TULARE, CALIFORNIA
WHERE Tulare is in the San Joaquin Valley. California is the top U.S. dairy state, surpassing Wisconsin in 1993.
NUMBER OF DAIRY FARMS 332 farms with almost half a million milk cows, nearly one million cattle.
COWS PER FARM 1,450 cows per farm
TOTAL PRODUCTION Last year the dairy farms in Tulare produced about 10 billion pounds of milk, roughly 15 times more than in Oxford. Tulare produced a quarter of California’s US$7.33 billion in 2007 milk and cream sales.
MANAGEMENT While corrals are still common, many free stall barns have been built in the past few years to improve cow comfort and production. During spring rains, open corral “drylots” aren’t very dry.
Read Also
Youth focused on keeping Quebec’s dairy industry strong
In part two of our Making the Future series, Country Guide spoke with Béatrice Neveu from Rawdon, Que. (Read part…
Most Californian dairy farms buy in all their feed, exposing them to high feed prices. Cost of production is currently running about $16/cwt on many farms.
MARKETING Prices are based on the Chicago Mercantile Exchange contract for powdered milk, where 37 per cent of California’s milk is sold. Only 14 percent is sold for liquid milk.
Prices fell to $11.50 per cwt in March, according to the National Milk Producers Federation. That’s the lowest all-milk price since September 2003.
California also produces a lot of commodity cheese, so the Chicago Mercantile Exchange cheese price also impacts the milk price heavily and their milk price tends to be lower than the U. S. average. For example, the February, March and April all-milk price was closer to $10.50/cwt in California.
BIGGEST CHALLENGE Price fluctuations are driven by the corral system which enables easier herd expansion and contraction. Producers have also outstripped local processing capacity.
In the last year, international consumption decreased in a falling economy, with a stronger U. S. dollar and the scare over melamine contamination in Chinese milk. Those trade issues have coincided with a three-year California drought that has increased the price of alfalfa hay. Corn costs have doubled, and competition is intensifying from ethanol producers. Dry conditions will likely continue to be a problem for California alfalfa producers as water rationing will be enforced in 2009, with agricultural producers receiving substantially less water than previously.
SOLUTIONS The National Milk Producers Federation is forming a strategic task force into the oversupply of milk and low milk prices. The group will look at ideas to control the market, such as changes to the Cooperatives Working Together program and possibly some type of supply management program. Currently, there are government dairy safety net programs, such as the Milk Income Loss Contract program and the dairy product price support program, both of which were revised in the 2008 Farm Bill.
Some co-ops in California have implemented new “base” programs, with farmers limited to producing their historic base volume of milk. Producers who produce “over base” must pay for the cost of marketing and shipping it, which results in very steep financial penalties. It’s working, somewhat. During the first quarter of 2009, California milk production was down 3.6 per cent compared to the same period in 2008.
(Thanks to Dave Natzke, editorial director of DAIRYBUSINESS COMMUNICATION for his review of this summary.)
OXFORD COUNTY, ONT.
WHERE Oxford is in the heart of southwestern Ontario. It is Ontario’s largest milk shipper, although nearby Perth County recently surpassed Oxford in cow numbers.
NUMBER OF DAIRY FARMS As of Jan. 1, 2009 there were 344 dairy farms in Oxford.
COWS PER FARM The typical Canadian dairy farm milks 67 cows. As of January 1, 2008, the Canadian dairy cattle population totalled 1,459,600 head, of which 989,500 were cows.
MILK PRICE Dairy farmers are paid according to the composition of the raw milk components (butterfat, protein and other solids) of their milk. The April 2009 blend price of $72.48 per hectolitre is approximately C$31.93 per cwt.
TOTAL PRODUCTION Last year, Oxford’s dairy farmers shipped 267,975 kilolitres of milk. That’s less than 10 per cent of Tulare’s output.
MANAGEMENT Mostly free stall and tie stall barns with some pasturing. Farmers produce their own feed and most raise their own heifers.
MARKETING Supply management based on planned domestic production, administered pricing and dairy product import controls.
Canada’s three largest processors — Saputo, Agropur and Parmalat — represent 14 per cent of the country’s dairy plants but process about 70 per cent of our milk. Ontario has about 32 per cent of the total processing market. If the total Canadian dairy market grows, irrespective of whether the growth is in the consumption of existing or new dairy products, that growth is shared by all provinces.
BIGGEST CHALLENGE The capital outlay for quota can be insurmountable for new entrants. The average price paid in April 2009 Ontario quota exchange was $30,502 per kilogram of solids. That’s about what one cow produces in one year, so for an average size dairy farm, the investment for quota alone would be $2 million.
SOLUTIONS Dairy Farmers of Ontario recently announced a new entrant program for 10 new farmers and transfer assessment of 15 per cent deducted from quota sales to reduce trading milk quota on speculation. Also, the quota exchange began using the pay-what-you-bid system.
