Processors

Midwest Dairy Producers Forced to Dump Milk

Fri, 04 Oct 2024 20:19:15 GMT

With much of the Upper Midwest processing capacity maxed out in terms of milk production, finding a new home for milk is not an easy task. Lucas Sjostrom, the executive director of Minnesota Milk shared that Hastings Creamery ability to discharge is shut down for 30 days, as they need to take their waste elsewhere. Sjostrom shares they are continuing operations and are accepting and diverting milk from the same farmers as needed.

“We’ve been working over the past few weeks with the farmers to find alternative markets while government officials have been looking to find a solution to keep the plant open,” he says. “We believe every milk buyer across the Upper Midwest is aware of the situation. Plants are already voluntarily dumping milk on-farm on certain days and even though we have transportation available, most plants cannot currently take the milk even for free.”

Hastings Creamery processes 150,000 lbs. of raw milk each day and purchases it from dairy farmers located in both Minnesota and Wisconsin. A variety of dairy products are under Hastings Creamery label, as well as some private labels for other companies and grocery store chains.

Justin Malone, one of the creamery’s owners, shared that it is a tough time in the dairy industry and some farmers are forced to dump milk because they can’t find any processing plants with the capacity to accept additional milk.

Other Farms Forced to Dump Milk, Too

The reality is that not only Hastings Creamery is impacted by an oversupply of milk on the market. Mitch Thompson owns and operates Thompson Family Dairy in Lewiston, Minn., and is a member-owner of Associated Milk Producers Inc. (AMPI). He shared that he had to dump milk from his herd on June 2.

“The milk hauler picked our milk up and said, ‘Well, I’m taking it to another farm’s field that just chopped rye to dump the milk in the field,’” he says, noting that he still will get paid for that dump milk, but shares the whole cooperative suffers when milk isn’t sold.

Thompson is uncertain on how long dumping milk will continue but shares that he is concerned about the current state of the dairy industry.

“We’re shipping around 70,000 lbs. of milk a day, so I worry where’s all that milk going to go,” he questions. “If they keep dumping the milk, how bad is our [milk] price going to get?”

At the time of the interview, Thompson shared that his farm’s milk was picked up and taken to the plant on June 5.

“It sounded like they were going to get a couple of other different farms and dump their milk like everybody’s taking their turn,” he shared.

Meanwhile, it’s normal business at Thompson Dairy, as cows must be milked every day. Even when the milk is then dumped into a nearby field.

“This is a real kick in the shorts. How long can you keep doing this when the milk price is so low already,” Thompson notes, sharing that he is concerned about the current situation of milk being dumped, as well as low milk prices.

“I just wonder when will things turn around,” he asks.

Flooded Milk Market

Sarah Schmidt, vice president of marketing with AMPI, says the reason producers are having to dump milk is simply because there is currently a flooded milk market.

“There is more milk on the market and fluid milk sales have declined dramatically, especially with schools closing for the summer,” she says. “Those fluid milk sales were there for the past several months and simply are not there now.”

Schmidt comments that milk from outside the Upper Midwest is pushing into the region and displacing typical, seasonal sales. She also notes all AMPI milk receiving plants are running at full capacity.

“The milk produced on member farms is exceeding our processing and marketing capacity,” she says. “The team is working hard to keep milk moving into processing facilities.”

Schmidt says unfortunately they do not see any specific signs as to when the tides are going to turn.

“What we do know is that dairy farmers produce a fantastic product and there is good demand for cheese and butter. I’m hopeful low cheese market prices make their way into the grocery stores, spurring increased sales,” she says.

Recession or Not: The Consumer Has Reached Their Breaking Point

Fri, 11 Nov 2022 17:39:40 GMT

Whether we are in a recession or not is to be determined, but I think we all can agree that we are feeling the impacts of a looming recession. Tanner Ehmke, a leading dairy economist with CoBank, says that we are not in a recession—not quite just yet.

“We’re going to be in one, probably soon,” he says. “That’s mixed news for those of us in agriculture. We want a strong consumer to buy our products. At the same time, we’re also competing for labor.”

Speaking of consumers, Ehmke says they are feeling the pinch every time they walk into the grocery store. The consumer has hit the level of how much price absorption they can take.

“We’ve hit that level,” Ehmke says. “The consumer is not going to take any more cost increase.”

The savings that the consumer was able to accumulate throughout the pandemic has dwindled thanks to higher fuel, higher rents, higher groceries and more.

“Through higher costs of everything now, those savings have been depleted,” Ehmke says. “Credit card debt is now going up. And that’s an indication for a lot of people that they’ve run out of cash.”

With all that being said, people no longer can absorb higher costs. Ehmke says that lighter foot traffic is seen in some grocery stores, while discount retailers have seen a significant increase in foot traffic.

“Even your wealthier consumers have decided that they cannot afford cost increases anymore,” he shares. “For their shopping, they’re trading down from branded products to private label store brands. They’re trading down from premium products to lower-priced commodity products. After they’ve done all of those things -- shifted retailers, shifted from brands to private label, shifted to commodity versus premium -- the next step then is for them to reduce how much volume they buy.”

Mike North, president with Ever.Ag, concurs with Ehmke and says that the looming recession is naturally top of mind for everyone. North also says that while consumers are very notably showing changes in spending, the dairy case has performed very well relative to other protein categories.

“Moreover, down trading in the food service universe can still include a lot of cheese as fine dining frequency is substituted with quick casual and delivery,” North says. “However, this may come at the expense of other fats/creams.”

