Pennsylvania’s Center for Dairy Excellence hosted five roundtable meetings across the state in mid-May to discuss dairy profitability and associated topics with executive director Jayne Sebright and risk management program manager Alan Zepp.
In Bedford on last May, Pennsylvania Secretary of Agriculture Russell Redding, plus field representatives, consultants, lending agents and extension experts, offered insight and ideas on dairy consumption, costs, foreign trade, immigration and production practices.
Zepp reviewed statistics that illustrate the state of the dairy industry. At close to 9.4 million head, the U.S. dairy herd is the largest since the 1990s. Milk production continues to rise, and butter, cheese and nonfat dry milk stocks all show significant increases over three years ago. Exports have not regained the volume achieved in early 2014 but reached $473 million in March of this year compared with $362 million in January 2016. The value of the U.S. dollar, although still relatively high, has been weakening. A strong dollar renders our exports less competitive.
Secretary Redding reminded the group of the announcement to renegotiate NAFTA. He advocated working with Secretary Perdue and U.S. Trade Representative Lighthizer on trade. “Fourteen percent of our milk is exported,” Sebright added.
Redding shared his recent conversation with Tom Vilsack, now president of the U.S. Dairy Export Council. “That very day,” Redding reported, “Vilsack said Australia and New Zealand were prepared to meet the U.S. price for Mexico. Our top export market is Mexico.”
Sebright pointed out Governor Wolf asked Prime Minister Trudeau to reevaluate his approach regarding Canada’s trade barrier on our exported ultra-filtered milk.
Zepp’s scorecard showed a U.S. all-milk price for March at $17.30 per cwt., obviously better than the March 2016 cwt. price of $15.30, but a devastating plunge from the $25.20 per cwt. in March 2014.
Turning to financing debt, Valerie Detwiler of CBT Bank commented that she has noticed farmer payments becoming farther behind. Zepp said, “Production costs should be lower in Pennsylvania.” Mike Hosterman, AgChoice Farm Credit vice president, noticed that New York dairy producers enjoy $1 per cwt. lower cost than those in the Commonwealth. “Pennsylvania has higher overhead and higher variable cost,” he said.
Penn State Extension educator Greg Strait reported that he counsels dairy farmers in this current situation to be certain to achieve the premiums such as a low somatic cell count.
Several meeting attendees noticed that dairymen often retain unproductive and unprofitable cows. “They care about their animals!” was the explanation. Amy Yeiser Leslie, industry relations specialist for American Dairy Association North East, quickly said, “We have to show the public that we care.” She explained that their promotions build consumer confidence as well as drive milk and dairy products demand. They work with schools and retailers, plus educate consumers about dairy production and the environment. Moreover, their training programs help the industry tell the dairy story. Currently workshops are scheduled for June 7 in Saratoga Springs, and June 8 for Batavia, both in New York.
Recognizing the immigration issues, Redding noted, “You can’t go to any discussion without talking about labor.” He explained, “The agricultural community has many opinions, but no solutions.” Further, Redding said, the views span H-2A to new proposals of green/blue cards to ‘ship them out.’ Compounding the issue is the lack of information on the numbers of guest workers. Stressing the need for a workable system with diverse needs such as seasonal or year-round, Redding said, “Dairy looks more like mushrooms than apples.”
With uncertainties in the export market and insufficient demand to absorb the gains in dairy productivity, the Northeast shares the national problem of surplus milk. A representative from a cooperative exclaimed, “Cities don’t want milk anymore. Urban areas want almond and soy milk.” He added that now more milk is being dumped. For Federal Milk Order No. 1, which encompasses states from Maryland to Maine, approval was granted for $11.4 million animal feed and dumpage category in January.
Sebright summarizes the roundtable meeting discussions, “We need to develop demand or diminish the supply for balance in the industry to be restored.”
Zepp’s monthly update with April data showed class III futures prices pushing up to $17 per cwt. for early fall, while USDA lowered their 2017 milk production estimates. Also, export values are stronger than 2016. Significantly, consumer confidence, which appears to drive demand, is the highest since 2000.
Sebright is optimistic. She noted, “Demand is now growing domestically and for exports. The industry is showing potential.”