In early May, Arla Foods at Hollandtown in Brown county announced to 11 dairy farmer patrons that they would not take their milk after June 31. Thus, another chapter in the current saga of, “What are we going to do with all the milk?”
Oh, the dairy industry has had periods of low milk prices over the decades but they have always been relatively short lived and recovered with accompanying price booms and dairy farming boomed.
One common factor during the milk price booms or busts, farmers always produced more milk to retain income during down years and get a bit ahead during the good years. They could always find a ready processor to take their milk, when and if, they were dissatisfied with milk price, quality testing, their milk hauler or any one of a dozen reasons, most, but vaguely connected with, how the milk would end up in shopping carts.
Dairy farming is loaded with organizations working for or representing milk producers: most devoted to producing more milk with less labor, less cost and more efficiently. And farmers listened and we’ve seen milk production in Wisconsin — and across dairyland — average near 24,000 pounds per cow per year, a figure granddad would have thought absolutely impossible.
It was the price, then…
Of course dairy farmers and the industry worried about too much milk for generations but really only in terms of a low price. That is until, Grassland Dairy spun off 60 (or so) producers last winter followed by Dean Foods releasing 100 patrons over eight states in March (effective June 1) and now the Arla move in Wisconsin.
It appears that all the former Grassland farmers found new homes, as have many of the former Dean farmers (with some time to go) with the Arla farmers still seeking homes for their milk.
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A week ago, Warren Allen, a semi retired, lifelong dairyman near Green Bay called to tell me his story. The 100 milk cows with a near 30,000 pound average are now owned by his son Randy.
“We and 10 other dairy farmers were notified by Arla Foods at Hollandtown that our milk would not be accepted after June 31,” he said. “Apparently their cheese isn’t selling well.”
“We shipped our milk to Arla for the past two years after many years at the Verifine plant in Sheboygan that closed. We have a tie stall barn and always run a very low somatic cell count,“ he says.
“We don’t know what to do,” Allen continued. “We’ve checked around and the other plants seem to be full. Maybe someone will squeeze us in, that’s our hope.”
“The 11 patrons provide about 200,000 pounds of milk a day,” another cutoff producer related. “And, these aren’t all small herds, one milks 1,300 cows.”
Arla: fourth biggest
Arla Foods is a rather unknown name in Wisconsin dairy circles but the dairy plant at crossroads Hollandtown, south of Green Bay, has a long history as White Clover Dairy under the Fassbender family ownership. The relationship with Arla dates to 1996 when White Clover began making Havarti cheese for Arla. Arla purchased the operation in 2006.
Arla was established in the spring of 2000 through the merger between the Danish MD Foods and the Swedish Arla and became Arla Foods, Inc., a cooperative owned by more than 12,500 farmers in Northern Europe. Headquartered in Denmark, Arla Foods has production in 13 countries and its products are sold in over 100 countries around the globe.
In other words, Arla is a big company — in fact it is the fourth largest dairy company in the world with respect to milk volume.
Randy Allen, Warren’s son, took over ownership of the dairy herd in January and owns two-thirds of the machinery in the family-planned farm transition.
All the farms cut by Arla seem to be north of the plant, Warren comments. Maybe the move was based on hauling distance combined with their cheese marketing challenges, he guesses.
Whatever the reason, the 11 farms must find a processor to handle their milk or leave the dairy business and closing down an operating dairy farm is unthinkable. It requires a lot of thinking and planning: What to do with the cows? The equipment? Employees? More important is the loss of income if the milk check doesn’t come any more. What about debt payment and yes, family living costs?
A milk production limiting quota system similar to the long standing Canadian system is suggested by some. Yes, quota is bought and sold (at a high price) but some Canadian farmers (several now in Wisconsin) chose to sell their quota and move to the US and grow their herds.
The long-standing milk production quota in Canada has not deterred the continuing loss of dairy herds: The 10,921 dairy herds in 2017 is down 732 herds from the 11,683 of two years prior and Statistics Canada says a loss of 9 percent of the dairy herds each year is normal.
History shows that US dairy farmers oppose production restrictions although several large dairy cooperatives have imposed expansion restrictions that are currently in effect.
Is it possible that all dairy processors could limit their milk intake (a quota) unless they have a market for the additional milk? That would need a fast-acting oversight committee to allow for new product and consumption needs.
Allen also asks about the farms with higher somatic cell counts. “Ours are always in the 100,000 range but I know there are farms running near the state’s 750,000 limit.” He’s correct according to DATCP, but 400,000 is the limit for exported dairy products, they say.
Then, there are the new dairies being built, including the 4,600 cow Pinnacle Dairy under construction in Green county, owned by the Tuls family. (They also own a similar dairy in Rock county.) This dairy faced much opposition from local residents and organizations before gaining state approval.
Where will this milk be processed if all the plants are full, many ask? I have not yet heard that question answered. But, I do know that the Tuls family is an outstanding dairy producer and I’d bet will (somehow) have a market — somewhere.
Another question? Why does Arla Foods, a multinational, multibillion dollar dairy processor headquartered in Denmark with a US headquarters in New Jersey, even bother with a 25 patron operation in Hollandtown, Wisconsin? I worry about that.
Too much milk is the challenge, is there a solution?
The 11 farmers in northeast Wisconsin sure hope so.
John Oncken is owner of Oncken Communications. He can be reached at 608-222-0624, or e-mail him at email@example.com.
By: John Oncken
Source: Wisconsin State Farmer