The daily Astorian., January 21, 2020, Page 5, Image 5

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THE ASTORIAN • TUESDAY, JANUARY 21, 2020
SPECIALS FOR
JAN 22 ND - JAN 28 TH
Market
LOCALLY OWNED AND OPERATED
WHERE THE MEAT LOVER’S SHOP
Steve Ringman/Seattle Times
Sixty cows are milked at a time on a rotary milking parlor at Natural Milk dairy in Washington state.
US dairies struggle amid
trade wars, low milk prices
But all that new milk has put downward
pressure on milk prices — and on dairy farm
incomes.
For fi fth-generation dairyman Jeremy
For years, many dairy farmers — espe-
Visser, 2014 was a record-breaker. Amid cially those at smaller operations — have
soaring global demand for U.S. milk prod- taken off-farm jobs to help their businesses
ucts, Visser made about $500 on each of the survive and “keep doing what they love
4,000 cows he was running in Stanwood and doing,” says Dan Wood, executive director
four other w estern Washington state dairy of the Washington State Dairy Federation.
operations.
Some dairy farmers have adopted new
But a year later, as those sweet trade con- business models that rely less on maximiz-
ditions began to sour, Visser’s fortunes also ing volume.
turned. In both 2016 and 2017, milk prices
At the Twin Brook Creamery in Lyn-
fell so low that Visser lost $100 on each cow. den, just south of the Canadian border, Larry
By 2018, the per-cow losses topped $300.
Stap, a former Darigold member — and
Visser pulled through, in part by mort- Visser’s distant cousin — has refashioned
gaging “everything I owned.” But at least 50 his dairy business around smaller batches of
dairy farmers he knows have left the busi- high-end “craft” milk.
ness. The last few years “have been tremen-
While most commercial dairies use the
dously diffi cult on us,” says the 42-year-old high-output Holstein breed, Stap’s 200 Jer-
father of three.
seys produce less milk, but it contains more
Visser could be speaking for most of the butterfat and other solids — and, Stap says,
roughly 350 dairy farmers still in business in more fl avor. That’s a key selling point for
Washington state, which as recently as 2007 his products, which include whole and other
boasted more than 800 dairy farms, accord- milks, fresh cream and sweetened milks.
ing to the U.S. Department of Agriculture.
Yet even with Stap’s niche, he hasn’t
Dairy is the state’s third-most valuable ignored big industry changes.
farm product, after apples and wheat, with
To control costs in the Northwest’s
$1.2 billion in annual sales. But the business tight labor market, Stap began switching
has been particularly vulnerable to economic to robotic milkers in 2015. The machines,
shifts linked to changing consumer tastes, which let cows give milk as often as they
over-production, environmental regulation, like, have reduced his labor costs and per-
and, more recently, global trade politics.
sonnel headaches.
As a result, a sector known for its booms
“They’re never late to work and they’re
and busts has grown more volatile. That has never hung over,” Stap jokes.
forced survivors to adopt new strategies,
But they’re not cheap: each milker costs
with some shifting to smaller niche mar- $200,000, and Stap’s herd needs four.
kets, while others try to grow their way out
Much of the innovation in the dairy
of declining incomes.
industry has focused on scaling up, not
With trade relations still uncertain, and down. Visser’s dairy enterprise, for example,
with some farmers struggling to repay loans has roughly doubled since 2014 as many of
taken out during the four-year price slump, his friends, neighbors, and others have sold
the state dairy sector faces numerous hur- their operations to him on their way out of
dles, says Shannon Neibergs, an extension the business.
economist at Washington State Univer-
That greater size has advantages. A larger
sity. Among bankers who lend to farmers, operation lets farmers spread costs over
Neibergs says, “the dairy portfolio is recog- more cattle. And a bigger revenue stream
nized as their highest risk.”
makes it easier to pay for those robotic milk-
To be clear, the state’s dairy sector is far- ers and other technologies — including sys-
ing better than big dairy players elsewhere tems to manage the dairy industry’s other
in the U.S.
big “output”: each Holstein cow generates
Wisconsin has lost some 1,600 dairy 115 pounds of manure every 24 hours.
farmers in the last three years alone, accord-
But going large has downsides, too.
ing to the state’s department of agriculture.
