Will ‘local’ focus stem tide of milk displacement?

PA-preferred (1).jpgHarrisburg Dairies, Schneider’s Dairy step up for milk from at least 9 of 42 dropped Pa. farms

 

(Author’s note: Farmers whose milk has been displaced in 8 states are in various stages of determining their futures. Some are exiting the dairy business, a few have been picked up by cooperatives, or as in the case of this story, by processors. Some are resorting to marketing milk with brokers at much lower prices. In addition to PA Preferred, Tennessee’s legislature is working on a state label for milk.)

By Sherry Bunting, Farmshine, March 30, 2018

BROWNSTOWN, Pa. — In the days following the “Save Pennsylvania Dairy Farms” town hall meeting in Lebanon March 19, some breakthroughs came for 9 of the 42 Pennsylvania farms notified by Dean Foods that their contracts will end May 31.

Harrisburg Dairies, based in Harrisburg, picked up 5 (possibly 9) of the 26 farms let go by Dean’s Swiss Premium plant in Lebanon.

Schneider’s Dairy, based in Pittsburgh, picked up 4 of the 16 farms let go by the Dean plant in Sharpsville.

Both Harrisburg Dairies and Schneider’s Dairy source their milk through direct relationships with local family farms, and they use the PA Preferred logo on their milk labels, signifying it was produced and processed in Pennsylvania, which also means the state-mandated over-order premium paid by consumers is passed back through the supply chain.

“It really made the decision for us, when it came to needing our milk supply to be independent producers that we can have a direct relationship, monitor and inspect ourselves,” Alex Dewey told abc27 News, Harrisburg about the PA Preferred label and their decision to add five of the displaced farms to their Pennsylvania-sourced milk. Dewey is the assistant general manager of Harrisburg Dairies.

Likewise, Schneider Dairy president William Schneider told Clarion news that, “We really didn’t need the milk, but… these people were going to lose their livelihood. I didn’t want people to be out on the street, so we did what we could.”

Both dairies appear to have chosen their 4 and 5 farms based on hauling routes and proximity to their respective plants.

Meanwhile, the situation is in limbo the remaining 12 farms in western Pennsylvania, along with the handful of Ohio and New York producers, affected by volume adjustments at Sharpsville and New Wilmington as well as 21 in eastern Pennsylvania affected by volume adjustments at Dean’s Swiss plant in Lebanon.

In addition, producers affected by these notices in Indiana, Kentucky, Tennessee and the Carolinas are also currently still seeking markets. A few in the Southeast have made plans to sell, but overall, there are still about 100 dairy farms displaced by Dean’s system-wide consolidation and Walmart’s new plant coming on line in May in Fort Wayne Indiana.

Some other marketing factors are emerging.

For example, the Dean Sharpsville plant continues to notoriously bring in loads of milk from Michigan. The company confirms that the 90-day notices sent Feb. 26 to over 100 dairy farms in 8 states, did not include Michigan.

The Sharpsville plant was referenced specifically in the December Pennsylvania Milk Marketing Board (PMMB) hearing where the Pennsylvania Association of Milk Dealers and Dean Foods requested a significant reduction in the producer over-order premium to its lowest level in 17 years. This change to a 75-cent mandated premium went into effect for wholesale and retail milk price minimums January 1.

At the time of the hearing, both John Pierce and Evan Kinser of Dean Foods testified that retailers are getting accustomed to bargain-priced milk elsewhere with documented retail milk prices offered to consumers in other states as low as 87 cents per gallon. Kinser testified that this new reality made Pennsylvania’s high state-minimum retail milk price an increasingly attractive destination for milk bottled elsewhere.

Kinser had further testified that the pressure from the increasing influx of out-of-state milk was making it difficult for milk produced in Pennsylvania to compete for retail (and apparently farm level) contracts.

Kinser also indicated that the mix of milk sourcing at the Sharpsville plant, in December, was already much different than the mix at the Swiss Premium plant in Lebanon. With Sharpsville close to the Ohio and New York borders, the plant has been sourcing milk from Ohio and New York for some time, but also increasingly from Michigan and Indiana.

In fact, at the December PMMB hearing, Kinser’s much-redacted testimony warned of Pennsylvania milk becoming displaced and that the new and lower 75-cent over-order premium level is “already a compromise that represented the highest level the current economic conditions can sustain.”

Kinser warned that if the premium were any higher than 75 cents, Dean Foods would be forced to renegotiate its contracts with suppliers to change the mix of milk used at ALL of its plants within the state in order to compete for contracts with packaged milk coming into the state from plants beyond Pennsylvania’s borders.

Even though the PMMB granted Dean’s request to lower the mandated premium to 75 cents, it appears the mix of milk is being renegotiated anyway as part of the company’s milk supply chain consolidation process as the volume adjustments at Pennsylvania plants have fallen primarily onto Pennsylvania farms.

Also emerging in the marketplace is the increased occurrence of brokered milk. This trend began in 2013 as producers across the Northeast and Mideast have dealt with contract losses in the fluid market at smaller levels than seen today.

Great Lakes Milk Producers is an example of a recently organized group of producers from Ohio, Michigan and Indiana, which is organized “like” a cooperative but markets milk as single-source loads through a broker.

Part of the drill is getting the milk qualified with farm audits and certifications as single-source loads that can be matched up to spot needs from cheese and yogurt plants to even, at times, the Dean plant in Sharpsville, Pennsylvania, the Southeast in the summer, and potentially even the new Class I Walmart plant in Fort Wayne.

Marketing through a broker can mean a long haul in a long market with changing conditions. This option makes milk quality a mandate without a premium.

As 27 farms in Indiana continue to seek a market, it is unclear whether brokering with Great Lakes Milk will become an option. The size of the displaced Indiana family dairy farms fits the single-source criteria, ranging 300 to 1500 cows and collectively represent an estimated 20 million pounds per month of displaced milk volume let go by a Dean plant in Indiana as well as Louisville, Kentucky.

“This is a huge issue for our state right now with an overwhelming impact,” said Indiana Dairy Producers executive director Doug Leman at a recent annual meeting in Indianapolis about the 27 farms with displaced milk scattered around the state. “Conversations are starting to happen, and we are planning a meeting for these farms. But just because Dean is not buying this milk, does not mean that the consumer demand has gone away. We have to let the dust settle and go through the milk shuffle.”

Among the recently affected Indiana farms is the sixth generation Kelsay Dairy Farm, operated by brothers Joe and Russ Kelsay and milking nearly 400 cows near Whiteland.  Joe Kelsay was the milkman for last year’s Indy500.

“We are exhausting all contacts and connections with cooperatives and plants,” said Kelsay in a phone interview. “Several told us they are not in a position to take any additional milk, some are doing some checking, and we do have a couple meetings scheduled. We are cautiously optimistic.”

When asked if the new Walmart plant will pick up any of the Dean dropped farms, Leman said the plant’s supply has been locked up with a percentage coming from undisclosed dairies doing contracts directly with Walmart and the balance being single-source loads via third parties.

“We can’t tell Walmart where to get the milk, but we are letting them know to check with these farms,” said Leman. “Some are within 50 miles of the plant.”

Kelsay doesn’t blame either Dean or Walmart for the market loss his family and others are experiencing. “This is a difficult time, but we can’t fault one company or another for doing their best to run their businesses,” he said.

Meanwhile, in Pennsylvania, town hall meetings were held (and reported in last week’s Farmshine) to raise public awareness. Ag Secretary Russ Redding wrote to Dean Foods asking for contract extensions.

But Dean has indicated its problem with excess volume will begin before these contracts end.

“We explored all our options before we made this decision,” noted Reace Smith, Dean Foods director of corporate communications. “At this time, we can’t extend the contracts further. As a fluid milk processing company, we are unable to store milk long-term.”

The timing is difficult with spring flush and spring decisions around the corner.

“We’re all in limbo right now,” said Agri-King nutritionist Bob Byers in a phone interview. He works with 25 farms, serving in the affected area of western Pennsylvania for 20 years. He notes that affected farm families have only so much time to make decisions like what crops to plant, what fuel and supplies to order. These decisions revolve around whether or not they will be milking cows after May 31.

