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Covington gives 2023 outlook at GA Dairy Conference; sees blend price pressure coming more from demand side, especially in Southeast

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By Sherry Bunting, Farmshine, February 10, 2023

SAVANNAH, Ga. — In a much anticipated market outlook with its full complement of charts and graphs, retired milk co-op executive Calvin Covington told the crowd of 500 attending the mid-January Georgia Dairy Conference in Savannah that 2022’s record-high blend prices outpaced his earlier projections, and he sees the pressure in 2023 coming more from the demand side than the supply side.

At levels more than $7 per hundredweight higher than 2021, Covington calculated the 2022 Federal Order blend price averages at $26.42, $28.42 and $26.87 for Orders 5, 6, and 7, respectively.

The higher national butterfat price — up almost $1.50 per pound from 2021 — accounted for more than 40% of southeastern fat-skim blend prices and was a big factor in record milk prices for farmers in multiple component pricing FMMOs, nationwide, in 2022.

Covington projected the Federal Order blend prices to average $22.84, $24.83 and $23.07 for Orders 5, 6 and 7, respectively, in 2023.

If the more than $3.50/cwt. decline is realized this year, and prices don’t go below these projections, “2023 could still have the third highest blend prices on record,” he said.

He cautioned that his projections are FO blend prices, not farm mailbox milk prices and said relatively small changes can make a big impact on these prices. 

Covington stressed the high cost to balance the fluid milk markets affects how the blend prices translate to mailbox milk checks in the Southeast. 

“This high cost to balance Class I is something we have to keep educating the rest of the country about,” he said. (In fact this is one reason a public hearing is set to begin Feb. 28 for the Appalachian, Florida and Southeast Federal Orders to consider proposals to amend inter-market transportation credits in Orders 5 and 7 and adopt plant delivery credits, otherwise known as intra-market transportation credits, in Orders 5, 6 and 7.)

Nationwide, Covington expects milk production growth in 2023 to be constrained by several factors including interest rates, operating margins and available replacements.

On the demand side, however, he said domestic and export sales on a total solids basis — while up year-over-year – are showing softer growth.

Looking ahead, he said the dry whey price is something he watches because it is the dairy commodity with the most worldwide impact. He sees it as a bellwether for milk prices going up or down. (Dry whey prices had come under pressure in December and January, but showed strength in spot sales on the CME into the beginning of February.)

Over the longer term, Covington looks at total milk production, number of cows as well as demand in terms of sales and product inventories on a quarterly basis to take the month-to-month variation out of the equation.

“In 2022, we had three quarters of lower milk production that helped bring up prices. Why? Cow numbers. We had a lot of cows in the first half of 2021, and those numbers began to get depleted into 2022. 

“Now we are starting to get a little more milk from dairy farmers adding a few more cows,” he said.

On the demand side, Covington looks at domestic and export demand separately by tracking commercial disappearance, trade, and inventories. He reported domestic dairy product demand was up 0.5% in 2022 on a total solids basis vs. prior year, compared to a 5-year average annual growth of 1.5%.

“Domestic demand has slowed down,” he said.

On the export side, it was a record year; however, export sales on a total solids basis were up 3.5% year-to-date through October, compared with a 5-year average annual growth of over 6%, according to Covington.

Combining these figures for the first 10 months of 2022, he said total demand was up 1% from prior year, compared to a 5-year average increase of 1.8% on a total solids basis. Covington said this could change slightly when November and December figures are included.

Bottomline, he sees dairy demand is growing, but this growth is slower than the average annual growth over the past five years.

Higher prices and overall inflation are affecting butter sales as reflected in commercial disappearance comparisons and anecdotal evidence shared by Covington. Using a chart of commercial disappearance comparisons, he said American cheese demand appears to be declining, while other cheese categories are showing demand growth. Dry skim milk powder represents 72% of all exports, and even though exported quantities were up in 2022, total commercial disappearance was down.

Some of these commercial disappearance trends are also a function of what is being produced and manufactured in the first place.

“The good news going into this new year is inventories,” he said. “We have no overly burdensome inventories to be concerned about.” 

Covington projects 2023 milk production to increase by no more than 1% over 2022, and he thinks the increase could be less than that. Why? Higher interest rates, lower operating margins and the prevalence of beef-on-dairy limiting the supply of dairy replacement heifers. (A tighter than expected supply of dairy replacements was later confirmed in the January 1 semi-annual All Cattle and Calf Inventory Report released by USDA on January 31.)

In the Class I fluid milk markets during 2022, Covington reported sales January through November were off 2.3% from prior year, and he highlighted the fact that the number of fluid milk plants is dwindling. 

A producer asked why this is happening, and Covington’s answer was blunt: “There’s no money in it, no profitability. Class I sales are down, so that business is not able to grow volume, and some of those plants are on land that’s a whole lot more valuable to sell than to run a milk plant,” he said.

