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State of the industry: Historic or hysteric?

PD Editor Walt Cooley Published on 16 March 2010

This is one of my favorite issues of the year. In addition to the annual insertion of a free dairy stats poster, we delve into some of the industry's hottest topics, including national changes to dairy price policy, predictions for when the milk check will cover costs and when to sell the cows and get out.

To be clear, we’re not advocating anyone hastily exit the dairy industry.

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In fact, most of our readers remained in the industry last year. Approximately 91 percent of the dairies that went out of business in 2009 had less than 100 cows. The number of 500-plus-cow dairies in the U.S. changed only slightly in 2009. A return to an average attrition rate for number of dairies exiting may be one of the biggest surprises from 2009.

With that said, we know many of you will not be able to continue under the current up-and-down milk price roller coaster. You’re reading and considering plans floated by co-ops, associations and grassroots groups. You’re also considering how to make the most of your finances. ( See this article by Larry Davis for tips). You might also be looking more carefully at risk management. Follow Gold Star Farms to see what progress they’ve made in their efforts to become better milk marketers.

One example of the difficulty of 2009 comes from California. Besides losing the most dairies of any state in the country – 1,691 – California also did something they haven’t done in more than 30 years. Producers there finished the year with a state milk production total lower than that of the prior year. Milk production in California has, since the end of the year, rebounded some, but the negative-growth in production was historic and a symbol of the 2009 dairy crisis.

2010 may be the year we see an above-average number of dairies exiting. If you’re even thinking about it, you should read John Baker's article about establishing an entry/exit plan . This article should help prepare you mentally to make the best decision possible for you and your dairy.

Despite all of our industry challenges, I still believe that we can find a way to fix what’s broken in the dairy industry.

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I recently returned from traveling abroad and talking about U.S. dairy product exports in the Middle East. When you’re working hard and feel down, it’s always good to go visit your end customers. You would have been proud to hear what they said about the quality of product we produce, although we have some improvements to make in marketing and our product portfolio.

These visits were candid, but encouraging. They didn’t always like the cost of our product, but nonetheless they wished we were more of an international player. They had some suggestions for what we could do to emerge as a global dairy supplier. In the next few issues, I’ll be sharing my insights from the trip. The first of three installments begins in this issue .

How the industry chooses to act in the years ahead will define whether our industry makes historic or hysteric changes. And, yet, regardless of others, you can make history yourself by surviving one more year. PD

  • Walt Cooley

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