Milk production in California, the largest milk producer, decreased four percent in 2009, according to a report by Rabobank’s Food & Agribusiness Research Advisory Group (FAR). The report calls the decrease the “largest single decrease ever recorded in California and the first year of negative milk growth since 1978.” For the same year in Wisconsin, the second largest milk producer, milk production actually increased by 3.15 percent, representing the biggest increase in 16 years despite a decrease in milk prices. So what’s the difference?
California dairy farmers are more reliant on purchased feed. The total feed costs increased 78 percent for California dairy farmers from 2006 to 2009, but only increased 12 percent for Wisconsin farmers. Wisconsin feed prices increased 69 percent, but farmers purchase much less of their feed since they grow their own. Half of California’s cost of production is actually from purchased feed, whereas it’s only 24 percent for Wisconsin farmers.
The report also points out that California farmers focus on specialization and scale in milk production and have large herd sizes. Wisconsin farmers “use a more integrated dairying model with fewer cows per operation.” Wisconsin has 14,158 dairy farms while California only has 1,923, according to the 2007 USDA Census of Agriculture.
Report suggests California dairy farmers need to export more
The report’s solution for the California dairy industry’s problems is to increase exports, although it does also recommend growing their own feed. “The export market now offers pricing at least as attractive as that available domestically and provides the only real avenue to significant volume growth,” the report states.
However, there is a problem with increasing exports, as a report on the Jamaican dairy industry shows. Small Jamaican dairy farmers are going out of business because they are unable to compete with subsidized milk imports.
Jamaica is the “second most heavily indebted country in the world (measured as debt per GDP),” according to the report, and spends about $10 million a year on imported milk.
A report on Kenya for ActionAid International Kenya (AAIK) looked at the effects of the surge of imported milk increases from 1992 to 2001. The report found that 40 percent of the Kenyan dairy farmers surveyed said they were negatively affected by the milk import increases and 35 percent said farm employment was negatively affected.
Growing more feed is the real solution
The best way for California dairy farmers to reduce their cost production is by growing more of their own feed, as Wisconsin farmers already do. An Associated Press article in March from Riverdale, California, which is a rural community in Fresno County loaded with dairy farms, states that Asian exports expanded, but California dairy farmers still struggle with the 2009 price decrease. The article also points out that corn prices are higher, which makes corn-based feed an added burden for already cash-strapped dairy farmers.
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