Over the past two years, the 10 southeastern states have lost 8 fluid milk processing plants, “and that’s done some damage,” said Covington.

At the end of December 2022, USDA listed 39 pool distributing plants for the three southeastern FMMOs — down from 44 a year earlier and down from 70 in the year 2000. The only balancing plants now located in the region are in Kentucky and Virginia.

Of the 39 pool distributing plants across Orders 5, 6 and 7, Covington said 18 are owned by cooperatives, 9 by grocery stores and 12 are privately-owned, but smaller.

“The bulk of your fluid milk is being processed by plants owned by cooperatives — by you — or by retail stores,” he said.

Meanwhile, most of the loss in fluid milk plants has occurred in Order 7, which has half as many fluid milk plants today as in 2000, according to Covington.

Located in Order 7 is Georgia, which has become the Southeast’s new leading state in total milk production. Georgia’s production growth is offsetting Florida’s production losses, moving Georgia to surpass Florida in total output. 

At the same time, Georgia has the fewest number of fluid milk plants — down to just two. This combination left Georgia’s farmers producing a per-capita fluid milk surplus of 53 pounds.

Together, the 10 southeastern states remain milk deficit, but the relationship between milk supply and fluid milk demand is steadier across the region, according to Covington. He said the 10-state production total over the past three years “has started to level a bit at 8.1 billion pounds, and is more concentrated to Georgia and Florida with Georgia as a milk producing state, not a milk processing state.” 

With producers making 101 pounds of milk per person across the 10 southeastern states, and fluid milk consumption at 133 pounds per person, the Southeast had a 32-pound per person deficit in 2022, he said. 

That is a smaller deficit than in 2010 — just before the accelerated annual declines in fluid milk sales began accumulating over the past decade. But as the milk supply in the southeastern states has steadied relative to declining fluid milk sales, the Class I utilization percentage across the three Orders has increased. Averaged at just over 74% for 2022, this was 4 points higher than in the year 2000, although the breakdown shows Class I utilization has been steadily increasing in Order 5 (Appalachian) while decreasing in Order 6 (Florida) and fluctuating in Order 7 (Southeast).

“The major challenge for milk markets in the Southeast is we need more of them,” said Covington. “A lot of the fluid milk products that are sold in the Southeast are not processed here. If we are going to have a viable dairy industry in the Southeast, we need growing and stable markets for milk produced in the Southeast.”

On the production side, he said the region has seen location shifts about every 40 years. “Since the 1980s, Florida was the highest and now into the 2020s, Georgia is number one,” Covington said. Together, they account for over 50% of the milk produced in the Southeast. Before the 1980s, Kentucky was number one with Tennessee a close second.

Covington predicts this pattern will continue while other states in the Southeast become smaller and are vulnerable to begin losing infrastructure.

When asked why Georgia is growing so fast, Covington said simply: “Good dairy farmers. If you look at production per cow and how this has improved, we see Georgia has had one of the highest per-cow production increases in the U.S.”

At the same time, he said, addressing the Georgians in the audience of around 500 people from multiple states: “Your farms are growing, and the state seems conducive to allowing you to grow. You just need to build some milk plants.”

The challenge for the Southeast region is to expand profitable sales at existing plants and/or seek to attract new dairy processing to the region, said Covington.

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As producers struggle, cooperatives fumble: How is ‘excess milk’ determined to be a problem in deficit areas?

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By Sherry Bunting, updated from Farmshine, June 1, 2018

KENTUCKY — As the calendar turns to June, the saga of lost markets has meant a transition for some, exits for others, and in Kentucky, 14 producers who still faced May 31, 2018 contract terminations with Dean Foods were given a 30-day reprieve.

“It’s down to the wire and we’re working on a hail-Mary,” says Maury Cox, executive director of the Kentucky Dairy Development Council (KDDC). “We started with 19 affected producers, and we’re down to 14. Some have exited the business and we may lose a couple more.”

According to Cox, the KDDC and other state officials are still working, leaving no stone unturned, for these 14 producers, confirming on May 28 that Dean Foods did extend their contracts to July 1.

Five of the original 19 affected producers in Kentucky have sold their cows and a few others, like Curtis and Carilynn Coombs, are in the process of incrementally downsizing their herds as the termination approaches.

In southern Indiana where seven producers were unable to find a market, Doug Leman, executive director of Indiana Dairy Producers, indicates that some are drying off cows, others are selling, and one is getting into on-farm milk processing. There are a select few that have been offered 30-day Dean contract extensions, mainly because their contract renewal dates were different, and Dean could utilize the milk.

In Kentucky, there is the added and unusual situation of an 800-cow dairy not being able to move into their new 8-robot dairy barn because the processor receiving their milk classified the second location, two miles from the main barn, as a start up instead of an existing patron’s modernization project that in total represented a modest expansion.