“There is a timeline involved to unwind a multi-generational dairy farm with inventories of cows and feed and with a team of employees to think about,” says Kelsay. “If there is no one to purchase our milk, how can we continue? What happens here has a significant impact on our team of employees, and their families, as well as our hauler, nutritionist, equipment and feed suppliers – our whole web of contacts. We do a lot of business with a lot of people.”

Byers notes that this is the worst of times in the dairy business that he has seen in his 20 years and that it definitely affects local jobs and businesses.

Lebanon9495(Signs)

“Local people want local milk,” he said. “That is the only thing that will help these local farms at this point. Media attention will help get that message in front of consumers, and in front of companies like Walmart.”

CAPTIONS –

PA-preferred

Alisha Risser of Lebanon posted this photo of Harrisburg Dairies’ milk displaying the PA Preferred label signifying the milk was produced on Pennsylvania farms. The Rissers were part of a town hall meeting in Lebanon reported in last week’s Farmshine, and they are one of five farms whose contracts were dropped by the Dean Swiss Premium plant in Lebanon that will be picked up by Harrisburg Dairies.

 

 

 

 

‘This is the face of the dairy crisis’

(Author’s note: Look for an update here soon about developments since this town hall meeting on 3/19. As of 3/31, in eastern Pennsylvania, 9 Lebanon County dairy farms have been picked up by Harrisburg Dairies, 2 have been picked up by a cooperative and 2 have decided to exit the dairy business, leaving 2 Lebanon County farms and 11 Lancaster County farms still seeking a market. In western Pennsylvania, 4 of the 16 farms have been picked up by Schneider’s Dairy based in Pittsburgh, leaving 12 still needing a market for their milk.)

Lebanon9490(crowd)Emotional town hall meeting in Lebanon, Pa. draws over 200 people urging contract extensions for Dean’s dropped dairies

By Sherry Bunting, Farmshine, March 23, 2018

LEBANON, Pa. – “Family is a treasure for all of us here, and we have a family crisis concerning our dairy farms,” said Randy Ebersole, a local car dealer whose family has been part of the Lebanon community surrounded by dairy farms for generations. He moderated a “Save Pennsylvania Dairy Farms” town hall meeting about the 26 Lebanon and Lancaster County dairy farms that received 90-day milk contract termination letters from the Lebanon Swiss Premium plant owned by Dean Foodd on March 3.

The meeting drew 200 people to the Expo Center Monday (March 19) and was covered by three television stations and a host of other media.

State representatives Frank Ryan, Russ Diamond and Sue Helm also attended and spoke about their commitment to work with farmers on solutions.

Jayne Sebright, executive director of the Center for Dairy Excellence also attended, mentioning the Center’s resources for counseling and support as well as a joint venture with the Pennsylvania Dairymen’s Association to launch a “local and real milk” promotion by June Dairy Month.

Pa. Ag Secretary Russell Redding was not present, but Sebright said he will be sending a letter to Dean Foods in support of an extension of terminated contracts for 42 Pennsylvania dairy farms, the 26 in eastern Pennsylvania and 16 shipping to Dean plants in western Pennsylvania.

“This is the face of the dairy crisis. This is not fake news. This is real,” said Ebersole of the panel of three producers, a nutritionist, a veterinarian and a feed mill manager who shared their stories of the impact to the farms whose milk contracts will end May 31, 2018. This represents about half of the Lebanon plant’s daily milk intake.

The message of the town hall meeting was simple: Don’t blame or boycott Dean Foods because there are still another 40 local farms who did not get letters and are supplying the Swiss plant in Lebanon. But do, write, call or email support for a contract extension for these terminated farms until fall or winter.

And yes, drink more milk and eat more dairy products, especially locally-sourced dairy, knowing how it supports healthy bodies and healthy communities.

All told, Dean Foods ended marketing agreements with over 100 farms in eight states as the company says it adjusted its milk volume because of a supply and demand imbalance made worse by the trend among retailers, namely Walmart, to vertically integrate into bottling their store brands and compressing the supply-chain with consolidated intakes and wider distributions.

The emotional 2-hour meeting revealed community support for these farms by those who recognize how these farms touch many of its jobs and businesses.

Yes. A legacy is on the line here. And there were plenty of youth among the 200 attendees, many of them from local dairy farms where the future is uncertain due to the current dairy economics and especially for those in the families whose farms have been blind-sided by these 90-day termination letters.

One after another, people voiced their concern that 90 days is not enough time to find a new market at the worst time of year, ahead of spring flush, nor is it enough time for these families to unwind their businesses by selling cows, assets, even their farms and their homes to settle their lifetime investments in a way that allows these farm families to find a path forward.

“You will not find a more dedicated and hard-working people than dairy farmers,” said Ebersole. “They have invested their money, their time and their lives developing their herds and their businesses. We understand the world is changing, and that we are not an island, but what has not changed is the expectation of fair and reasonable treatment.”

A local pastor asked a blessing on the meeting and referenced Psalms 139 where David asks God ‘search me… and know my heart; test me and know my anxious thoughts. See if there is any offensive way in me and lead me in the way everlasting.’

The parallels of this passage to what these farmers are facing were obvious in the emotion that followed as each of six panelists told their stories and as others attending lent their support and as 8-oz chugs of Dean’s TruMoo milk and trays of cheese from the Lebanon County dairy royalty were enjoyed.

No one blamed Dean Foods.

Producers talked of a good relationship with the plant. They talked of how the letters completely turned their worlds upside down. They talked of how they have called eight to 10 other milk buyers in the region, none of them stepping up to accept new milk.

“Our cows are like our children,” said Kirby Horst of Lynncrest Holsteins, which has produced milk for the Lebanon Swiss Premium plant for 60 years across two generations. “The thought of 90 days and no market for our milk and no place for our cows to go… the thought of looking out at the pastures and not seeing the cows … I don’t know if I can handle that.”

The affected producers and the businesses that serve them stressed that with a little more time, they could do what is best for their families.

“Just like all the 26 farms affected in this community, our minds are missing right now,” said Alisha Risser. She and her husband have been shipping their milk to the Swiss plant for 17 years. She described how they worked full time jobs and saved and rented a barn before purchasing a herd and then building a dairy full time on their farm in 2001, when they began shipping milk to the plant in Lebanon.

“We have been lucky to have our passion be our job every day and to share this with our kids,” said Risser, her voice tinged with emotion as she described how her husband and youngest son bounce ideas off each other about the cows and the crops. “Our children wonder what future we have now. This is such a feeling of helplessness.

“We are proud of our milk that we produce on our farm, and we are proud of the Swiss Premium milk in our community,” she added. “We are just asking the community to support us with letters to Dean Foods to provide a contract extension until fall or winter.”

As milk pricing, promotion, regulatory environments and dietary guidelines are sorted out in the coming months, these farms are left without a milk market, without an opportunity to compete, to survive.

“God is always faithful, and we know we will be okay in the end, but an extension would allow all 26 farms here to make decisions for our families and our futures,” Risser said.

Ebersole added that, “These farms have developed their cow herds over a long period of time. They are rooted in our community. It’s not like a car dealership where you can just go to the Manheim Auto Auction and get in the business of selling cars.”

Lebanon5278(ProducerPanel).jpgIndeed, a legacy is on the line in Lebanon and Lancaster Counties, as in other communities similarly affected.

“I am not sure how we are going to handle this going forward. We have put all we have into the farm. Nothing will settle like it should,” said Brent Hostetter, who received his letter a week after the other farms on his milk hauling route were notified. Hostetter and his wife have been shipping to the plant for 19 years.

“Our kids love the farm. It has been going three generations, and now I am not sure how we can see a fourth,” said Hostetter. Like the others, he said a contract extension would give them some time to figure things out.

He also encouraged the public to “support our Pennsylvania farmers” to buy local milk and to look at the plant codes.

Lebanon5282(AgBizPanel).jpgRick Stehr, a nutritionist and owner of R&J Consulting, directed some of his comments to the significant number of youth in the audience, saying that these farms are where the next generation learns morals, values, work ethic and the joys and failures of life.

“This is worth fighting for,” said Stehr, “worth fighting all together for.”

