“The dairy industry is in for some very difficult times," dairy science professor Leslie Ferreira said. Stock Photo

Cal Poly’s Dairy Science Department has begun to put more emphasis on the postproduction of dairy because of the current economic hardships facing the dairy industry. Dairy prices are unstable, and the price of feed has increased, according to Cal Poly faculty and industry experts.

Dairy science professor Stanley Henderson said he watched the decline in dairy farms — including Cal Poly’s — in recent years.

“We were once a fairly large dairy, and San Luis Obispo County was the largest dairy area in the state,” Henderson said. “It no longer has hardly any dairy in it except for Cal Poly. Now we’re a small dairy in an area that’s not milking many cows.”

It’s not just San Luis Obispo County that has seen a loss in dairy farming. Dairy farms have been going out of business across the country for the past 40 years, said Chris Galen, the senior vice president of communications for the National Milk Producers Federation, an Arlington, Va.,-based corporation.

It has led to a shift in Cal Poly’s dairy science program. While there is still an emphasis on the production of dairy, the economic hardships facing the industry have made the postproduction of dairy, including processing and husbandry, more prominent, Henderson said.

Henderson said he frequently addresses the topic of instability in the dairy market with students.

“I talk about it in every class I teach,” he said. “(In) the introductory class, we’re talking about it. I teach a management class; we visit dairies and discuss it with dairymen.”

Despite the fact that dairies are struggling nationwide, dairy science professor Leslie Ferreira said this does not mean it will be difficult for graduates to find work.

“The dairy industry is in for some very difficult times,” he said. “Yet, I don’t think that’s going to impact our graduates unless they go into the dairy production part of it.”

The dairy industry needs highly trained professionals, but since it’s not a glamorous field, there aren’t a lot of people who are interested, Ferreira said.

Dairies have been in decline over the past four decades because of unstable dairy prices and the high cost of feed, said Rob Vandenheuval, general manager at the Chino, Calif.,-based Milk Producers Council.

“The system now is absolutely broken,” he said. “It does not do anything substantial to protect the multibillion dollar investment in the dairy industry that our farmers have made.”

Some of the rising cost of farming is due to labor costs, while some of it is due to energy and petroleum prices for livestock operations. The biggest problem, though, is how the price of feed is affecting dairy operations, Galen said.

Frustration set in with dairy farmers because the price of feed increased in recent years, and the government has been powerless to do anything about it.

“In 2009, the price paid to dairy farmers across the country was so substantially less than the cost it took them to feed the cows and operate their dairy, that the average farm across the country lost $1,000 a head,” Vandenheuval said. “If you’re milking a thousand cows, you got paid $1 million less than it took you to operate your dairy that year.”

The Dairy Security Act of 2011, introduced to the House of Representatives by Mike Simpson (R- ID) and Collin Peterson (D- MN), could help stabilize the dairy industry if passed. And Galen said the act will create a system that deals more effectively with issues in dairy.

“What the Dairy Security Act intends to do is to basically provide a more effective safety net for farmers that’s not tied to milk prices, but it’s tied to margins,” Galen said. “We’re defining margins as the price farmers get when their selling their milk and the costs of feed.”

The Dairy Price Support Program, the Milk Income Loss Contract Program and the Dairy Export Incentive Program were all created by the government as ways to help the dairy industry stabilize.

All three will be cut if the Dairy Security Act passes, Vandenheuval said.

Instead, farmers will have the choice to be supported by a new margin stabilization program.

“With the assumption that this does get passed into law in the next year or two, once this is implanted, farmers can either opt for the margin insurance program, enough to have the government subsidize against low margins or they can opt out,” Galen said. “If they opt in to get that subsidy from the government, then they are also subject to the market stabilization program.”

The program would allow the government to regulate how much milk is on the market by asking dairy farmers who opted for subsidies to cut back before they create an excess of supply, Galen said.

The Senior Vice President of Legislative Affairs and Economic Policy at the Washington, D.C. International Dairy Foods Association (Jerry Slominski) said the government regulation was the main opposition his employers had against the bill.

“We think dairy farmers should have the ability to manage the risk of prices swinging up and down. A program like the Dairy Security Act is one that would have the government manage that risk for them,” Slominski said. “It has the government do things for dairy farmers. We think if you can give them the right tools, they can manage themselves, and it would be a better system.”

The bill is controversial but has an appeal in Washington, D.C. because it will cut the cost of dairy spending by 20 percent during the next 10 years, saving the government $1.67 million, Vandenheuval said.

Stabilized prices in the dairy industry would have an impact on Cal Poly, head of the dairy science department Bruce Golden said.

“Cal Poly’s dairy is making a bit of money,” Golden said. “Milk is at a record high but so are feed prices. It’s all very expensive to do but we’ve been keeping our heads above water. If the feed price drops, it could be very good, but if milk prices drop just a little bit, it could be very costly to us.”

Ferreira said he was optimistic about the future of dairy industry.

“People are always going to drink milk. They are always eating cheese,” he said.

This article was written by Erin Keating.

Leave a comment

Your email address will not be published.