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CapitalPress.com
Friday, July 15, 2022
Dairy
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Groundbreaking ceremony held
for nation’s largest research dairy
By CAROL RYAN DUMAS
Capital Press
RUPERT, Idaho —
Ground has finally been
broken for the much-antic-
ipated research dairy — the
largest in the U.S. — that
can take Idaho’s dairy pro-
ducers sustainably into the
future.
“This really is an historic
event,” said Mark McGuire,
University of Idaho associ-
ate dean and director of the
Idaho Agriculture Experi-
ment Station.
The university knew
there was a need for a
research dairy in southern
Idaho. Dairymen and Idaho
Dairymen’s Association led
the effort, and the university
responded, he said.
Dairy is a progressive
force that wants answers
and solutions. The research
dairy has been a long time
coming, and the universi-
ty’s partnership with dairy
producers led to success, he
said.
“It’s nice to be moving
dirt,” he said.
The research dairy will
be the main component of
the university’s $45 million
Center for Agriculture, Food
and the Environment, said
Michael Parrella, dean of the
university’s College of Agri-
cultural and Life Sciences.
“Today is certainly a sig-
nificant milestone for the
research dairy,” he said.
Dairy research by univer-
sities around the country is
making great progress. But
that research is on a small
scale, about 100 cows, he
said.
“They are not going to
be able to do the work that
we’ll be able to do here,” he
said.
The
commercial-scale
dairy will be built on a 640-
acre demonstration farm
conducting
environmen-
tal research and will have
a capacity of up to 2,000
cows. Its research will have
a unique focus on the arid
West, where herd sizes are
especially large and opera-
tions face unique challenges
such as water constraints.
“We expect this facil-
ity to be a mecca,” bring-
ing in other researchers, stu-
dents and research funding,
he said.
Research will address
environmental impacts of
dairies on water quality and
efficiency, as well as nutrient
management and soil health.
It will be an intersection of
animal agriculture and crop
agriculture, he said.
Dairy producers came to
the university to drive the
impetus and need for the
facility, he said.
“I don’t look at this as a
U of I project; I look at this
as a partnership,” he said.
Rick Naerebout, CEO of
Idaho Dairymen’s Associa-
tion, said the foundation of
a research dairy unique to
Idaho was laid by dairy pro-
ducers Mike Quesnell and
Bill Stouder (now deceased),
who saw the need for envi-
ronmental research.
“This is a huge moment
for us,” he said.
The U.S. dairy industry
has committed to net zero
carbon emissions by 2050.
The research dairy is going
to be a key figure in helping
the industry reach that goal,
he said.
“After two decades of
talking about this project …
we’re going to move dirt,”
he said.
The research dairy is
expected to be completed in
2023 and to begin milking
cows in 2024.
The dairy is a partner-
ship between the university,
Idaho Dairymen’s Asso-
ciation—which has led
the effort for more than 15
years—and the state, with
each contributing funding.
Other agriculture groups,
processors and individuals
have contributed or com-
mitted funding for the larger
Center for Agriculture, Food
and Environment. CAFE
includes an education and
outreach center in Jerome
and food science efforts in
partnership with the College
of Southern Idaho in Twin
Falls.
High costs, slack demand
put pressure on U.S. dairy
By CAROL RYAN DUMAS
Capital Press
High input costs and weak-
ening demand continue to keep
global milk production at bay.
As of the second quarter of
2022, milk production in the Big
7 dairy export regions is expected
to have contracted for the fourth
consecutive quarter. The Big 7
consists of the U.S., EU, New
Zealand,
Australia,
Brazil,
Argentina and Uruguay.
That hasn’t happened since
2012-2013, according to Rabo-
bank analysts.
Global milk output is expected
to have declined by 1.1% year
over year in the second quarter
after declining 1.9% in the first
quarter. Positive year-on-year
growth versus a low comparable
is anticipated in the second half
of the year, resulting in an esti-
mated decrease of 0.5% for 2022,
they said in the latest “Dairy
Quarterly” report.
Farmgate milk prices are
high across most regions, but
that hasn’t resulted in produc-
tion growth. Producers are facing
higher corn and soybean prices
and weather disruptions in some
regions.
“Overall inflation pressures in
energy, fuel and wages are also
impacting profitability across the
Big 7. Despite higher milk prices,
production growth and the feed-
costs scenario remain challeng-
ing,” they said.
That supply shortfall is run-
ning up against weaker demand,
with consumers in most regions
feeling the impact of inflation in
their purchasing power. Inflation
in the U.S. and European Union
is at a 40-year high.
“In emerging markets, infla-
tion is not new. But the severity
of the current rise in prices, espe-
cially for commodity-importing
countries has been amplified by
Port of Seattle
Containers are stacked at the Port of Seattle. More work remains to
be done to resolve shipping problems, according to the National Milk
Producers Federation.
Dairy focuses on supply-chain fixes
By CAROL RYAN DUMAS
Capital Press
Guven Polat/Getty Images
Cows are milked at a dairy farm. Dairy exports continue to shrink.
the effects of the war in Ukraine
and a very strong dollar,” they
said.
China will be key to global
dairy demand moving forward.
Dairy imports to China, exclud-
ing whey, are already down 4%
year over year in the first four
months of the year.
“Strong domestic milk pro-
duction coupled with weaker con-
sumer demand due to COVID-re-
lated measures at a time of high
inventory is resulting in lower
imports,” the analysts said.