Greater output and falling milk prices —
Many of the nation’s big milk proces- they dropped 32% between 2014 and 2018
sors are also hurting. Dallas-based Dean — puts more pressure on dairy farmers to
Foods, the biggest U.S. milk producer, fi led fi nd new ways and places to sell their milk.
for bankruptcy protection
In some cases, that has
in November, and Borden
meant developing new
WISCONSIN HAS consumer products. Dari-
Dairy Co., also in Dallas,
followed suit this month.
for example, has
LOST SOME 1,600 gold,
One big problem for
introduced a higher pro-
Borden and Dean: Amer-
DAIRY FARMERS tein, lower-sugar milk,
icans are drinking less
called Fit, which CEO
IN THE LAST
milk even as they’re eating
Stan Ryan says is “mov-
more cheese, butter and
ing people from things
THREE YEARS
other milk byproducts.
like almond milk back into
By contrast, the Pacifi c
dairy milk.”
ALONE,
Northwest’s biggest pro-
Increasingly, however,
ACCORDING
cessor, Seattle-based Dari-
Northwest dairies have
gold, is still seeing sales
looked abroad to offl oad
TO THE STATE’S
increases. Part of the rea-
their extra output. From
DEPARTMENT OF 2000 to 2014, Washing-
son is that the farm-
er-owned
cooperative,
ton’s dairy exports jumped
AGRICULTURE.
which processes milk from
from $32 million to $232
Visser and 428 other mem-
million. In 2018, the most
bers of the Northwest Dairy Association in recent year for which data is available,
Washington, Oregon, Idaho and Montana, Washington exported more than a seventh of
focuses more on high-demand products — its total dairy output by dollar value, accord-
including bulk cheese and butter, whey pro- ing to the USDA. The share is even higher
tein and dried milk — than on liquid milk.
at Darigold, which exports 40% of its out-
In its 2019 fi scal year, Darigold reported put and hopes to top 50% in the near future.
net sales of $2.3 billion, up nearly 8% from
Washington state’s proximity to Asian
2017.
trading partners gives state dairy producers
Still, net sales are down more than 11% a key advantage over Midwestern competi-
from 2015. And Darigold’s membership has tors. “We can get products to China or Sin-
continued to shrink — its Washington con- gapore cheaper than we can get them to Chi-
tingent has fallen from 412 in 2006 to 294 cago,” Ryan says.
this year.
Darigold has invested heavily in boost-
The ranks of dairy farmers everywhere ing its exports — for example, by produc-
will probably keep falling, in part, because ing more powdered milk, which is in high
they are often better at producing milk than demand overseas — and is counting on
fi nding places to sell it.
exports for three quarters of future sales
With a steady stream of new technolo- growth.
gies — including ones that focus on milk-
But relying more on foreign buyers can
ing, breeding, nutrition and genetics — dairy be risky. From 2014 to 2018, the dollar value
farmers have seen impressive gains in out- of Washington dairy exports plummeted
put. From 1993 to 2018, milk yields from 24% as trade disputes cut overseas sales,
the average Washington dairy cow climbed according to the USDA. Federal relief pay-
25% , to more than 12 tons, according to the ments to farmers hurt by the disputes — pro-
USDA. And unlike many other businesses, jected to be around $9.7 million for 2019 —
where output often can be adjusted for will cover only a fraction of the losses.
changing demand, a dairy farm cannot sim-
The trade disputes also appear to have
ply idle a herd if prices fall.
extended the milk price slump. Though milk
“It’s very hard to turn a cow off,” Visser prices rose through much of 2019, they’re
jokes.
still 8% below the 2014 peak.
By PAUL ROBERTS
Seattle Times
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