As the new robot barn sits empty, and many contacts made with no takers, Kentucky dairy leaders scratch their heads at the gate-keeping that is going on — wondering how is it possible that these things are happening? That in a milk deficit region, just two loads of milk from 14 former Dean Dairy Direct farms — that now have until July 1 — can’t find a home? That in a milk-deficit region, this separate situation happens to  a progressive dairy having to let their new completed barn sit empty and keep milking exclusively in the old facility, in order to keep their existing milk contract with another bottler?

All of this happening in a state that is part of the Southeast region that University of Wisconsin dairy economist Mark Stephenson says has a 41-billion-pound milk deficit in terms of production and consumers. And all of this happening in a state spanning two Federal Milk Marketing Orders (5 and 7) that regularly utilize transportation credits and diversions to move milk — bringing milk in from up to 500 miles away to meet the actual processing needs.

It doesn’t make sense. The movie playing-out in Kentucky could come to other theaters in the eastern U.S., and the previews are already being shown.

Repeated emails to Dean Foods went unanswered over the past two weeks as the company’s corporate communications director indicated by automatic reply that she is on “paid time off” until June 4.

Phone calls and emails to the communications department for the Kroger Company have also not been returned as Kroger bottles 100% of its store-brand milk at its own plants, including the Kroger Winchester Farms Dairy plant in Winchester, Kentucky, which is supplied by Select Milk Producers, Inc. and Dairy Farmers of America (DFA).

IMG-0010x(Incidentally, a billboard popped up recently on I-65 North outside of Louisville, Kentucky –picturing Holstein dairy cows grazing and proclaiming Kroger as “proud to support Kentucky farmers”. What could this mean? As noted in this report, requests to Kroger’s communications department — to understand what these billboards mean and what percentage of milk in Kentucky Kroger stores actually comes from Kentucky farms — have gone unanswered.)

Prairie Farms recently announced it is closing a plant in Fulton, Kentucky and will operate a distribution point there. Prairie Farms and DFA own or supply other milk processing assets in the state and region.

Numerous sources outside the directly affected region indicate that Prairie Farms is working with Walmart to source milk and bottling for Walmart while the Fort Wayne plant start up is delayed . Prairie Farms, Great Lakes Milk Producers and Foremost Farms are the three cooperatives, along with Walmart’s independent milk contracts, meeting the single-source loads requirement for Walmart’s new plant in Fort Wayne, Indiana.

(Author’s note: While Walmart touts the milk for its new bottling plant, once fully operational, will come from within 180 miles of the Fort Wayne plant, the plant’s reach in Great Value bottled milk distribution will be much farther — up to 300 miles away where milk that is more ‘local’ to those Walmart stores in Kentucky and southern Indiana is displaced. So far, none of the cooperatives working with Walmart have taken on this southern milk.)

With Prairie Farms, Dairy Farmers of America (DFA), and Select Milk Producers all supplying milk processing operations in Kentucky, not one has agreed to take on the Dean-dropped dairy producers as members.

New members are a problem for Prairie Farms when their own members are on a quota system, and yet, the cooperative is working with other cooperatives and Walmart to source milk to supply a consumer need that was previously sourced from the dropped herds via the Dean plants.

As for other plants, even Bluegrass Dairy and Food, a dairy powders and ingredients company — with plants in Glasgow and Springfield, Kentucky balancing milk supplies in the region — is not exclusively owned by the local Williams family who founded it in 1995. The majority of the company was purchased in 2010 by a private investment firm. Sources indicate Bluegrass cannot accept the displaced milk from independent producers because they are completely co-op supplied and balance co-op milk at the two Kentucky plants as well as a third plant in Dawson, Minnesota.

When asked if DFA is taking new members, John Wilson, senior vice president and chief fluid marketing officer wrote in an email: “Our Area Councils monitor local milk marketing and manage membership decisions as well as other local issues. Membership decisions by this group of local dairy farmers are evaluated based on a number of factors, including an available market for milk, which continues to be out-of-balance in some areas of the country.”

On the Kentucky situation, specifically, Wilson said that, “We are concerned for family farms. We recognize the dairy farmers in Kentucky and southern Indiana who have been displaced face a tough situation. While there is excess milk in the area and finding a home for this milk will be a challenge, we are working with others to determine if we can provide any assistance.”

DFA-FMMO.jpgFollow up questions about how “excess milk” is determined to be a problem in a milk-deficit area, have not been answered. (Since publication, DFA’s John Wilson replied in an email that the “excess milk situation is really the region, not specifically Kentucky.” One can see why when comparing the DFA Area Council Map, above right, to the USDA Federal Order Area Map, above left…  Note how in the above DFA Area Council Map, the lines are drawn with the navy blue of DFA’s Mideast Area Council dipping straight into the maroon of the deficit Southeast Area Council right through central Kentucky, for example, and it becomes apparent that the decisions can be weighted toward surplus transport between Orders within Area Councils and between them.)

