Technology Advancements, A New Hope, and Bankruptcies: What Happened with Dairy Farmers in 2019

The dairy industry has been under significant stress the past four years. From declining milk prices to changes in consumer demands, countless dairies have been forced to close. 2019 was a year that may have brought new hope for dairy farmers through technology advancements. However, bankruptcies of dairy producers and processors throughout 2019 cannot be ignored.

Technology Advancements

In March, Zoetis launched Clarified Plus for Jersey milk cows for genomic predictions that provide direct indication of the genetic risk factors for the seven of the most common adult cow diseases and three in calves. This enables the use of genetic selection to work in tandem with good management practices to help reach herd health and profitability goals.

In a new partnership with California Bioenergy, Land O'Lakes SUSTAIN, the company's conservation solutions provider, announced in April it's making methane digesters more cost-effective for farmers to install on their dairy operations. The digesters will help support California's goal to reduce dairy and livestock manure-related methane emissions by 40% by 2030.

Using and improving dairy genetics was another hot topic in 2019. Some producers have shifted their attention from cows that look good and produce the most milk to metrics that look at overall efficiency and longevity in the milk herd. By linking traits to feed efficiency and using data to drive and improve genetic selection, producers are working to breed for cows that remain healthy and stay in the herd.

Take Lloyd Holterman Jr. and his father, Lloyd Sr., who were watching things such as type, fat, and protein to determine genetic variations. They weren't paying attention to the productive life of the cow, specifically, the traits necessary to improve the number of lactations and health of the cow throughout her life, and her milk's components. The Holtermans determined that profitable changes are not always quick changes, all milk is not the same, and healthy cows are profitable cows. Using these genetic focuses, the Holtermans have improved their dairy herd and bottom line.

Twenty-five years ago, dairy farmers were first introduced to milking robots. While most robots had been seen in dairies with 120 to 240 cows, the past four years had seen growth in larger operations. This article in 2019 showed how to make the transition to robotic milking for larger dairy farmers.

Adding automation to their dairy farm has been pivotal for Takes Dairy near Ely, Iowa. Dan and Debbie Takes have sought the latest innovations for the past 30 years and recently started looking into adding robotics for their cow herd.

The 2019 World Dairy Expo hosted over 62,00 visitors with a sold-out exhibit space, but it was also a front row seat to the most recent technology advancements. These five new products from the expo include nedap augmented reality, DeLaval test spray robot TSR, McLananhan Modular SMS12 System, IMV Imaging wireless ultrasound scanners, and the Next Generation of Hybrid Alfalfa.

In the News

On January 28, South Korea announced it had identified a case of foot-and-mouth disease at a 120-head dairy cow farm in Angseong City. Then, just two days later, South Korea reported another case of foot-and-mouth disease nearby. Both cases were confirmed to be the O-type virus, which the country stated they vaccinate all cattle and hogs for. Between the two farms, over 200 cows had been slaughtered.

The polar vortex of late January in the Midwest and East caused some hauling issues and plant closures for dairy producers, among other challenges to start 2019. The Food and Drug Administration issued a request last fall for information on how consumers use plant-based foods using terms such as milk or cheese in labeling products. Then, the Whole Milk for Healthy Kids Act of 2019 was introduced to recognize the importance of milk to the health and well-being of growing children.

The Canadian government announced it would spend C$1.75 billion ($1.32 billion) over eight years to compensate dairy farmers who face greater competition after free trade deals were struck with European Union and Trans-Pacific nations in August of 2019. The trade pacts had eroded Canada's system of production quotas and high tariffs that was designed to support prices of dairy, poultry, and eggs. As part of the European and Trans-Pacific trade deals Canada signed, it agreed to allow greater imports into the Canadian market, although the supply management system remains in place.

In October of 2019, Secretary Sonny Perdue said dairy farmers have to get big to survive. The "economies of scale having happened in America – get bigger and small go out," Perdue said at a dairy show in Wisconsin. In response to Perdue's comments, dairy farmer Jerry Volence said, "What I heard today from the secretary of agriculture was there's no place for me."

