During our recent look into cheesemaking in New York state, we noticed a saddening trend of several smaller cheesemakers closing the doors of their creameries or transitioning their farms to other agricultural operations in an effort to stabilize their revenue. We decided to take a deeper look into this trend, not just in terms of cheesemaking in that state, but the dairy industry as a whole in order to give us a better picture of the hurdles these producers are facing and the impact it is having throughout the state.
The obstacles faced by dairy farmers can be broken into two segments: the price they receive for their fluid milk and the supply of milk overtaking level of demand.
We were able to find some great articles and research that delved into this agricultural economic issue in New York, as well as the role it was playing in other areas of the country.
Federal Milk Marketing Orders
A majority of dairy farms in the country fall under the jurisdiction of the USDA Federal Milk Marketing Orders (FMMO). The FMMO were put in place for two reasons: to guarantee dairy farmers a minimum price for their product on an annual basis, as well as to guarantee a certain level of milk supply to consumers.
Siena Chrisman, who is an eco-blogger for Grace Communications Ecocentric Blog, looked into the role the FMMO’s play in the dairy farming industry and just how effective they were in August, 2016. In her research she found that the price floor set for milk was often based on dairy based products not the cost of production for the farmer to maintain and milk their herd. As a result, dairy farmers continue to lose money because of the costs of their equipment and herd maintenance.
Read more about Chrisman’s look into pricing struggles faced by dairy farmers in New York and Wisconsin here.
Over Supply in Milk Production
Jeff Platsky and Steve Orr took a more recent look at levels of milk production in New York. Their research found that the falling prices of milk were due to a surplus of milk being produced. Many farmers who have stayed open, expanded their herd size to meet what was expected to be an increase in demand as cheese and yogurt plants in the state continued production at high levels, alongside the continued success of exporting milk to Canada and Europe. However, international trade sanctions and predicted cut backs to levels of production at these plants have many farmers concerned about a continuation of growth in the surplus with nowhere for their product to go, thus no revenue for them to continue operating.
Is There Hope for the Dairy Industry?
So with all of this surplus supply of milk and unstable prices of fluid milk, is there any sort of silver lining out there for dairy farmers? There is, and that silver lining just so happens to have a lot to do with cheese! As the international and domestic cheese market continues to grow in terms of consumption and production, cheese prices are forecasted to continue rising, ideally creating an increase in the price received for fluid milk.
The USDA has also forecasted that production of fluid milk will continue to rise steadily, but not at such a rapid pace that will cause milk prices to continue to fall. Also, despite sanctions in certain areas of the world, demand for dairy products exported from the US has risen.
While the economic market of fluid milk and dairy products clearly has erratic and fickle tendencies, forecasts and outlooks are looking bright and we wish the best for these dairy farmers in the coming months and years! Stay tuned for future updates as we continue our research into cheesemaking state-by-state!
Daniel McElligott - Oldways Cheese Coalition Research Associate