After all, milk moves in mysterious (and not so mysterious) ways.

MilkTruck#1Meanwhile, of the over 100 dairy farms in eight states affected by the Dean contract terminations, it has been the willingness of smaller regional bottlers and smaller regional cooperatives to mobilize compassion, leadership and local marketing efforts to pick up the slack.

In Pennsylvania, it was localized (PA Preferred / Choose PA Dairy) bottlers like Schneider’s Dairy and Harrisburg Dairies that picked up many of the eastern and western Pennsylvania farms, with much of the balance being picked up by New York-based Progressive Dairymen’s Cooperative, marketing with United, a bargaining co-op covering both New York and Pennsylvania. Six Pennsylvania farms sold their cows.

In addition, one New York producer shipping to the Erie, Pennsylvania plant slated for closure, made his last shipment of milk on May 31 and sold his 150-cow herd and equipment, although he is hoping to rent the freestall barn he built a year ago.

In Tennessee, at least one farm exited, and all but one remaining were picked up by the new Appalachian Dairy Farmers Cooperative that is marketing to a bottler featuring local milk.

In northern Indiana, the farms with lost markets were picked up by two regional cooperatives Michigan Milk Producers and the Ohio-based Great Lakes Milk Producers.

In addition, with the new Class I Walmart plant in Fort Wayne, and the destabilization of fluid milk sales as U.S. population growth is not making up for declining per-capita fluid milk consumption, Dean plant closings are on the horizon. Sources indicate that Dean plans to close as many as seven plants by September but that no new producer-termination letters are expected in the near-term.

This level of Dean consolidation was mentioned in quarterly earning reports. However, Dean Foods has not publicly announced specific plant closings and repeated emails and calls to the Dallas-based company were not answered.

Three plant closings later this year have been confirmed by town authorities quoted in press reports.

One is the Garelick plant in Lynn, Mass.

Another is Dean’s Meadow Brook plant in Erie, Pennsylvania. The Erie Regional Chamber reported to Erie News Now that Dean intends to sell the Erie plant and transfer its bottling to the plant in Sharpsville, Pennsylvania while purchasing a smaller property in Erie for a distribution center.

The third reported Dean plant closure of an estimated seven to be announced is the Louisville, Kentucky plant where many of the Kentucky and Indiana farms that received contract-termination letters ship their milk.

Meanwhile, as Walmart’s new milk sourcing with the “Midwest supply-chain” gets underway ahead of its new Fort Wayne plant becoming fully operational, the 90 to 100 million gallons of milk per year (roughly 800 mil. lbs) are already being moved away from regional bottling and distribution channels to consolidated sourcing and distribution — with the biggest effects at the farthest edges of the new Fort Wayne plant service area, like Kentucky, where dropped producers are unable to find milk buyers.

There just does not appear to be any market access at other plants in the region without being members of cooperatives like DFA or Select or Prairie Farms, and despite multiple attempts by state dairy leaders, none of these three cooperatives have stepped up to accept the displaced producers as members.

As noted in a May 15 Farmshine report,  the KDDC, Kentucky Department of Agriculture and the Governor’s Office of Ag Policy have all been involved in helping these farms find a solution.

It is not an issue of no processors for the milk. The issue is the gates to these processors are closed to these displaced independent producers because they are not already members of the cooperatives manning the gates.

In the most recent March/April edition of KDDC’s Milk Matters newsletter, president Richard Sparrow talked about the situation for these Kentucky dairy farms as “operating in a very limited, if not closed market, with few or maybe no options.”

In his Milk Matters president’s corner, Sparrow offers this commentary:

“It is a really sad commentary on the state of our dairy industry that all the major fluid milk processors in Kentucky have a large percentage of their day-to-day milk supply coming from farms hundreds of miles outside our state’s boundaries. Yet, at the same time, Kentucky dairy farm families can’t find a home for their milk,” writes Sparrow. “This situation did not happen overnight. It is not an oversupply problem or a quality problem. It is a marketing problem.”

KDDC executive director Maury Cox said in a phone interview that he did not want to be negative. However, when he looks at the whole picture of the market, the increased hauling and marketing fees, the quota programs and base-excess programs in this milk-deficit region, the amount of milk being sold $1.00 or more below mailbox price, and the effect of potentially losing these producers upon the infrastructure for remaining producers, he admits that it is difficult to see light at the end of the tunnel.

“They are putting us out,” he says. “I think we are looking at the complete demise of Kentucky’s dairy industry. I think that is what we are seeing.”

