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If you could change one thing about the U.S. dairy industry …

Gerwin Kerkdijk Published on 19 March 2012

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Prior to immersing myself in the U.S. dairy market as of 2009, I’ve had the opportunity to farm in three countries, as well as work with dairy genetic suppliers and farmers in at least 50 more through my current employer.

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Every country has a unique set of circumstances driven by their domestic dairy needs or ability to compete on the global product market.The dairy industry differs greatly around the world based on economy, climate, social, environment and labor, just to name a few.

Recently in the U.S., economic pressures and price volatility have been a driving issue for American dairy farmers, holding them back from further profitability and gaining global market share. It would be easy to pinpoint this as the number one item to change, but let’s gain some global perspective first.

Netherlands
In the Netherlands, where I was born and raised, approximately 17 million people cohabitate with four million dairy cattle in an area the size of Maryland. In the U.S., Maryland only has 5.8 million people and about 195,000 cattle. As you can imagine, this has called for more intense environmental and social regulations over producers.

Land constraints and nutrient management are present in everyday life for the dairy farm. Similar to nutrient management planning for CAFOs in the U.S., all farms register what goes into the soil to help combat phosphorus and nitrogen buildup.

In the U.S., you may have agreements with a neighbor to spread your additional manure on their land. In the Netherlands, farmers resort to drying manure and shipping it from the country to adhere to regulations.

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With so many people in a small area, general society is aware and has made their voice heard on farming. They want a high-quality product and expect it to be produced in an aesthetically pleasing countryside, with animal welfare at the forefront. This has driven the development of the industry in many ways.

For example, syncing cows with hormones for timed-A.I. breeding programs is nearly nonexistent, as consumers view the usage of hormones negatively.

Dutch dairy farmers have been able to sustain these high-cost practices due to a strong export demand of value-added milk products, quota system and government subsidies that support the high standards associated with dairy products from the Netherlands. Phasing out of the E.U. quota in 2015 will have an impact on Dutch competitiveness, as demand for high-cost price product has slow growth in the growing dairy consumption markets.

New Zealand
Beyond Europe, I’ve had the opportunity to sharemilk in New Zealand, which is on the opposite end of the spectrum from the E.U. on inputs. Although both are strong export markets, New Zealand produces milk at one-fourth of the production costs compared to the Netherlands, as compiled by the International Farm Comparison Network.

A seasonal, pasture-based system thrives on aligning the majority of a herd’s lactation curve with the best grass-growing time of year. This low-input approach focuses on maintaining the margins as opposed to achieving the highest productivity and the economies of scale the U.S. commonly strives for. This has been a successful approach for global dairy export competitiveness.

The carbon footprint of the dairy industry has been a contention point as less kilograms of milk are produced per hectare of land, leaving an opportunity to gain efficiencies. Increased productivity decreases the carbon footprint by diluting the maintenance of the cows and land over more output.

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For example, in the U.S., since 1944, dairy farmers have reduced the carbon footprint by 41 percent, according to Jude Capper. Producers have been increasing productivity by supplementing grain in the diet, as it is the only way for many to increase farm revenues as other input costs rise.

Land prices continue to rise, putting pressure on the pasture-farming practices that have been the backbone of the industry. This is causing investor groups to invest in more available, lower-cost regions like the southern U.S. or South America.

Bolivia
An up-and-coming dairy production market – along with other South American countries – Bolivia was an eye-opening experience.

In the U.S., the Netherlands and New Zealand, dairy industries benefit from a developed economy, strong infrastructure and consistent domestic demand. The industry supplier network is well developed and marketing of dairy products is reliable. These items, which we take for granted daily, have a huge impact on the running of a farm, something you only realize when it’s not there, like in Bolivia.

The abundant land, climate and natural resources make this country a new frontier for dairy but, at this time, farming has not specialized. The common farm has livestock, crops and trees.

Specialization and professionalizing of the dairy industry is an opportunity for development, as long as the labor market can support it. Finding the specialized labor and knowledge is a challenge that holds many South American farms back from the global market.

United States
I’ve experienced the American dairy industry from the “outside” for several years. At first glance, the U.S. is a melting pot of production systems. Every imaginable farm style has its place in this industry that helps keep the U.S. viable on the world market. Benefiting from this diversity also attracts an array of challenges.

Challenges with land and environmental regulations have increased around farms of a certain size or in different states, providing a barrier to continued growth. Consumer perception around welfare and the carbon footprint of milk production are becoming hot topics every day in legislation and social media, creating new fronts that the U.S. dairy farmer has to be educated on to keep their “license to farm.”

Lack of qualified labor, coupled with variable input and mailbox milk prices, also directly affect day-to-day operations and long-term viability. In any given day, U.S. dairy farmers are adapting their operations to suit each of the above challenges.

With the constantly changing environment and multitude of production systems, it’s impossible to identify the one thing to change that will improve the dairy farmer’s life in the U.S.

All challenges set aside, there is one quality the U.S. dairy industry should never change: the entrepreneurial spirit and openness to new ideas and technology. Nowhere else in the world have I experienced this climate in the dairy sector.

I believe this is what will keep the U.S. a global player in the world market, and why I’m most excited to work with American dairy farmers on a daily basis. PD

Gerwin Kerkdijk is the managing director of CRV U.S.A. , a branch of CRV, a global cattle improvement organization.

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Gerwin Kerkdijk
Managing Director
CRV-Division Products

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