New Hope

South Dakota was a star state in 2019 for dairy growth and production. Vikram Mistry, head of the dairy science department at South Dakota State University, had seen an increase in the number of students in his classes from 1979-1986. Then classes had about 80 to 90 students. Those numbers dropped to 40 by 2002, but have climbed again to 125 students from 13 different states today. The dairy processing industry also increased in South Dakota. Agropur supplies all the mozzarella cheese to Papa Murphy's (a pizza chain east of the Rocky Mountains) and opened its expanded plant in Lake Nordon, South Dakota. The growth is expected to have a $1 billion economic impact on the state. Valley Queen Cheese Factory in Milbank, South Dakota, also enlarged its facility, increasing processing by 25%, equal to up to 5 million pounds of milk per day.

With the release of the 2017 Ag Census in early 2019, cattle, dairy, and hog inventories all jumped between 2012 and 2017. The size of the 2017 dairy herd was the largest in a census year since 1987, at 10 million head, according to the USDA. Dating back to the 1940s, the size of the dairy herd has been shrinking consistently. However, in the past 20 years, the number has stayed between 9 million and 10 million head. Yet, the number of dairy farms plunged to 54,599, down from 64,098, the lowest on record, indicating yet more consolidation in the ag industry.

Dairy farmers saw challenges facing them in early 2019. Take the Brockshus Family Dairy near Ocheyedan, Iowa, which rely on resiliency to stay afloat with record-low prices and tough economic times. They say that making some tough changes; successfully marketing products; and having a plan B, C, D, and E is what is going to make a dairy farmer resilient in the ever-changing industry.

The Chesapeake Gold Farms in Cecil County, Maryland, knows this resiliency and has learned how to diversify. One of the few English dairy farms in the area, Bob and Diane Miller and their three sons found their niche in the retail cheese business. The Millers also invest in conservation through planting cover crops and injecting most of their manure.

Boosting dairy demand in an ever-changing marketplace was another key topic in 2019. For dairy farmers, it's vital to keep ahead of consumer trends and to develop new products to meet consumer demands.

The Pagel's Ponderosa Dairy is an example of catering to consumer trends. The 5,200-cow dairy in Kewaunee, Wisconsin, embraces visits with the public. The farmers work to increase interactions with visiting consumers, have developed their own cheese brand to diversify, and are growing the farm's brand through local tastings at farmers markets.

Near the end of 2019, the dairy market showed signs of recovery, according to Robert Crop, a dairy marketing specialist at the University of Wisconsin. Declining herd numbers, higher slaughter levels, and an expected jump in feed costs are predicted to lead to a very small milk production increase of below 2% over the relatively small increase in 2019 of 0.3%. With that, the average all-milk price could reach $18 to $19 – levels not seen in years.

As producers move into 2020 with a ray of optimism, there are still some external factors weighing on the dairy sector. From a tight feed supply, consolidations, price protection to the global economy, knowing what could be ahead can help producers develop a 2020 marketing plan.

Bankruptcies

2019 was a big year for dairy processor and producer banckrupticies. Louis Dreyfus Company announced on January 16, it would sell or wind down its small business by the middle of 2019 as the trading giant focuses on commodities such as grain and oilseeds. Privately held Louis Dreyfus previously earmarked the dairy business as a noncore activity, it said in a statement.

After opting out of a prior lawsuit against Dairy Farmers of America (DFA) that resulted in a $50 million settlement in 2016, a group of more than 115 Northeastern farmers will take their case to a jury trial. In October, the lawsuit alleges that DFA violated the Sherman Antitrust Act by conspiring to monopsonize the fluid milk market.

In November of 2019, Dean Foods, America's largest milk processor announced the company was filing for Chapter 11 bankruptcy. The company has over 50 brands and dairy products including Dairy Pure®, Organic Valley®, Land O' Lakes®, and TruMoo®. Dean Foods is working with Dairy Farmers of America to purchase the assets.

• READ MORE: Burdened by Debt, Borden Files for Bankruptcy Reorganization