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Milk Map MATH…

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map-1.jpgAuthor’s note: Since Milk Map Math was published April 6, I came across another interesting piece in April 11 Tank Transport Trader, where Dr. Mark Stephenson talks of the surpluses in the Midwest and West and states the 8 bil. lbs. Northeast milk deficit and 41 bil. lbs. Southeast deficit, and how the challenge is getting milk from the surplus areas to deficient areas. Read on, for Milk Map Math – 2017 data.

By Sherry Bunting, Farmshine, April 6, 2018

BROWNSTOWN, Pa. – Dairy consolidation away from the eastern U.S. continued in 2017, aided by further losses in basis revealed in the average net mailbox milk prices.

As the state and regional variations in mailbox milk prices move closer to a national price, the losers on the map are the states encompassed by the Federal Orders with highest Class I utilization: Northeast, Mideast, Appalachian, Southeast and Florida.

Not only is fluid milk the shrinking piece of the expanding pie, it is also the segment of the market with a legacy tied to local farms, family farms, farms that are getting dropped by bottlers as the milk bottling industry is also consolidating into wider spheres of milk sourcing.

The only way to slow this trend is to work directly with consumers and retailers because they have already told the dairy industry they want: local milk. Trouble is, the industry, and the checkoff dollars paid by these significant farms in the diminishing eastern region, are not listening to consumers. They’ve got eyes set across the seas on exports hitting 20% by 2025, while leaving the domestic market for nature’s most perfect food — milk — vulnerable and neglected.

Meanwhile, the milksheds on both the East and West Coasts had production levels in 2017 that were lower or unchanged, while big gains in production in the Western Plains milkshed overtook all milkshed production for the first time.

ChartWhile U.S. production was 215 bil. lbs., up 1.4% over 2016, the traditional Northeast milkshed, at 36.88 bil. lbs. added just 0.6%. Anchored by New York (up 0.9%), Pennsylvania (up 1.1%), Ohio (up 0.8%) and Vermont (unchanged), this milkshed includes other New England states that lost 3 to 5% and Maryland down 0.4%.
National-footprint cooperatives, like DFA and Land O’Lakes talk of the flood of milk in the Northeast.

Land O’Lakes is shrinking the Eastern base from 9 mil. lbs. per day to triggering penalties above 8.6 mil. lbs. per day, according to letters received by members. At the same time, different rules are applied in the Upper Midwest where demand will be affected by expansion of the Agropur plant driving expansion in the I-29 corridor.

DFA has placed a base program on members in parts of the Southeast, despite the Southeast deficit and virtually unchanged milk production in the milkshed, while different rules are applied elsewhere on the map, even in states that ship milk to the eastern states throughout the year and have a new powder facility in Kansas to balance that.

When the industry refers to the eastern markets being oversupplied, they are really talking about the ability of expansion areas of the U.S. to serve the markets and consumers of the East.

In particular, they are including in the description of a Northeast supply, the Mideast states of Michigan (up 3.3%) and Indiana (up 2.7%). Even when we figure in these states, the combined Northeast and Mideast milksheds produced 52.37 bil lbs in 2017, up 1.3%.

The Midwest milkshed — from Wisconsin and Illinois to the Dakotas, including the rapidly growing I-29 corridor of Iowa, Minn. and South Dakota — made 50.25 bil. lbs, up 1.3%.

The sea of green in milk production, however, can be found in the Western Plains milkshed from Texas, New Mexico, Arizona in the south to Nevada, Utah, Idaho to the north, including rapidly growing Colorado, Kansas, Nebraska and Oklahoma. This milkshed grew by 5% to 53.12 bil. lbs.

Texas, alone, produced over 12 bil. lbs., up virtually 12% on the strength of output per cow and 7% more cows — leapfrogging both Pennsylvania and Michigan for the No. 5 spot — pushing Pennsylvania to 7th.

New Mexico grew 6.5% to 8.21 bil. lbs. with 4.3% more cows. Every state in this milkshed grew by more than 5% except for Nevada’s growth of 3.6% and number 4 Idaho’s small loss of 0.3%. The West Coast made 48.85 bil lbs, down 1.7% in 2017 with No. 1 California off by 1.7% and Pacific Northwest off by more.

Shifts in state and regional Mailbox Milk Prices tell the story. Losing the most ground relative to the U.S. average were Pennsylvania and the Southeast states. Both were averaged by USDA at $17.55 for 2017. In fact, the eastern Pennsylvania portion of that price was even lower, at $17.39.

Interestingly, the West Coast gained the most ground on net mailbox prices with California’s mailbox at $16.19, up 9.3% over 2016 and the Northwest at $17.59 up 10.2%.

Florida regained the number one position with a mailbox price of $18.96, up 9%, while the Southeast milkshed was tie for 10th with Pennsylvania at $17.55. This value represented a 7.2% gain over 2016 for Pennsylvania but just a 5.8% gain over 2016 for the Southeast.