He noted that for every 9 milk cows in Pennsylvania, one job is supported in the related business infrastructure. In Lebanon County, alone, one job is supported by six cows. The impact is deep if these cows and farms are lost, he said.

“Each cow here produces $14,000 in revenue for our community,” said Stehr, “16% of U.S. dairy farms are located in Pennsylvania where the average farm size is 80 cows. We are not California or New Mexico. We are located well within a day’s drive from 50% of the U.S. population. It seems our location would be pretty good, and yet this is happening.”

The emotion was palpable as Stehr and others offered to do whatever is needed in terms of counseling and assistance through this.

Alan Graves, manager of Mark Hershey Farms, a prominent feed mill in Lebanon County, said 80% of the mill’s feed business is dairy.

“We have been in business 45 years and employ 55 people in this community,” said Graves. “This day is about the producers and how they affect everything else in our communities. Our mill employees and their families rely on these dairies for their jobs. We don’t make business projections for 90 days, we are out a few years in our projections.

“The extension these producers are asking for is a fair request,” he added. “They have spent their lives improving their cows and improving the product they produce. The thought of taking that away in 90 days is almost unjust.”

Ebersole described the community impact this way: “These folks write out checks to other businesses in our community. There has to be a check coming back the other way. In 90 days that will all stop.”

Dr. Bruce Keck of Annville-Cleona Veterinary Service talked about how the public is unaware of what has been happening over the past 30 days and the past 10 years of consolidation and change. He asked the three television stations represented to raise awareness.

“We want to bombard Dean Foods with letters and emails and phone calls,” he said.

“These dairy farmers are so invested in cows and equipment that they can’t just quickly turn around,” said Keck, who has worked with local dairy farmers as a veterinarian for 25 years and took over the practice started by his father in 1961. He understands the family business dynamics.

“Without an extension, these families will be forced to sell their herds, and even their farms, for a fraction of their worth in this environment,” said Keck, “and that will trickle down to affect truckers, nutritionists, equipment companies, feed mills, veterinarians and more. This is like asking a loaded tractor trailer to turn as fast as a speeding car. It’s not enough time.”

To communicate support for the farms facing 90-day termination of contracts, call Dean Foods at 214-303-3767, email dairydirectsupport@deanfoods.com, or mail a letter to Dean Foods, 2711 North Haskell Avenue, Suite 3400, Dallas, TX, 75204.

-30-

Lebanon5240(Hostetter)Brent Hostetter, Lebanon County dairy producer: “I am not sure how we are going to handle this going forward. We have put all we have into the farm. Nothing will settle like it should.”

 

Lebanon5228(Risser)Alisha Risser, Lebanon County dairy producer: “We are proud of our milk that we produce on our farm, and we are proud of the Swiss Premium milk in our community. We are just asking the community to support us with letters to Dean Foods to provide a contract extension until fall or winter.”

Lebanon5216(Horst)Kirby Horst, Lebanon County dairy producer: “The thought of looking out at the pastures and not seeing the cows … I don’t know if I can handle that.”

Randy Ebersole, local car dealer and panel moderator: “This is not about blaming or boycotting Dean Foods. Please do the opposite, fill yourselves up with these dairy products.”

Lebanon5260(Kreck)Dr. Bruce Keck, Annville-Cleona Veterinary Service: “Without a contract extension…This is like asking a loaded tractor trailer to turn as fast as a speeding car. It’s not enough time.”

Lebanon5272(Stehr&Moderator)Rick Stehr, R&J Consulting: “This is worth fighting for…worth fighting all together for.”

Lebanon5257(Graves)

Alan Graves, Mark Hershey Farms: “These producers have spent their lives improving their cows and improving the product they produce. The thought of taking that away in 90 days is almost unjust.”

Lebanon9500(Helms)Rep. Sue Helm: “A group of representatives are writing a letter Dean Foods. We want farmers to stay in contact with us.”

Lebanon5291(RepDiamond)Rep. Russ Diamond: “We wanted to get Pennsylvania milk into Pennsylvania schools but have been told that with the product stream in Pennsylvania, this is hard to do. This Pa. Milk Marketing Board issue is a hard issue to get to the bottom, and people get very protective of it.”

Lebanon5303(RepRyan)Rep. Frank Ryan: “Keep faith first and foremost and your sense of humor and talk with your bankers. This is emotionally draining and people want to run from it. There is a solution and we need to work together to find it.”

Lebanon5314(Morrissey)

Bernie Morrissey, retired agribusinessman: “Dairy farmer Nelson Troutman got me involved in this nine years ago, and I have given up my retirement to work on this issue because it’s important to our farms. No matter who buys your milk, this is all connected… There are over 25 milk contracts from outside dairies selling milk in Pennsylvania while you guys are under the Pa. Milk Marketing Law. You have been shafted.”

Lebanon5318(EbyMike Eby, chairman National Dairy Producers Organization and former Lancaster County dairy farmer: “The media are our friends. We can work with the media to advertise our product in ways the (check off) promotion programs can’t.”

 

Lebanon9495(Signs)

Seismic shifts in milk supply chain ahead: New Walmart plant triggers Dean’s cut of over 100 dairy farms in 8 states

SwissDeanStory9468

By Sherry Bunting, from Farmshine, March 9, 2018

LEBANON, Pa. — He saw the mailman drive up and linger in the driveway, wondering if they were expecting a package. Moments later, his wife was standing there, holding a letter she had signed for.

The certified letter informed this Lancaster County dairy farm family that after 13 years of sending their milk to the Swiss Premium plant in Lebanon – along with decades of the farm’s milk in generations before them — the agreement with Dean Dairy Direct would end May 31, 2018.

The same story played out Friday among neighboring farms on the same hauling route to the same plant. And it was the same scene in driveways for approximately 120 dairy farms in eight states, including 42 in eastern and western Pennsylvania — around half of the Dean Dairy Direct shippers to three plants in the state.

Reace Smith, director of corporate communications for the Dallas, Texas-based Dean Foods, confirmed in a phone call Monday that against the backdrop of expanding raw milk production, and companies “asserting and expanding their presence in a market where consumers are drinking less milk (namely the Fort Wayne, Indiana Walmart plant where bottling begins this month) over 100 dairy farms in eight states received 90-day termination notices” from Dean Dairy Direct on Friday and Saturday, March 2 and 3 stating that their agreements will end May 31, 2018.

Smith confirmed that the over 100 affected dairy farms are in the states of Indiana, Ohio, Pennsylvania, New York, Kentucky, Tennessee, North Carolina and South Carolina.

“This affects all size herds and is not a large or small farm thing,” said Smith. While she was unable to supply specific information about the farms that were terminated, she said the widespread volume adjustments at multiple plants across four Federal Orders was necessary due to the new Class I plant (Walmart) coming online this month and the loss of a contract through a competitive bidding process (Food Lion).

Both market losses for Dean indicating structural change to the dairy industry as more retailers move into milk bottling in more centralized distribution models.

Sources in the various states confirm the affected farms range in size from less than 100 cows to over 1000 cows.

“This was an incredibly difficult decision. We tried very hard to avoid it and regret this decision had to be made,” said Smith. She indicated that Dean Dairy Direct field representatives are serving as resources to these producers and can provide a list of contacts for potential milk buyers. They are also offering counseling.

DeanFoodsMap.jpgWhile the company will not provide a list of affected plants or a state by state break down in the number of farms or volume of milk affected, they have indicated that the state that may be hardest hit on a volume basis is Indiana.

In fact, the volume of displaced milk in Indiana, alone, has been estimated at over 20 million pounds per month, representing the under 100 to over 1000 cow size range but most of them milking 300 to 1000.

The affected Indiana farms shipped milk to the Dean plant in Louisville, Kentucky, which also terminated 22 Kentucky dairy producers, ranging from 50 cows to 250, according to Maury Cox, executive director of the Kentucky Dairy Development Council.

In Tennessee, Julie Walker of Agri-Voice near Knoxville has confirmed nine (now 10 confirmed) affected producers ranging 60 cows to 300, and numbers in the Carolinas are unknown at this time.

