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0409 PD: Pennsylvania Dairy Summit focuses on industry trends

Karen Lee Published on 25 February 2009

“This summit offers a vision and a hope for a more vibrant dairy industry,” announced Dina Zug, 2009 Dairy Summit chairperson at the opening session on Feb. 11 in Lancaster, Pennsylvania.

The Pennsylvania Dairy Stakeholders and the Professional Dairy Managers of Pennsylvania with support from the Penn State Dairy Alliance, Center for Dairy Excellence and Pennsylvania Department of Agriculture, welcomed 500 dairy producers and allied industry to the summit.

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Immediately summit attendees were prompted to take a look at what has been happening with their product market as Dr. John Stanton of St. Joseph’s University shared “Emerging Trends in the Dairy Industry”.

“The economic times have changed significantly, and the world’s a very different place than it was before,” he said.

“Like it or not, we are in a global market,” announced Stanton. Previously, exports were used as a dumping ground. Now dairy has been linked to development and countries like Brazil, Russia, India and China will grow in their demand for dairy.

Stanton did acknowledge most of the consumption continues to take place here at home, where U.S. consumption has changed very little over time.

“I have all the faith in the world that you can produce milk,” Stanton told the room full of producers. “The question is how to get people to drink more milk.”

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Structural changes are occurring in today’s economy. The number of people in the bottom fifth for income is increasing, as is the number of people in the top fifth. Therefore, the middle class, who has been the strength for the dairy industry, is shrinking.

Two major changes are taking place with consumers today. First, they are traveling less, resulting in fewer visits to stores and fewer food purchases. Second, they are trading down. Consumers have less money to spend, but they don’t want to give up as much. Therefore, they are looking at varieties that cost less or come in smaller quantities.

“It’s not all bad for us,” Stanton said. “In every change, there’s opportunity.”

He shared the most popular lunch today is a grilled cheese sandwich and tomato soup. Mac and cheese is also increasing in consumption. People are turning to comfort foods, and some of these are great for the dairy industry, he said.

Stores themselves have been changing the way people shop for food. The numbers of supercenters, warehouse stores and dollar stores continue to grow.

Convenience store sales are growing because people are able to combine two trips into one. In addition, sales at warehouse stores are growing because if people take the time to make that trip they buy a lot while they are there.

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“Most of the food industry is in love with the supermarket channel…but times they are a-changing,” Stanton said. Everyone is beginning to sell food, from Home Depot to day cares. “There are whole new formats taking place that never existed before.”

“We need to have dairy consistent with what they want to eat,” Stanton said. “Somebody’s got to be out there saying, ‘How should we be meeting their format?’”

“People don’t buy cheap, they buy what they want. People don’t buy milk because it’s too expensive. It’s because it’s not given to them in a format they want,” he said. “You’ve got to change the way you go to the market because people have changed.”

Another trend in the industry is that private-label sales are at an all-time high. Consumers have less money so they are stepping down to private labels and finding they aren’t that bad.

Food safety is number one on consumers’ minds today and the way to combat this concern is the effort to buy local. “People believe their neighbors are more trustworthy than people they don’t know,” he said. Local foods are also most likely fresher and better-tasting than those that have traveled long distances.

The dairy industry has been so focused on reducing costs that it has put all the milk in one vat where it loses its identity. This could be a problem for the supermarket chains that have begun to publish where their food comes from.

In light of the local movement, the organic trend is waning, Stanton reported. The media is giving more attention to the true value of organic products and consumers are finding their needs met with local products and not necessarily organic.

Another big area that is growing today is that of prebiotics and probiotics. The industry has found health concerns people have and are developing products to address them.

“The environment has changed, and our job is to adapt to a way they want and a format they want, not the way that’s easiest and cheapest to us,” Stanton concluded.

Discussion on trends continued throughout the two-day Summit with topics and speakers including “Animal Well-Being: An Opportunity/An Obligation” with Dr. Wes Jamison of the University of Florida and Dr. Jim Reynolds of the American Veterinary Medicine Association Animal Welfare Committee; “Sustainability and Dairy’s Carbon Footprint” with DMI Executives Chuck Cruickshank and Rick Naczi; “Taking the Ordinary to Extraordinary: The Wegmans’ Experience” with Ken Cassara of Wegmans who is vice president of dairy/frozen foods; and “Emerging Dairy Markets in the Northeast” with Joe Cervantes of Farmland Dairies who is vice president of dairy development.

Breakout sessions included topics of: Farm transition with George Mueller, a New York dairy producer; feeding alternative energy with Dr. Gabriella A. Varga of Penn State University and John Vrieze, a Wisconsin dairy producer; community outreach from the farm with Ron Robbins, a New York dairy producer; and dairy animal quality assurance with Drew Wilkins of Cargill Meat Solutions, and Paul Slayton of the Pennsylvania Beef Council.

Dairy producer John Vrieze enlightened the crowd with the new technologies he’s employed on his Wisconsin dairies. He milks 2,400 cows at two locations and has a separate 450-cow transition facility that services both locations. Vrieze has digesters at each dairy and sells the methane as natural gas. He’s also implemented the use of an ISS filtration system and can discharge water from manure into nearby waterways. He’s been playing around with growing algae to produce biofuels and is considering using the gas produced on a dairy to run a greenhouse for tilapia fish and lettuce grown through aquaponics.

George Mueller, a dairy producer from Willow Bend and Spring Hope Farms in New York, shared the secrets to his 52 years of profitability and steady growth, and Hank Wagner, a dairy producer from Gillett, Wisconsin, concluded the conference by inspiring others to find opportunities in unexpected places.

Awards and honors

The Dairy Summit is also a place where industry groups present their annual awards. Receiving 2009 Pacesetter awards from the Pennsylvania Dairy Stakeholders were Kar-Dale-Acres, a 700-cow dairy operated by Dale and Carol Hoffman near Shinglehouse, Pennsylvania, and the Lancaster DHIA. The Pennsylvania Dairymen’s Association presented three awards, including: Charles E. Cowan Memorial Award to Somerset County dairyman Tom Croner; Distinguished Dairy Woman Award to Paula Meabon of Wattsburg, Pennsylvania; and Extension Award to Gary Hennip, dairy educator and county Extension director in Bradford County. PD

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