New England was second at $18.65 and the Appalachian region regained third with a 2017 mailbox price of $18.09, up 8% over year ago. New York was $17.46.

Wisconsin had the fourth highest mailbox price in the nation at $17.95, up 7.6% while Minnesota was 9th at $17.56, up 6.4%. Iowa and Illinois were up 8 and 9% with mailbox prices of $17.69 and $17.96, respectively.

Ohio was up 9% with a mailbox average of $17.61, while Indiana was up 7.4% at $17.02.

Michigan, up 8.3% at $15.59, and New Mexico, up 5.4% at $15.24, were the states with the lowest mailbox prices. West Texas garnered a mailbox average at $16.77, up 8.6%.

Wisconsin and Pennsylvania remained the top two for the number of licensed dairy farms. Pennsylvania lost 80, down 1.3% at 6570. Wisconsin lost 430 at 9090, down 4.6%.

Overall, the U.S. milk production increase of 1.4% came from 67,000 more cow on 1600 fewer licensed dairy farms. Across the 50 states, the number of licensed dairy farms fell 4% to 40,219 and the number of dairy cows grew 0.7% to 9.3 million head.

Keep in mind, USDA milk production statistics are compiled, in part, using Market Admin. pooling reports for marketings relative to cow numbers. With milk moving in ways it never has before, there could be some gray areas in some of these state and regional tallies.

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Blessings counted in Irma’s wake, challenges ahead

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Damage to dairy buildings, but people safe, livestock losses minimal. Processing and distribution channels challenged. Biggest issues: Power. Fuel. Communications. 

wFlorida2812(Dakin)

By Sherry Bunting, Farmshine, Friday, Sept. 15, 2017 (Photos courtesy of the dairies)

FLORIDA – “Four freestall barns are damaged, one completely collapsed, but amazingly not one cow was hurt. God had his hands on us,” said Jerry Dakin in a Farmshine phone interview Tuesday morning, 36 hours after Hurricane Irma hit Dakin Dairy, Myakka City, Florida, just 20 miles east of Sarasota as the eye wall nudged inland after traveling up the west coast of Florida to continue its trek up the center of the state. The more than 300-mile-wide hurricane — packing winds in excess of 100 mph — produced widespread damage as well as loss of power to over 5 million homes and businesses across the entire state of Florida and into Georgia and South Carolina.

The reports are still rolling in and the stories we heard are similar in the South — from the Rucks family of the Milking R in Okeechobee and Dakin Dairy in Manatee County, east to the Wrights in Hardee County — and north — at Alliance Dairies and North Florida Holsteins in Gilchrist County — all the way to Hillcrest Farms Inc. near Augusta, Georgia.

Dairy producers were in high gear preparing for Hurricane Irma last week, and while it appears that dairy buildings have sustained substantial damage throughout the Sunshine State and beyond, producers are counting their blessings in Irma’s wake: People are okay, livestock losses are minimal, second crop corn silage largely held its ground.

The most pressing concern in rural areas is the same as in urban — no power, limited supplies of fuel, spotty communication capabilities and a breakdown in the normal processing and distribution channels for food and other necessities, which means, for dairy farmers, where to go with the milk?

Of the four dairies interviewed early this week across a 250-mile stretch from South Florida to North ranging 1200 to 10,000 cattle and representing over 25,000 cows, just four animals were lost — a milk cow euthanized for injuries at one farm and three young heifers at another were found quite possibly hit by lightning or electrical shock. Among the social media posts of additional farms throughout the region were similar stories and responses of appreciation for the prayers and encouragement of others while focusing the first 24 to 36 hours post-Irma on getting generators going and getting cattle fed and milked and watered and then settling in to sort, evaluate and prioritize additional special needs.

Perhaps most important, however, are the stories of encouragement. Dakin said he spoke with fellow dairymen in a show of support before the storm and that it has been the encouragement of others “even folks from up north texting us and letting us know they are praying for us” that has gotten them through it.

“I have an unbelievable team of employees,” said Dakins of the over 60 employees who work for the dairy he built in 2001 and the dairy plant and store that were added in 2009.  “I am only one man, but it is this team of family and employees that is getting things done.”

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Dakin was feeling fortunate Tuesday morning after the cavalry arrived Monday night — five utility trucks got the dairy, and its milk plant and store, back on the power grid. Since then, the plant has worked overtime separating and pasteurizing milk for multiple cooperatives. In some cases, the skim is being dumped because milk channels are backed up due to plant, supermarket and school closures and other infrastructure issues.

“It’s a big deal to have our plant processing because we are able to unload tankers and get them back to farms,” he explains that they are processing 20 more loads than normal since the storm. “When it comes to a disaster like this, we’re all in this together.”

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They milked their own 2200 cows at 6 p.m. Sunday evening ahead of the storm, and then shut everything down, planning ahead to skip the night milking. They had boarded things up, pushed 1200 dry cows and heifers two miles away from buildings into pastures with wooded windbreaks, and parked large equipment all around the house where 25 family and crew hunkered down “like we were going to war.”