From the standpoint of the farms affected, Pennsylvania is hardest hit, and while the number of New York farms is unknown at this time, some may have shipped to Dean plants in Pennsylvania.

According to Jayne Sebright, executive director of the Center for Dairy Excellence, 42 Pennsylvania dairy farms shipping to three Dean plants in eastern and western Pennsylvania received notices Friday – representing half of the Dean Dairy Direct shippers in the state. This includes 26 producers in eastern Pennsylvania, including Lebanon and Lancaster Counties, as well as 16 in western Pennsylvania, where the Dean plants in Sharpsville and Erie also ended agreements with Ohio farms. The number of Ohio farms affected is unknown at this time.

“The (Agriculture) Department and the Center have been reaching out to other markets to see what capacity is available, but at this point we do not know of any with available capacity,” said Sebright. “We are working to support the affected farms as best we can. We are very concerned both about the future of the farms and the well-being of the farm families.”

Sebright noted that the Center is making additional resources available and recommending use of their Dairy Decision Consultants Program to evaluate options — both within and outside of the dairy industry. “This is a difficult situation to be in and we are concerned.”

Dean-Cows.jpgIn fact, the farm this reporter visited in Lancaster County Tuesday was already working to call every available market and neighbors who also lost their contracts were looking at everything they could think of. Four or five trucks go through the county picking up milk every day so they wonder if each one can find a market or if they are better off pulling their milk together to find a single-haul market.

The producer was thankful, at least, for being part of a dairy producer discussion group and thankful for folks like Dr. Charlie Gardner with the Center who leads the group.

Not only were the Pennsylvania dairy farms shocked to receive the letters, veterinarians, nutritionists, feed company and equipment maintenance folks are facing this loss with their farm customers as the news spread this week throughout farm communities and the greater dairy community.

In Indiana, where estimates are that over 20 million pounds of milk per month has been displaced, producers had already been on edge as the Walmart plant took shape in their state and they contemplated its milk sourcing.

“We are working with producers and contacting cooperatives and potential markets to try to work together to get through this thing,” said Doug Leman, executive director of the Indiana Dairy Producers. He has been in contact with affected producers, the Indiana Department of Agriculture, and the plants and cooperatives that provide markets for milk in the region.

“I’ve had calls not just from the affected producers, but from many other Indiana dairy producers sharing their concern and asking if there is anything they can do,” said Leman. “I’m encouraged by that, and I am encouraging our producers to keep their chins up through this difficult time in their lives, families and businesses in the hopes that we can work through this together.”

Leman said he does not want to blame Walmart because, wherever the first Walmart plant would have been located, this was coming. Indeed, Walmart has entered a trend among retailers to move toward bottling their own private label store brands (Great Value and Sam’s Club Member’s Mark) rather than contracting with Dean Foods.

“Walmart was coming to Ohio, Michigan or Indiana, and I still believe it is better to have the plant in Indiana because it offers opportunities,” said Leman.

While fluid milk consumption is on the decline for 15 years — although stabilizing with more consumption of whole milk last year — retailers notice that nearly every shopping basket going through their stores includes milk. They seek their own store brand loyalty as loyalty to their store and some of the retail price wars happening in states without loss-leader protection are evidence of this. As is the ability to pull premiums away from states that have loss-leader protection or a minimum retail price as in Pennsylvania, to “fund” price wars in other surrounding states without any loss-leader protection.

The dichotomy points to a need, perhaps, for a federal loss-leader threshold versus random state programs that can fuel the picking of winners and losers in today’s times of seismic structural change to the dairy industry from retail all the way through the supply-chain.

In short, the region would likely have been affected by Walmart’s decision to vertically integrate its Great Value and Member’s Mark milk brand for its stores in the region — no matter which state the plant had been located.

In fact, sources indicate potential sites to the south are being eyed for a second Walmart plant in the future, revealing a corridor strategy to this vertical integration of single-source, full-traceability, each-truck-one-farm model.

The Dean Dairy Direct letters of termination to dairy producers in the region were dated February 26, 2018, which was the same day as Dean’s 2017 earnings call where the company projected its strategy in brand and private label supply and to “right size” its milk volume and consolidate its supply chain to achieve a “flatter, leaner and more agile” company into 2019.

According to Smith, there are no official announcements of any plant closures at this time and none of the plants involved have released all of their shippers. Still, there remains concern that some of the plants that have released a larger portion of their farms are vulnerable.

“We still have a commitment to local milk,” said Smith about the volume adjustments. “There are many factors that impacted this decision. We are seeing surplus raw milk when the public is consuming less fluid milk, and we see companies asserting and expanding their presence in a market where consumers are drinking three gallons less annually, per capita, since 2010 while the U.S. dairy industry is producing 350 million gallons more milk annually than the year before.”

In addition to the overall imbalance Smith said that, “The introduction of new plants when there is an industrywide surplus forced us into the position of further adjusting our milk supply according to demand.”

As vertical integration of milk at the retail level leads to consolidation by the nation’s largest milk bottler – Dean Foods – the company has diversified into soft dairy product brands that are just starting out of the gate and were discussed in the Dean earnings call as well.

Specifically, the letter received by Indiana and Kentucky dairy producers shipping to the Louisville plant stated “two indisputable dynamics led to this difficult decision. First and foremost, a retailer’s new Class I fluid processing plant is coming online in the region, significantly decreasing our production as milk volume is moved away from our facility to this new plant.

“The second reason is bigger than all of us. The steady increase of raw milk production combined with the decrease of Class I fluid dairy consumption…” the letter stated.

Letters received by producers in the southern market as well as eastern Pennsylvania did not specifically reference the new Class I fluid processing plant built by a retailer (Walmart) as had the letter to Kentucky and Indiana producers serving the Louisville plant and western Pennsylvania and Ohio producers serving the Sharpsville plant.

Those letters received by farms further to the east and the south indicated the plants had “lost a portion of customer fluid milk volume to a competitor through a customer-bid process.” Sources indicate this may include both the Food Lion private label store brand and the Walmart Great Value private label in these areas as well.

The letters received by producers said further that Dean was “unable to lock-in enough new customer volume to offset this loss.” This is a function of the overall decline in fluid milk consumption and the new milk via large multi-owner, multi-site farms in surplus regions of the Mideast and Midwest.

One thing is also clear in speaking with producers, veterinarians, organizations and others in the industry, the farms that are facing this difficulty are largely well-managed and producing high quality milk. Many of them are young families representing the next generation. Many are progressive, with updated facilities and technologies as well as utilizing the resources available to them for continued improvement in all that they do to supply their communities with milk.

In these states affected, whole transportation routes were terminated, presenting both challenges and opportunities for a collective effort in dealing with these market losses.

Walmart will not reveal the farms they have secured to supply the plant, but it is widely known that some of the milk will come from the north, some from within Indiana, and that a processor in Wisconsin is handling contracts and in a position to balance the Walmart plant’s fluid needs that may or may not have involvement by cooperatives.

As in Indiana and other states, Cox said of Kentucky: “We, are contacting other potential markets for our producers and would like to meet with Dean Foods to see what more we can do for these producers and to have a better understanding about the future of the Louisville plant” (where both the affected Kentucky and Indiana producers shipped their milk.)

Some state dairy organizations, state departments of agriculture and other industry leaders indicate they want to let the dust settle and allow options to emerge as they adopt a patient mindset to look at potential options for their respective state’s producers.

In the meantime, all are reaching out to producers and urging producers to reach out to them, and to each other. In fact, right now, more than ever, the dairy community needs to be reaching out and talking about its future to higher levels of relationships beyond what has occurred in the past.

“We want to survive,” said the dairyman this reporter visited 15 minutes from my home in Lancaster County, Pennsylvania, just four days after receiving the letter.

Like others this reporter has spoken to, they have done everything the industry suggests to make their farm competitive. While a small farm whose milk shipped for generations to the Lebanon Swiss plant serving local stores and consumers, this young farm family had invested in the latest technology, produces milk with very high components and very low somatic cell counts.

But here they are, facing what 120 of all sizes face throughout eight states as vertical integration from Walmart and other retailers sends a ripple effect and seismic shifts throughout the supply chain.