Whey imports by China are
already down 40%, and non-
whey imports are expected to
drop 34% year over year in 2022.
In addition, New Zealand 30%
to 40% of its dairy exports go to
China, and China is not pleased
with New Zealand aligning with
the U.S. in its criticism of the
country. China closing part or
all of its markets to New Zea-
land even temporarily would be
a huge blow to global dairy mar-
kets, and all parties would lose,
they said.
In the U.S., the milk cow herd
hit bottom in January after post-
ing monthly declines since June
2021. Producers added to the
herd in February and March. The
herd held steady in April but was
down 98,000 head from a year
earlier.
Milk production was down
1% in April and 0.7% in May
year over year. The analysts
expect it to turn positive by April.
But growth is forecast to remain
below trend with a 0.9% growth
year over year in the second half
of the year and a 1.1% growth in
2023.
While supply constraints
have pushed milk prices higher,
demand is beginning to push
back.
“This demand response will
trigger heightened volatility as
markets search for equilibrium,”
the analysts said.
U.S. dairy exports have been
mixed but only fell 1% in vol-
ume year over year in the first
quarter. Exports to China fell
9%, driven by lower whey
exports, but there were gains in
Mexico and Japan.
There’s still more work to be
done to improve the shipping sys-
tem for dairy exporters, a leader of
the National Milk Producers Feder-
ation says.
The NMPF worked with Con-
gress for the better part of the year
on the Ocean Shipping Reform
Act, which was signed into law last
month. The law will bring welcome
changes to support U.S. agricul-
tural exports, but the group recog-
nizes it’s not a total solution to sup-
ply-chain problems.
The legislation would address
carriers’ refusal to provide contain-
ers and space on ships, guidelines
on what constitutes unreasonable
refusal to load product and guide-
lines on detention and demurrage
fees.
Carriers have been refusing to
provide containers simply because
it’s more profitable for them to take
back empty containers and return
them quicker to the West Coast.
They’re not even extending con-
tracts for U.S. agricultural exports,
said Tony Rice, trade policy man-
ager for NMPF.
The next step, now that the
Ocean Shipping Reform Act is law,
is a rulemaking process by the Fed-
eral Maritime Commission, he said.
A lot of the ocean carriers have
dropped detention and demurrage
fees in response to the legislation,
but there are still a lot of difficulties
with labor and shortages of truckers
and containers, he said during the
latest “Dairy Defined” podcast.
The percentage of empty con-
tainers leaving the major West Coast
ports has still been around 70%. In
2021 alone, these challenges have
cost U.S. dairy exporters just over
$1.5 billion, he said.
“Nearly 18% of total U.S.
(milk) production was exported in
2021 alone. And as you can imag-
ine if there is any hiccup in getting
that product out the door that has
a downward pressure on farmgate
milk prices,” he said.
It’s really important to fix the
supply-chain problems and not
only the short term problems. It’s
clear that export volume is going
to continue as international custom-
ers demand U.S. dairy products, he
said.
“Our competitors, mostly the EU
and New Zealand, they’ve shown
that they’re not going to be able to
keep pace in the coming years. So it
makes it all the more important that
these supply-chain issues get ironed
out, and hopefully sooner rather
than later,” he said.
The Ocean Shipping Reform
Act would take steps to do that,
and NMPF’s role is making sure
the Federal Maritime Commission
takes measures to ensure the pro-
visions are strong and support U.S.
agriculture and dairy exports, he
said.
But it is only one piece of the
puzzle. NMPF is going to continue
its efforts with the administration
and Congress to make sure all avail-
able tools can be employed to make
sure U.S. dairy exporters can meet
international demand now and in
the future, he said.
Dairy product demand weakening
By LEE MIELKE
For the Capital Press
airy product demand
is weaker than most
people expected,
according to Matt Gould,
editor and analyst with the
Dairy and Food Market Ana-
lyst newsletter in the July
11 “Dairy Radio Now”
broadcast.
He pointed to the Fed rais-
ing interest rates, the slowing
economy, and the loosening
of our tight supply chains as
contributors.
When asked if exports will
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bail dairy out, he answered,
“That’s the almighty question.”
He said U.S. dairy prices
have moved below the rest
of the world so, “If you’re an
international dairy buyer, you
look at the U.S. and say, ‘Their
dairy products are on sale.’”
And, while dairy prices
have fallen, Gould says, “It will
not be a total plunge. We will
see a floor put in, if for no other
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reason than milk supplies glob-
ally remain tight.”
Milk estimates lowered
The Agriculture Depart-
ment again lowered its milk
production estimates for 2022
and 2023 its latest World
Agricultural Supply and
Demand Estimates report, cit-
ing slower expected growth in
milk per cow.
2022 production was esti-
mated at 226.0 billion pounds,
down 400 million pounds
from last month’s estimate.
If realized, 2022 production
would be down 300 million
pounds or 0.1% from 2021.
2023 production was
estimated at 228.3 bil-
lion pounds, down 1 billion
pounds. If realized, 2023 pro-
duction would be up 2.3 bil-
lion pounds or just 1.0% from
2022.
The 2022 Class III milk
price average was estimated
at $22.80 per cwt., down a
dime from last month’s esti-
mate, and compares to $17.08
in 2021 and $18.16 in 2020.
The 2023 average is estimated
at $20.85, up 20 cents from a
month ago.