“We were so boarded up that we didn’t feel the true impact, until we opened a door, and it was wild. I decided not to walk outside, to stay calm, pray and rest because I knew there was nothing I could do during the storm and there would be a lot to do when the storm was over,” Dakin recounted.

The storm hit with all its fury at 10 p.m. Sunday evening. By 3:00 a.m. Monday morning, the winds were still blowing, but the core, or eye wall, had passed.

“I didn’t want to walk out of the house, scared about what I was going to see, but I knew I had to face it,” Dakin recounted. “I went straight for the barns, and I saw the buildings down and the cattle out where the gates were knocked down by the collapsed building. Cows were standing in the holding pen bellowing.”

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He cranked up the generator and got help and got to milking. He had already pulled grain concentrates from the ration in the days leading up to the storm to slow milk production, but even so, the pumps could not keep up with the initial milk flow after missing the night milking. “We couldn’t milk them fast enough,” Dakin related, adding that this is the first hurricane his farm has ever seen and that his brothers’ farms in the county were having similar experiences for the first time.

Northeast of Dakin, about 50 miles as the crow flies, Joe Wright was hunkered down at his dairy in Zolfo Springs. He was in the same closet in the same concrete building he took refuge in at the dairy during Hurricane Charley 13 years ago. Of the four hurricanes his farm has weathered, three were in 2004. Irma, the fourth, was second only to Charley in terms of its impact on Wright’s dairy, but he says Irma is the worst in its broad impact on his state and the region’s dairy industry.

Wright looked at the Weather Channel “spaghetti models” ahead of the storm and had a feeling it would track up the nearby Peace River, like Charley, so he didn’t let his guard down when he heard it was heading in a northwesterly direction. True enough. Once the eye wall got close to St. Petersburg, it’s northwest track bent east, putting the edge of the eye wall near Wright’s dairy. The structural damage to buildings tells the tale.

“Right now we are just milking and feeding and trying to return to some normalcy to begin evaluating cows,” he said, explaining that in 2004, they lost cows. The barn fell in on them when Charley came through. Since then, they have converted to modified grazing and so one of the things they did ahead of Irma was to intentionally push the cows out of the barns and lock them out and away from the buildings.

“We thought they would be better off in pasture, and it appears so because the roofs and ends of our freestall barns were just ripped off by Irma,” Wright said Tuesday from his son’s cell phone as they drove 100 miles for a backup generator after their primary generator sustained voltage issues that were impacting pumps and motors on the farm. Fielding a call from a roofer on his own phone, Wright said another pressing concern is getting a roof over the milking parlor, and if possible, the cattle working areas. “The rest of it will wait for winter.”

Confessing he hasn’t slept, really, since Friday or Saturday night and hasn’t been to his home 10 miles from the dairy, Wright shared that, three big oak trees were down at home that he couldn’t deal with. “My neighbors in town know what we’re up against with the dairy,” he said. “They came and cut them up and hauled them away. It’s hard for me to explain what that means. It’s uplifting.”

At Dakin Dairy, the milk cows had remained in the freestall barns, and survived. Dakin observed how difficult it had been to move 2200 cows from the barn to the milking parlor as the storm was within four hours of reaching them. They milked quickly and cows literally wanted to run back to their barns.

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Like Wright, Dakin did make the decision to move his pasture cattle away from buildings, and apart from clearing sheet metal and removing safety hazards around the collapsed areas of the barns, rebuilding will be put off until winter.

“We’ve got a month and a half yet of the real hot weather,” said Dakin. “If anyone is looking for construction work in sunny Florida this winter, we’ll have it.”

Another 180 miles north in Trenton and Bell, the Sunshine State’s two largest herds – Alliance Dairies and North Florida Holsteins – were also in line for hurricane force winds. By the time the eye had traveled inland those nearly 200 miles, Irma had been downgraded to a Category 1 hurricane but still packed high winds, spin-off tornadoes and significant rainfall on the back edge.

“We survived it pretty well and have enough generator power to milk cows, cool milk and pump water. We’ve been able to keep enough manpower to get things done,” said Don Bennink of North Florida Holsteins in a phone interview Monday night from the darkness of his home without power. He was thankful to be just four hours behind in the milking schedule after hearing of others being as much as a full day behind and said all of the generator power is devoted to the dairy. His home can do without power for now.

“We got hit, but south Florida got nailed,” said Bennink. He had spent the days leading up to the storm making sure the generators were backed up and operable, having extra feed and fuel delivered and double checking everything he could think of.

“The worst of the storm, for us, was from 1:00 a.m. to 6:00 a.m. Monday morning,” he said. “We shut down when it got bad and restarted Monday afternoon. We had a crew here because we provided shelter for a lot of our people.”