Ehmke says it is going to be a balancing act between the farmers and processors going forward.

“You simply can’t pass that cost on to the consumer anymore,” he says. “It’s just going to compress margins.”

North says yes, the recession is a big story and advises producers to be mindful of normal seasonal demands that will taper into the new calendar year.

Water Shortage Pushes Central Oregon Dairy Farmer to Sell 40% of His Herd

Tue, 10 May 2022 15:07:29 GMT

Water is a crucial ingredient when it comes to agriculture. This especially holds true in locations like the High Desert of Central Oregon. With 12 inches of precipitation annually, central Oregon isn’t a stranger to dry conditions. However, their scarce water issues have generated problems for river habitat along the Upper Deschutes River. All of this has diverted irrigation water that normally would be allocated for agriculture, to stay put in the river.

This ongoing issue has become a headache for many farmers, like dairy farmer Jos Poland of Madras. Less water doesn’t only mean fewer aces for his cows to graze on. It has forced Poland to make the hard decision to sell 40% of his herd earlier this year, reducing it from 240 head to 140 milking to cut costs. Poland says he was left with no other choice.

The water issue has been ongoing, but it was heightened when Oregon’s spotted frog population was put on the federal Endangered Species List in 2014. This caused the Center for Biological Diversity to ratchet up the pressure, slapping on a lawsuit that requires more water distribution for the Upper Deschutes. Doing just that means less water for farmers, like Poland.

When the river loses water, the wetland frog habitat along the Upper Deschutes dries up. When the river has too much water, frog eggs flush downstream and die.

“It’s not a great picture for the frog right now,” Bridget Moran, who manages the U.S. Fish and Wildlife Service Bend office, says. “The listing of the frog brought to the surface a need for the broader restoration of the river.”

Poland, who ships his organic milk to Darigold, says he cannot grow enough grass to feed his cows due to the water shortage.

“Feed prices have skyrocketed,” he says. “And, it’s becoming harder and harder to find hay.”

Emotional as it is, Poland is contemplating what’s next for him if the drought continues.

Early Beginnings

His journey began in Holland, where he was born and raised on his family’s dairy farm, owned by his father and uncles. At 20-year-old, Poland went to Canada as an exchange student and then became a partner on a dairy farm in Alberta. In 1993, Poland moved to America to operate a conventional dairy farm in the Wilmette Valley before he built his dairy in 2005 with his wife, Deanna, who was raised on a central Oregon dairy farm.

Deanna understands the heaviness of the challenges she and her husband face as dairy farmers. However, the family lifestyle that owning and operating a dairy farm provides pushes them to not give up. The Poland’s have three children: Johan, 16, and twins, Maikel and Maija, 15.

“It’s great for the family to come together and be a team, working together,” Deanna says.

When labor became a bigger issue, the Poland’s pulled the trigger to install robots in 2020. This investment is something Poland questions, as this was ahead of the drought. When the water scarcity intensified, thanks to the spotted frog issue, Poland has regrets.

“To tell you the truth, I never would have done this if I knew then what I know now,” he shares. “I would have probably said, ‘that’s enough, I’m going to do something else.’”

Water Nightmare

Being in a drought for a couple of years, Poland says their water allocations have drastically declined.

“We normally get about two feet per acre of water,” he says. “Last year we got one foot and then later during the irrigation season, somewhere at end of June, they cut us back more. This year we get allocated half of what we got last year.”

This reduction means that Poland can only irrigate about a quarter of his land that he has water rights for.

“It took a lot of time for me to get my organic pastures established,” he shares. “The best thing to control the weeds for organic farmers is to water the pastures.”

Poland reports that half of his pastures are totally dead.

“They’re done. I’ll have to start all over if we ever get water back,” he says.

Head south to Redmond-Bend area, and Poland says they are getting five to six feet per acre of water.

“It makes no sense. They’re wasting water. It’s all because it is tied up in old water laws,” he says.

Poland claims that more water was left in the river during the wintertime causing less water to be stored for future irrigation.

“We should have twice the amount of water right now,” he says.

Due to being a certified organic producer, Poland’s cows are required to spend so much time each day grazing out on pasture. Last year, they gave some leniency due to the drought, but this year he was forced to cull some cows. Poland is hoping he doesn’t have to further reduce his herd size but says that it will all depend on if his farm gets the timely summer rains that they desperately need.

“Last year we had 100°F at the end of June, which we never have had before,” he says. “I never had any thunderstorm showers to speak of last year.”

Moving Ahead

Poland’s plan is to reevaluate his situation later this fall before making any further life decisions.

“We’re going to watch what feed costs do, but I do think they’re going to be just outrageous,” he says.

Although they have no signed feed contracts, the Poland’s have a great relationship with their long-time feed supplier from eastern Oregon.

“We agree on the price and the quantity at the beginning of the season,” Poland says. “Even if prices go up, our buyer goes off of our agreed price.”

With only two dairies left in central Oregon, the idea of thinking about a life without cows tears at Poland’s heart.

“We built everything brand new here, starting from scratch,” he says. “It’s very hard to think about life without dairy cows, but at some point, you have to say enough is enough.”

Poland says truck driving might be the route he goes next, but for the time being, they’re trying to take the best care of their cattle.

“That is what we know how to do best,” he says.

Both growing up on family dairy farms, working hard has always been in the Poland’s veins. But now, they feel like they’re working harder than ever before and with mountains of roadblocks, the duo say it’s almost too hard to keep going on.

“It never bothered me before,” he says. “But I’m 56 now and I cannot predict what the future holds.”