-30-

 

Dairy at a Crossroads Part I: 2018 Turning point?

dairycrossroadssherry4-e1519953486606.jpg

Number of farms, robust infrastructure are interdependent. The ripple spreads wide and the pain in rural communities, deep.

 By Sherry Bunting, reprinted from Farmshine, February 23, 2018

BROWNSTOWN, Pa. — Dr. David Kohl recently said he is still bullish on the small farms that populate the eastern dairy industry, that there will always be a place for them, but they will change their focus.

Still, lenders and industry participants confide they are concerned about a large number of dairy exits in 2018. They are encouraging producers to work with advisors, and urging the industry to work together in the embattled eastern U.S., because the whole infrastructure depends on the number of farms as much as — if not more than — the number of cows and amount of milk produced.

While lenders like Dale Hershey, director of ag lending for Univest Bank and Trust, say they have already seen many diversify and change how they operate, others are in the process of re-thinking their futures.

The biggest concern for Hershey is when farms decide to sell the cows, seldom do the cows come back to the farm.

“Some of those farms will stay empty. That, I do see,” he asserts. “Occasionally they’ll come back in and milk, but mostly they will go into something else, or if the farm is sold, we’ll see most of them stay dark in terms of dairy production.

“I think we’ll look back 10 years from now and see 2018 as a turning point.”

Mike Peachey of Acuity Advisors and CPAs agrees. He sees dairy at a crossroads similar to the hog industry in the 1990s: “My concern is that we will see a dairy industry 10 years from now that looks very different from how it looks today, and we are helping our dairy customers take stock of that.”

Peachey observes that as the number of farms decreases, “This puts a lot of pressure on the dairy infrastructure and the ag businesses that support the dairy farms. One of Pennsylvania’s competitive advantages is that there is a lot of infrastructure and support in the whole supply chain that is very beneficial for competitive pricing for our dairy farmers.”

He cites the region’s multiple feed companies, multiple points of expertise, nutritional perspectives and a bidding process, multiple veterinarians, the strong ag lending infrastructure, equipment dealers, and expertise in different specialties.

“My concern is that if the number of dairy farms decreases, and if the infrastructure goes away, then it changes that competitive advantage,” he says, observing that the number of cows or the amount of milk produced does not necessarily make up for what is lost when the quantity of individual farms is reduced by consolidation.

Yes, the dairy industry is at a crossroads, and no where is this perhaps more evident than in eastern states, like Pennsylvania.

The Northeast was a fluid milk market in the past, close to 50% of utilization. Today it is less than 30%. As more milk is produced — even if per capita fluid milk consumption stayed the same — not enough other products are made here, so mailbox prices are falling under the coinciding weight of increased hauling costs and losses in competitive and quality premiums.

Meanwhile, the Class IV utilization has increased as a percentage in the blend price, leading many to believe the Northeast model of dairy pricing may be broken.

In fact, so concerned are states and dairy organizations that state-wide analyses are being conducted in top tier “notably fluid” states like Pennsylvania and New York in the Northeast as well as in Georgia, in the Southeast. The states of Michigan and Wisconsin are also looking at their state’s production, processing and infrastructure to improve their future competitiveness.

In Wisconsin, milk prices are driven off the cheese market — a growing market that has been cultivated to generate variety, demand and competitive premiums — whereas the Northeast model is built off Class I, which is not competitive, nor is it growing. And, unlike cheese with its diverse growth in specialties and brands, the Class I milk at the store is treated like a base commodity against which all newcomers and imitations are compared and premium-priced.

Dairy producers and industry participants also say they are concerned about the Pennsylvania Milk Marketing Board’s role in terms of the costs associated with milk assembly vs. where the state premiums are going.

Meanwhile, store inventories are kept close to the bone. If they throw a gallon of milk away, the margin on every other gallon is affected, and so stocking depth is being reduced.

These are the kinds of issues that states like Pennsylvania, Georgia, New York and Michigan, among others, are actively looking at as they study capacity and market needs and trends.

Producers don’t control these decisions, but their input is vital.

From farm to table, technology and workforce are two other big pieces with immigration reform being a double-edged sword.

If the Congress and the Trump administration are able to legalize immigrant worker status, what will that really do for the dairy workforce? A National Milk Producers Federation study with Texas A&M reveals that 80% of the nation’s milk was harvested by immigrant workers — up from 60% in 2009.

With general unemployment now falling below 5%, which many economists consider to be full employment, a legalized immigrant workforce may be lost to jobs in industries with better margins.

Workforce issues are also affecting trucking and other infrastructure employment.

Labor is fast replacing environmental as the number one issue facing the dairy industry, and against that background, farms will do things differently over the next 10 years to systemize their production, say various experts.

Builders, lenders and others are seeing the emphasis for this in three areas: wet calves, dry cows and post fresh, as well as through investments in technologies that improve management, specifically by their impacts on cost of production because this is the criteria that will drive farm-level investments into the future.

Technologies may help solve it, but this requires investment. The right answer, policy-wise, is elusive, but for individual farms, the right answer comes, again, from knowing cost of production from which to weigh out the options and run projections and scenarios based on where the farm is now and where it wants to be in the future.

While some see opportunities to drive milk output per cow higher with more cow comfort and better heifer programs, pointing out that Pennsylvania lags behind other states in its milk output per cow, others in the industry point to imposed restraints pushing the focus toward managing risk.

Complicating the marginal milk model for improvement in Pennsylvania is the Land O’Lakes base program. When producers are over base — because they’ve improved their management — they take a penalty when the base is enforced, depending on the eastern region’s total production.

Learning to manage through this intermittent penalty seems to be affecting mainly the producers in the East, despite more substantial growth in the West. In addition, DFA has started a base program for portions of its membership in parts of the Southeast U.S., where milk is already regionally deficit.

How will this push-pull play out at the farm level?

Some producers will carry a lunch. Hershey is seeing a trend toward small farm operators finding seasonal off-farm employment to keep their dairy farms running.

Others have and will become diversified, which can reveal two pathways: Getting successful in another area and exiting the dairy, or seeing the dairy as a lifestyle to keep, and using other income streams to weather the storm.

In addition to diversifying, lenders note niche processing will be a path for some. There are a number of niche producers in this part of the country. Some have been doing this a long time, others are just getting in.

“The good economy has really helped those operations. Tourists are traveling, coming to our county, dining out, and packing the places we deal with,” Hershey observes about Lancaster County, Pennsylvania. Some of our cheesemaking stores are flourishing right now, but that business is not for the faint of heart. It requires deep pockets to get into.”

Connecting dots for consumers is essential for eastern states, like Pennsylvania. For example, in Lancaster County, Pennsylvania, there is this dichotomy. The county — like other parts of the eastern U.S. — has grown in produce and other specialty crops to become a great hub of food. To some degree this includes dairy, but more stimulation is needed.

As will be further discussed in part two of this dairy-at-a-crossroads series, knowing the cost of production for the farm business and knowing where lie the passions, strengths and weaknesses of the farm family are keys to finding each farm’s own path — whether that means keeping the cows and diversifying, investing in niche marketing, getting more competitive on cost of production or giving the cows up and channeling that valuable positive experience and energy to new pursuits.

This industry is about the milk and the cows, but even moreso, it is about the people.

“We can do it here,” says Peachey. “When we know our farm’s cost of production, we know the weak spot in our model and can figure out how to compensate for that and find where our opportunities are.”

As these changing tides and issues sort themselves out, Peachey observes how dairymen are making these “tremendous strides to improve their operations,” and he believes the next wave of improvement is figuring out how to do risk management well, how to capture margins when they are available, and how to protect operations from downside risk.

“We can take an operation so far and continue to improve, but the next wave of significant profitability and improvement is in managing the top line price and the input costs and locking in those good margins when they are there,” says Peachey.

“A generation ago, with price supports, dairy farmers could work hard and do okay or very well. Now it is a business requiring an approach to management for the long run,” he adds.

In part two of this series, we’ll examine the map for navigating the dairy crossroads.