The dairy’s office, where the former milking parlor had previously stood, was sturdy, and 50 people, including employees and their families, weathered the storm there with provisions while the winds blew roofs and debris.

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Newborn calves at the time of the storm were stowed safely in the herdsman’s office near the calving area.

 

The storm had its impact. While the tunnel-ventilated barns for the milk cows are intact, the large tunnel fans were ripped apart. The estimated 20 inches of rain that fell in a short time at North Florida Holsteins created substantial flooding in the heifer yards.

“We expected this much wind, or more,” said Bennink, “But we did not expect this much water.”

Like the incidental reports from other dairies on social media that had found a few individual animal losses, Bennink said of the 10,000 head of cattle at North Florida Holsteins, three calves were lost.

He was counting his blessings Monday evening, and thankful for his “reliable people.”

Just west of Bell in Trenton, Florida, Jan Henderson at Alliance Dairies had spent the days leading up to the storm pleading with fuel suppliers to get fuel to them. “We wanted our tanks full for gasoline and diesel, and we even filled our choppers so we could siphon if needed,” she said in a phone interview Tuesday. Being responsible for over 10,000 cattle between the main dairy and two grazing operations at other locations, Henderson relied on her managers, quarterbacked plays they had run through and filled in hands-on wherever she was needed.

“We tested our generators to operate under load and made sure our mobile generators were working. We had multiple meetings with our managers on the course of action to make sure cows get milked and fed and youngstock get watered and fed,” she explained.

Before the storm, Henderson was in people prep mode, bringing in plenty of food and energy drinks for employees. Once the storm hit, she was communicating with managers and filling in the gaps on shifts bringing cows to the parlor.

“We are very blessed that Irma weakened from its earlier strength, and we had already determined we would go to 2x milking the day of the storm. We kept going until 6 p.m. when everyone needed to be wherever they were going to shelter,” she said, noting that Saturday’s crew was smaller than normal, and managers from all areas of the farming enterprise helped cover milking shifts — hunkering down at the dairy.

Two days after the storm, one of their grazing dairies has power and the other is still waiting. Alliance Dairies, where 5200 cows are milked, is expected to be without power until next week.

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“We are able to milk and cool milk, and we can provide water, but we are not able to operate our fans,” said Henderson. “It was cool and comfortable the day after the storm, but the heat and humidity is returning.”

“We have very committed people here, and I am awestruck by what our people have been able to do,” said Henderson.

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Like most dairies in Florida right now, they have milk accumulating on trailers with 10 full trailers sitting as of Tuesday morning. One of the grazing dairies was completely full when two milk trucks pulled in, one without a trailer and the other with an empty trailer just in time on Tuesday morning.

While most of the plants are closed and reopening on differing schedules, Henderson notes the power outages and evacuations mean that, “There are 6 million fewer people drinking milk right now, so processors are not feeling the need to process milk.”

Bennink also noted that as processors have been closed with two to three days of milk in silos, milk is also backing up on farms with no place to go.

“It will go from one extreme to the other. When they start needing milk again, they won’t be able to get it fast enough, but we can’t just hold it for them. They will want fresh milk,” he explained, adding that while the coop management is doing a “fantastic job” handling this difficult situation, there will be milk dumped in Florida.

“There’s a lot of milk out there (nationally), and we don’t have the over-order premiums we used to have here, so we’re not going to get sympathy from our customers over the costs our cooperative has to bear to deal with the situation,” Wright observes, adding that in addition to fuel shortages, milk transportation is also hampered by availability of trailers and the ability to wash them down.

More will be known in the coming week, but the Southeast dairy producers will bear the brunt of the costs of handling these issues and it’s unclear what insurances may or may not cover such market conditions that are exacerbated by a natural disaster.

Fuel shortages, plant closures, power outages and evacuations have changed the dynamics in the region.”

Dakin’s plant and a Dean’s plant are currently operating. Some plants are flooded, others have generator problems and some are light on staff to operate. Supermarkets are also having refrigeration and power generation issues.

Restoration of power and fuel to the area will go a long way to immediate needs in this recovery.

Notes Henderson: “You prepare for the worst and hope for the best, and we certainly got a little of both. It was bad enough, but if it had not weakened from earlier forecasts, I don’t want to think about what we might be seeing.”

Wright observes the basics: “If we have feed, fuel and a generator, we can get through this. If we get power, we can do a lot of this cleanup. But without power, it wears on you, and it’s tough on the equipment with the voltages.”

Bennink said it will be a long while for the state of Florida to pick up the pieces, and yet he was feeling fortunate to have his people around and to be able to provide food and shelter during the storm. “One hand washes the other,” he said.

Adds Dakin: “Prayers lifted us up. It is amazing to hear from people in so many other states and to know they have been praying for us down here.”

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