. Her good-natured humor is evident when she talks about working with seven brothers. And she is enthusiastic about hosting school tours.
“Give back to the community at all times,” is something Jan says they learned from their parents.
For her generation growing up, the Itle house was the gathering place, Jan recalls. “Our house was like a train station, and we still extend that invitation to the community today — to come and see what we do and share our passion.”
As the public becomes more generations removed from farm life, and the dairy disconnect grows, the Itles are doing all they can to reconnect. That helps their business model and the dairy industry as a whole.
The Itle family has seen it all in their farm-to-consumer business at Vale Wood Farms. The land on which the farm and processing plant sit today has been in the family since 1841, and while they’ve been processing and home-delivering milk and dairy products since 1933, “we are still addicted to our cow habit,” says Carissa.
Carissa is one of six fourth-generation family members working full-time here. Her father Bill is one of eight third-generation siblings involved full-time, plus another involved to some degree with a career as a veterinarian.
As company president, Bill manages the processing side. His brother Pat manages the 500 acres of crops. His sister Jan is the herd manager with her nephew Zach as assistant herd manager.
Being one of the oldest of the 18 members of her generation, ranging from adults to infants, Carissa describes the overlap. It’s easy to see how her role serves as a bridge between generations.
All told, Vale Wood Farms employs 55 people, including family members. In fact, Carissa confirms that some of their employees are also multi-generational. In fact, even the many family members with careers outside of Vale Wood Farms, come back to help with events and such. “We were all raised to jump in and do, when we see something needing done,” says Carissa.
When Bill Itle looks at the future, he notes the confusion about what is real dairy is an issue.
“We feel the pain when farmers feel the pain, because we’re part of that, and it’s not always the processor making the money,” he says. While he has seen an increase in whole milk consumption, the overall drag on total fluid sales, says Bill, is confusion in the dairy case.
“It’s tough to get our name back and away from imitation products. They’ve been doing it a long time. They aren’t hiding in the woodwork,” Bill relates.
Carissa agrees, noting that some consumers don’t really know that almond milk isn’t milk.
“I have friends who ask why we don’t make it,” she says. “They think it’s a milk flavor.”
For all of its challenges and opportunities, this is a family that loves what they do.
“We appreciate how lucky we are to have this tradition here, and we also have a responsibility to keep it alive,” says Carissa, noting that for multiple generations to run three separate businesses together takes flexibility.
She recalls her grandmother often saying, “you can disagree without being disagreeable.”
“Balancing the generation with one foot out the door with the generation gaining life experience can be tricky,” says Carissa, admitting sometimes her role is more “cat herder” and interpreter.
“In a family business, we learn that there will be differing opinions, but at the end of the day, we make decisions and everyone supports the decisions. In a family business, you learn to have good healthy debate and to strongly support your point of view, but then to compromise and accept a decision once it’s made, and that’s how you thrive.”
As the industry changes around them, the Itle family jumps in to make key consumer connections. As a result, they maintain a steady market for their steady milk supply, growing home-delivery sales in the face of increased competition and consolidation being the new reality in supermarket dairy case sales.
They have an on-site dairy store, but it is off the beaten track and represents just 2% of their sales. As we sit in the pavilion that Carissa’s sister Jen has decorated for the following week’s Pasture Party, Carissa explains the evolution of dairy trends coming full-circle.
She gives four examples: The resurgence of fresh, real and local foods; the ‘new’ idea of home delivery; how ‘old’ products like whole milk, butter, and cottage cheese, are making a comeback; and how those old paper cartons are making a comeback too.
(In fact, take a look at the dairy case the next time you go to the supermarket. Most ‘new’ plant-based non-dairy beverages and ‘new’ dairy case items like iced coffees are packaged in paper cartons.)
“Consumers are gravitating back to the carton,” says Carissa. While Vale Wood bottles a variety of sizes in plastic bottles, paper half-gallon cartons are also available “because our customers see this as a great thing, from an environmental standpoint, and we like it because it protects the milk from light.”
We talk about the growing number of consumers seeking food delivery services and how the meal kit companies have really taken off. In fact, the three biggest food retailers – Walmart, Kroger and Amazon/Whole Foods — have either bought or created meal kit or food box delivery services.
Even as total consumption of dairy milk continues to erode, the large chain supermarkets and big-box stores are getting into the game because their checkout scanners confirm that milk — real dairy milk — is still the most frequently found item in grocery baskets.
So the future will either be a competition for shrinking market share – or an all-out effort to expand the fluid market. Vale Wood pays attention to those trends to steady their market while opening eyes of consumers expand it.
The upheaval in the industry reveals the trend toward the nation’s larger retail chains wanting a bigger piece of the shrinking fluid market. Small processors, like Vale Wood, on the other hand, seek to appeal to consumers and increase product demand.
The direct competition for supermarket shelf space is becoming intense because milk, though consumption is down, is still a store’s gateway to win customer loyalty.
As all processors navigate the competitive pressures, it is the home delivery service that is steadying the ship for Vale Wood. That part of their business brings them back to that key: connecting with consumers. A big part of that connection is the cows at the farm.
“It’s unique that we still milk cows,” says Carissa. “The cows are central to our farm history and heritage and our sense of identity.”
The Itle family milks 200 cows. Their processing covers 400 cows, as they purchase milk from three neighboring dairy farms instead of expanding their own.
In addition to bottling milk and flavored milk and making ice cream, they do soft products like dips and cottage cheese, and are now doing flavored butters. They do “a little bit of everything” to capitalize on trends. This helps them deal with increased competition for fewer milk drinkers.
“We can never underestimate the effort required to get into (or keep) a market,” Carissa says. And those barriers to entry are becoming more challenging as store brand private label market share increases at the same time that non-dairy beverage alternatives compete for space in the dairy case.
Still, 95% of Vale Wood’s milk utilization is Class I, thanks in large part to their consumer connections and education that lead to product awareness and loyalty.