 

-30-

Ag economy runs counter to urban economy

Dr. Kohl connects dots, prepares farmers for economic reset

UnivestMeeting(DavidKohl)1.jpg

By Sherry Bunting, reprinted from Farmshine, February 2, 2018

EAST EARL, Pa. – “The growth of the economy is hotter than a pepper sprout, but for how much longer?” observed Dr. David Kohl, Virginia Tech professor emeritus. He then opened eyes, and ears, saying that, “When the urban and suburban economies are going gangbusters, the ag and rural economies tend to struggle. That is very typical. The ag economy tends to run counter to the general economy.”

And with that, we were off to the races with Dr. Kohl, who spoke about positioning for success in the economic reset as the keynoter for the annual Univest Ag Summit that drew over 350 people — mainly farm families and many of them dairy producers — to Shady Maple Smorgasbord here last Friday, Jan. 26.

When Kohl is on the agenda for a meeting, you know you are in for an invigorating look at socio-economic trends, and a whole lot more. His high energy presentations deliver tidbits of insight that help make sense of market patterns that are so difficult to understand. The fact that he is a partner in a creamery is just ice cream on top of the cake.

Part of the reason for these opposite fortunes for urban vs. rural economies is the strength of the dollar and the price of oil that coincide.

Kohl is watching what happens with the U.S. dollar because this will influence inflation and interest rates in the general economy as well as exports in the ag economy.

“When the dollar is stronger, we are in a weaker position to trade commodities,” said Kohl. “When the dollar is weaker, it picks up inflation, so we have to watch out for higher interest rates. We are well into this period of low flat interest rates, but that is about to change.”

Kohl sees the Fed raising the prime rate possibly four times in the coming year, but that will depend on the rate of inflation. If it stays below 3%, there will be less incentive to raise interest rates. In fact, the report released that day pegged it at 2.6%. We shall see.

As he went through the indicators, Kohl indicated his bullishness on agriculture in the East. “One-third of the consumers with money reside within 10 hours of you,” he said.

While it is true that as the economy improves and consumers have more money in their pockets, the food processing and foodservice sector positions have improved, the problem is that the farm sector tends to ride at the back of that bus. What makes the difference for ag, according to Kohl, is the economic growth of export partners.

Trade has become integral to the marketing, pricing and distribution of farm commodities, including dairy, according to Kohl.

He travels extensively, especially during meeting season, and he said it is his ability to go out and confirm the numbers that allows him to see trends and connect dots.

Right now, he said, the problem for dairy is that we are working through a surplus. “The high prices of 2014-15 brought in some inefficiencies,” said Kohl. “When I see the bottom third of producers making good money, that’s when I know we will see financial issues within the next two years.”

On the trade issues, Kohl said that 1 out of 7 days’ worth of milk production in the U.S. is exported somewhere, and 39% of those exports are going to Mexico. During a conference in Mexico, he learned that those buyers will go elsewhere and pay more for dairy if they need to.

And while Asia, and China, are important export destinations for farm products, Kohl said that  NAFTA re-negotiations are important because the U.S. exports more ag products to Canada and Mexico, combined, than to China.

He observes that 47% of the Mexican population is under 25 years of age, and that “This youthful population of consumers helps fuel continued growth in U.S. agriculture.”

He also noted that 3 of every 7 consumers with money to buy goods reside in Asia, but the U.S. has pulled out of the Trans Pacific Partnership, “leaving China to fill our spot, so now Canada and Mexico are in the TPP and they are making agreements without us there.”

Kohl acknowledged the currency manipulations that go on by other countries, including China and Mexico, to improve their market competitiveness globally, and he said that is something to watch both in the trade negotiation processes and in terms of economic factors affecting agriculture, particularly as the U.S. dollar is likely to weaken.

Within this trade discussion, Kohl said the single most important thing that President Trump has done is appointing former Iowa Governor Terry Branstad as Ambassador to China.

And here’s the stuff you get from a guy like Kohl: Branstad and China’s leader Xi Jinping have a very close trusting relationship that dates back 35 years to their work on an Iowa hog farm. In fact, China’s leader holds a Ph.D. in ag and rural markets. He came from an elite family in China, but during the 1980s farm crisis circumstances had him working on farms in east Iowa.

UnivestMeeting(DaveKohl)2“The leader of China worked on hog farms for two years. He ‘gets’ agriculture,” said Kohl, as he turned to a table populated with blue and gold jackets and said: “The relationships you form today, you will not know their impact down the road.”

Under the Trump administration, the U.S. sealed a “beefed up” pork and protein deal with China that has been good for the livestock sector. Perhaps dairy is next?

 Kohl also watches the weather. South America is in their double crop season and it is dry there. In the U.S. southwest, it is very dry in Texas, Oklahoma and Kansas. “If this continues through April 15 or May 15 and if it goes to the upper Midwest with a dry Southeast, it will impact corn.

He also keeps a careful eye on oil and energy prices, proclaiming that the U.S. made a pact after 9/11 to become energy independent within 25 years, but has done it in 10.

“We are now the energy leader in the world, so other nations can’t control us anymore,” said Kohl. Oil and energy costs influence the general economy, and really have an impact on farms. “8 out of every 10 dollars spent on the farm business are connected to oil.”

On the flip side of the oil coin is the historical relationship between oil prices and farm commodity prices. Kohl sees oil getting cheaper. “The demand side is changing. People are moving to cities and using public transportation,” he said, adding this surprising statistic: 31% of people aged 18 to 25 do not have a driver’s license.

He also noted that in Germany, they want to outlaw the internal combustion engine by 2040! And that in China, they want to have 25% of all vehicles run by electric by 2025.

The big trends impact so many things over time, and that is why Kohl pays attention to them.

In fact, he noted that the advances in farming technology have produced surpluses by taking the lower yield farms and really improving those yields. “That is what technology does. It improves the bottom end and that creates surplus, and this is why we need export markets.”

What does all of this mean for farmers? Kohl put the “correction” or “reset” he sees coming into perspective, observing that the 1980s correction went down fast and lasted five years. “This one is a grinder,” he said. “We are not seeing a collapse in the ag economy like we did in the 1980s. We are seeing it grinding along and surviving with technology and management.”

Kohl sees the stock market rate of gains as something that can’t last forever and believes it is a “bubble.” He quickly added that many people disagree.

He noted that student debt is record high, the rate of consumer savings in the U.S. is at the lowest level since 2007 and credit card debt just exceeded a trillion dollars.

Bubble or no bubble, Kohl encouraged listeners with his belief that what we have now is an “asset bubble” where equity and resilience will be the tools to guard. “Don’t get complacent on equity,” he urged.

The economic drivers of the current cycle are its elongation into a supercycle, the available technology and management, interest rates, stronger financial underwriting, working capital, land equity cushion, and crop insurance programs.

“Currently 90% of the world economy is hot,” said Kohl, adding that, “If it grows too fast, it’s a weed.” In his opinion, it is growing too fast.

The killers to watch out for are a rise in oil prices, a decline in the stock market, a tightening of credit strategies by the Central Bank and ‘bubbles.’ The bubbles to watch are auto debt, student debt, stock market, credit card debt and farm land asset to credit.

“Economic expansions do not die, they are killed off, and those are the things that can kill them,” said Kohl.

He said workforce development will be critical for sustaining the economic engine that is revving up, and he was encouraged to hear President Trump say last week that, “Not everybody needs to go to college. There is nothing wrong with vocational skills.”

What can dairy farmers do as these macro-economic factors around them are out of their control?

“Look at your business, and drive it toward efficiencies,” said Kohl. “Do your cash flows early and often to adjust to changing tides.”

Recognizing the trend toward diversified income streams on farms in southeast Pennsylvania, Kohl said that is more sustainable in today’s environment.

But the biggest piece of advice he gave was for farmers to “be proactive. Whether large or small, the top producers are making the adjustments, the middle is in denial waiting for bad weather somewhere to bring back commodity prices and the bottom third are at the end of the pier not knowing what is wrong.”

Look for Kohl’s cornerstones for success as this continues in a future edition.

Dairy Exports: Jekyll and Hyde

MilkMarketMoosHeader070914web.jpgDairy Exports: Jekyll and Hyde

By Sherry Bunting, Milk Market Moos, Farmshine, February 2, 2018

Talk to dairy farmers and industry observers about dairy exports and the response runs the gamut from enthusiastic full-court-press to cautious optimistic pursuit to a pessimistic skepticism about the profitability they bring to the table.

awGDC18-Day1-56.jpgNo matter where you are on the scale of good, bad or indifferent, exports are essential for agriculture and for dairy.

The hands of time do not turn backward on technology and progress, and so we are in a global market. If we want to be competitive in our domestic market, we need to also be competitive globally.

The food industry is increasingly served by global players and multinational companies that can source and supply from all corners of the globe. People would be surprised to learn how relatively small the transportation cost is in exporting ag commodities, especially further processed dairy products, overseas compared with cross country, on a per-unit basis.

If our ships are not arriving at other ports because we can’t compete, then other ships will arrive at our ports because we can’t compete.

That said, forward progress in supplying markets overseas needs to be pursued, not with reckless abandon finding ‘homes’ for excess milk, but with strategic thinking that includes the marketing and a consideration for the well being of our dairy farm sector.

As Secretary of Agriculture Sonny Perdue pointed out in his visit to Pennsylvania last week, America’s food security is America’s national security. Our farmers are the thin green line that, along with our military, keep our nation safe. After 9/11, the U.S. set out to be energy independent within 25 years and accomplished this in 10, according to a talk, given by Dr. David Kohl, Virginia Tech professor emeritus, in Lancaster County, Pennsylvania last Friday.

Just as our growing economy became at one point dependent on other nations for a portion of its energy needs, to its peril, we should take care that we do not become dependent in the future on other nations for our food.

A laughable thought, perhaps, but the rapidly consolidating agriculture industry needs its wide and varied base of family farms, small independent businesses, that support a varied and competitive rural infrastructure and provide the safety net of food security for American consumers through their independent pursuit of partnering with industry and academia to producer more, with less.

Kohl talked about how important trade is to American farmers, including the dairy industry, which currently exports 1 out of every 7 days’ worth of milk.

He made some observations about China’s agriculture. That Chinese interests purchase of Smithfield was largely to purchase the food safety protocols to ensure their food security. Here’s a statistic Kohl shared that got me thinking. He said that while there are 2 million farmers in the U.S., there are 314 million farmers in China.

“They are not taking on technology there as rapidly because there are 800 million people living in rural China and they need something to do,” said Kohl.

Just think about that for a minute. Technology is as essential to the future in agriculture as are our trade negotiations and exports; however, this statistic made me think about our rural youth both on and off the farm.

Dairy farming, like the hog business in the 1990s, is at a crossroads. Farmers, through their cooperative memberships, partnerships and other arrangements, own some of the largest and most aggressive processing assets that are strategically consolidating markets and distribution.

They hold in their hands their futures as individual small businesses — parts of the whole, contributors to a market, dairy farmers who not only are improving their own business acumen but continually improving how they manage their herds and possess a passion for what they are doing, a passion that is being called upon to directly market their farming lifestyle to consumers to counteract the negative attacks of anti-animal activists casting doubt wherever they turn.

U.S. Dairy Export CEO Tom Vilsack has set a lofty goal of getting U.S. dairy exports to 20% of production vs. the current 14. That would be nearly one and a half days’ worth of milk production out of every seven.

That sounds exciting, but when have we heard percentage of increase goals set for the fluid milk category? Could that incremental effort not also be exciting?
There are reasons why we are not seeing this, and in some respects, those reasons bring us back full circle to the export discussion.

Beverage milk is not exported on the scale that dairy commodities and dairy products are. Yes, DFA is among those exporting shelf stable milk to China for supermarkets, but this is not a globally traded product as are cheese, butter, and particularly dairy indgredients and protein powders.

While dairy processors eye up the opportunities and build inventories around allocated sales, and manage their risk with offsets, dairy farmers are in the price-taking position with the promise that if exports grow, they and their families can grow their businesses, without a serious discussion about the profitability in that proposition.

All of this to say, that the main market for U.S. farm milk is here at home as not only a beverage but also a growing number of dairy products finding good demand.
We are not New Zealand, which exports most all of what they produce.

The U.S. has, already, a strong robust customer base for cheese, yogurt, butter and a host of dairy products, as well as a sector of our industry (beverage milk) that needs our committed attention through dynamic labeling, comparative promotion vs. the imposters, consumer education about MILK, not how many situps and pushups to do each day. It needs people in charge who truly believe it is important, not an offhand remark by a checkoff-paid employee for U.S. DEC speaking at a conference, saying that fluid market is a dead horse as he proceeded to dig into the exciting team of horses (exports) waiting in the wings to save the day.

Having said all of this, it is imperative that U.S. dairy farmers be competitive to be involved in the global marketplace because it is here, with all of its pluses and minuses, but that does not mean we turn way from the prize in which the Federal Orders place high value and for which other products are taking over because we have, in effect, laid down and allowed the incremental loss of beverage milk sales.

But let’s examine the fluid milk dilemma further in the next edition.

Author’s Note: Re-inventing this Ag Moos blog for the times….  Milk Market Moos is a column I have been writing in Farmshine since 2003. It became a weekly feature in 2007. Find some of this content here, at Ag Moos, along with other dairy and beef market related stories, agriculture news, and, in between, the stories and images of the inspirational people of agriculture… but you can get it first, and you can get it all, in Farmshine Newspaper, just $15/year. Farmshine is a weekly newspaper published in Brownstown, Pennsylvania — now in its 39th year of publishing all-dairy, all-the-time.

Gift of life, keeps giving

Status

Burdettes_Dec2017(SherryPhoto)vertical.jpg

Justin, Claire, Reese, 10, Brinkley, 8, and Tripp, the dog, by the Christmas tree on a December afternoon just 3 weeks after the kidney transplant that gives Reese a new lease on life. Tucked in under the tree is Reese’s beloved cat Jack. Reese is quite enthusiastic about her four-legged friends, be they Holstein dairy cattle or house pets. Photo by Sherry Bunting 

 

‘Reese shows us you can have tragedy in your life and still move on and be full of life and hope for the future.’

 By Sherry Bunting, reprinted from Farmshine, Friday, December 15, 2017

MERCERSBURG, Pa. — Cheese ball is back on the menu this Christmas at the Burdette house on Corner Road outside of Mercersburg, Pennsylvania. It’s among the favorite foods that Reese Burdette has had to forgo for nearly four years to be easy on her damaged kidneys as she recovered from the May 2014 house fire.

That, along with hash brown casserole and all the yummy goodness of dairy foods, potatoes, orange juice and bananas — essentially nutritious foods high in vitamins such as potassium. In fact, so happy is Reese about bananas, Claire believes she’s eaten a tree full already.

Not only is Reese happy to be eating these foods again, “I hope to start growing again too!” the smiling 10-year-old said during my visit to Windy-Knoll View farm last Thursday.

While she has forged ahead on this journey on every front, it was the kidney transplant everyone knew Reese would eventually need that was hanging out there on the horizon. Justin and Claire Burdette learned in September that their daughter was in renal failure. She had been doing so well, so the timing was a bit of a shock.

Many people had already been tested as live donors — from friends and family members to colleagues in the dairy industry. But who would think that the “angel” sent into Reese’s life would be a friend of a cousin by marriage who had met Reese one time, a young, single woman with a heart of gold and willing to go through the surgery to donate a kidney to give Reese the vitality of life this ‘tuff girl’ has been fighting for.

Reese&Alyssa

Ahead of the kidney transplant surgery, Reese’s aunt Laura Jackson updated on social media describing Alyssa as selfless, inspirational, courageous and beautiful with a giving spirit that is truly admirable. “Her love of children and animals led her right to us because right now, Reese does need some extra help,” wrote Laura. What many may not realize is that this gift of a new kidney comes from a woman “who loves her family and just wants to make a difference in this crazy world we live in… What this beautiful soul has offered up is a very different kind of life for Reese… the chance to be a normal 10-year-old with a chance to grow.”  Photo credit Bre Bogert Photography

Through the selfless generosity of Alyssa Hussey, 32, of Winchester, Virginia, a special education teacher with the Loudoun County Public Schools, the successful kidney transplant took place at Johns Hopkins on November 20. Not only are they both home and doing well, Reese was released just five days after the surgery, getting her home just after Thanksgiving and far sooner than imagined.

The two were expecting to have a visit at the farm this week, and Reese said she is anxious to show her hero around to see her growing little herd of 12 Holsteins, not to mention the five calves her sister Brinkley has accumulated among the Windy-Knoll View herd of top registered Holsteins.

Ahead of the transplant surgery, Reese’s aunt Laura Jackson updated on social media to say:

“What many may not realize is what this beautiful soul has offered up is a very different kind of life for Reese, a chance at a life with more quality and abundance, of water parks, river swimming, better health and the chance to be a normal 10-year-old with a chance to grow.”

Alyssa has given Reese the ultimate gift — the gift of life.

“We are relieved to have faced this. We knew it was coming. We just didn’t think it would be now. But what a blessing,” Justin reflects. “This kidney transplant would not be possible without someone like Alyssa. It’s proof that living donors are out there and we found one that we had ties to and never knew.”

Claire says that, “It’s hard to fathom someone willing to give our child their kidney and we barely knew her. But she didn’t think twice. We are beyond grateful.”

Burdettes_Dec2017-14 (1)It was a regular day on the farm when I arrived just as Reese was finishing school via the virtual robot — a necessity as she avoids large indoor crowds for the next 100 days since the transplant. Her younger sister Brinkley was just getting off the school bus. We had an hour to talk before Justin headed out to milk, driving down Brinkley and Reese Way, the dirt roads across the field between their house and the farm. The late afternoon sun, as the farm’s name suggests, broke through cold windswept clouds in the gap of the south mountains.

 

Reese-Brinkley-Jim-Nina(FacebookPhotoProvided).jpg

Three weeks after her kidney transplant, Reese looked forward to the annual sleigh ride in Greencastle last Friday evening with grandparents Jim and Nina Burdette. While she must avoid indoor crowds for 100 days, the outdoor Christmas festivity was high on her list of things to look forward to. Facebook photo.

At the kitchen table, the topic of conversation centered on the many things Reese was already reintroducing into her life since the transplant, the goals she and her mother Claire have set, and the activities she is looking forward to – not the least of which was a trip to Greencastle Friday evening for the annual horse-drawn sleigh ride with her Momo and Papap (Jim and Nina Burdette).

What is it about Reese’s story that has inspired such a far-reaching interest and impact? People write and call and follow her progress from near and far. It’s a story of faith, hope and the determination to live life to the fullest, to overcome challenges and setbacks, to never give up, never let go of the rope and to keep moving forward in a matter-of-fact way with fierce strength, raw honesty, family love and accountability filtered by the wisdom of a 10-year-old’s keen sense of humor.

Justin notes that they had a visit not long ago from a Canadian couple who keep in touch often to see how Reese is doing. They traveled to Pennsylvania just to visit her, amazed by her journey after nearly two years at Johns Hopkins recovering from the fire. This dairy farming couple had been through a barn fire and had dealt with animal losses that were depressing. Knowing Reese, seeing her, has made a difference in their world.

They are but one example of hearts Reese has helped to heal through her own example.

They are among the many who have written the Burdettes about what Reese’s story means to them, and what her journey has done for them in their own circumstances. Claire explains that, at first, these responses were hard to realize and digest because so many have done so much for Reese and their family that they felt they were leaning on others only to learn that others were finding support also in them.

Reese-Brinkley-Sleigh(FacebookPhotoProvided)“I think what Reese shows us is that you can have tragedy in your life and still move on and be full of life and hope for the future. I think that is what Reese has done for people,” Claire explains.

Healing and support going both ways – a lifeline — gifts that keep giving.

In like manner, the kidney donated by Alyssa Hussey is new hope transplanted, a gift that keeps giving in a young girl with a second chance.

Justin and Claire also had high praise for their summer intern who came back to help at the farm so they could be with Reese, worry-free, in the hospital for the transplant. Mikey Barton is the grandson of Ken Main of Elite Dairy and Cutting-Edge Genetics in Copake, New York. He had served as an intern last summer at Windy-Knoll View, and when he heard about the upcoming kidney transplant for Reese, he came down to help take care of things.

“We are so blessed,” the Burdettes said, describing the bond Mikey has made with their family. “Blessed that he comes back to see us and that he would take his time off to come down here so we could focus on Reese.”

 

Justin was quick to point out that he got back to the farm Wednesday to be sure to have Mikey home with his family for Thanksgiving, and that Mikey made time to drive the two hours south to see Reese in the hospital before heading north back to New York.

“We felt we have learned as much from Mikey as he has learned from us through this internship experience,” said Claire. “It has been a neat connection. He knows our routine and we didn’t have to worry about things at home for those few days.”

The Burdettes also credit the support of their local community and the dairy community from the beginning. Flannery’s Tavern on the Square in Mercersburg hosted a Team Reese fundraiser a week before the kidney transplant to help with medical and related expenses with the restaurant donating 15% of the days sales and providing a room for 75 silent-auction items donated and bid on by the greater community.

For the Burdettes, it has been the physical outpouring that accompanies the financial support of others that has lifted them up. To see a Team Reese fundraiser pack the local restaurant from open to close shows how much Reese has lived up to her nickname as “Mercersburg’s daughter.” When she and Brinkley walk into Flannerys, as they do once a week, people cheer. No price can be put on that physical show of support.

Every effort to this point has come together toward a life that will be much different for Reese now. No lines to tether her. No long trips for dialysis.

Clair confirms the doctors are very happy with her progress and her bloodwork looks good. Her main job in the next 100 days is to stay healthy and drink lots of fluids for that new kidney.

High on Reese’s list of “new” is fewer shots, fewer medicines, and working on giving up the tracheotomy for supplemental oxygen.

She is pretty excited about her Dad’s promise of a trip to Great Wolf Lodge where a waterpark is in her future.

“I can’t wait to bathe in that waterpark and get Brinkley soaked!” she says with a laugh.

But first she needs to reach the point in her journey where the trach is no longer needed. Now that the kidney transplant has occurred, there will be sleep studies and trials to be sure the timing is right to close the trach, and then the watersports and other activities will beckon. Reese already gave up the constant companion of traveling oxygen last Easter when she wanted to be outside with the other kids for a longer period of time, and decided on her own, she didn’t need it.

Reese has set a goal to attend the Pennsylvania Junior Holstein Convention in Lancaster in February. Mom’s goal is to get her through the next three months away from crowds to be strong and healthy into this next chapter of her journey.

Because we all know what comes next. There are calves to work with and cows to care for and in addition to a new calf Cream Cheese from her Carrie cow, named after the child life specialist who has been inspirational on this journey, there are the new gals from her Pantene line, like Potato Chip and Pretzel.

Reese and Brinkley talk excitedly about their cattle as they rattle off names and pedigrees.

But the cow work will have to wait, except for drive-throughs this winter. Instead, Reese is happy to be making and eating some of her favorite dishes. This week she made sticky buns with her Momo and a repeat favorite meal – sloppy joes.

She says, “No more driving to dialysis and getting home late at night!” That all ended on November 21 along with the line in her belly and the constant hemoglobin shots.

The people who have stuck with Reese from the beginning continue to be there in large ways and small. A woman in town still sends Reese a card every week, just as she has since May 2014.

As for the Christmas celebration, her second at home since the fire, Reese has big plans. She shared her small, but typical 10-year-old’s list for Santa and the family traditions she looks forward to. To avoid contact with crowds, she’s shopping by internet, and she’s pretty excited that on Christmas Eve, she will be helping her Momo prepare the dinner.

For Claire and Justin, having their daughter home with her new kidney for Christmas is the greatest gift of all.

“There is so much good in this world,” Justin affirms. “We just have to look for it.”

One place to look is the inspiration of little Reese Burdette.

Correspondence can be sent to Reese Burdette, 8656 Corner Road, Mercersburg, PA 17236. Financial contributions or fundraisers for Reese and her family, can be sent to “We Love Reese” First Community Bank, 12 S. Main St., Mercersburg, PA 17236.

-30-