- The Washington Times - Wednesday, November 6, 2019

California’s oldest dairy farm is banking on a new source of milk, having traded its cows for almond trees.

The Giacomazzi Dairy’s radical shift is reflective of America’s shrinking dairy market, where historically low milk prices, the trade war with China and efficient technologies have made it nearly impossible for small farmers to make a profit.

“The dairy industry was always a roller coaster ride, but now it is broken,” Dino Giacomazzi told The Washington Times about the decision to change production at his family’s 126-year-old farm in Hanford, which until last month had as many as 2,000 milk-producing cows.

Milk has been a staple in the American diet and U.S. economy for decades, and the farmers who produce it make up one of the nation’s oldest regulated industries. Last year, they sold about $35 billion worth of milk.

The overall industry, according to the National Farmers Union, accounts for about 1% of gross domestic product, generating an economic impact of $628 billion and playing a central role in the nation’s rural, agricultural economy that “cannot be overstated.”

But over the past 30 years, dairy farms have largely consolidated into the larger operations now dominating the industry. From 1992 to 2018, more than 94,000 family dairies closed their barns at a rate of 10 per day, the National Farmers Union says.

According to Department of Agriculture figures, the U.S. has lost nearly 20,000 of its licensed dairy farms — more than 30% — over the past decade. From 2017 to 2018 the number dropped from 40,199 to 37,468, almost 7%.

California, Wisconsin, New York, Idaho and Pennsylvania are the leading milk-producing states. Dairy also plays a major role in Florida, Maine, Michigan, Minnesota, Ohio and Vermont. Local reporting in each state regularly features stories of the industry’s demise.

This week in New Orleans, industry leaders from the National Milk Producers Federation, the United Dairy Industry Association and the National Dairy Promotion and Research Board gathered for their annual conference. Discussing the future, their leadership put a positive spin on what farmers who have survived call “a natural but painful evolution.”

“Resilience against hardship has always been a fact of life in dairy,” Jim Mulhern, CEO of the National Milk Producers Federation, said in an email. “We know that if we embrace change while holding true to our values, we will win.”

Some farmers blame themselves for the spate of closures. Industry analysts also point to decades of flat milk prices that made profits hard to come by.

The past decade has brought turbulent pricing fluctuations, which hobble farmers’ ability to predict supply and demand. Prices fluctuated as the industry shifted from local to national to global sales, thanks to advances in refrigeration, dairy storage and other efficiencies.

Diversification from producing only milk to more profitable dairy goods such as cheese and yogurt briefly offered a lifeline and boost in sales. But sales of those products also have proved volatile, Mr. Giacomazzi said.

New York state had a yogurt boom early this decade when the company Chobani began to corner the national market for Greek yogurt, which it produced in the central part of the state.

Because Greek yogurt requires four times as much milk as regular yogurt, dairy production in New York blossomed and farmers bought more cows. But a steep drop in global milk prices after 2014 left smaller farmers engulfed by debt they incurred in buying cows to meet the demand brought about by Chobani’s surging sales.

Farmers and analysts say 2014 was critical because that was when costs rose for U.S. farmers because of supply issues in China. Milk prices stayed low for the next four years before rebounding this year.

 “Farmers always have a plan for the future, but after four hard years, many were running on fumes. Now prices are higher, and while many farms were lost, the ones that made it through have a chance to recover,” Alan Bjerga of the 103-year-old National Milk Producers Federation told The Times.

The Government Accountability Office issued a report last week on dairy cooperatives, which have existed for roughly 100 years as mechanisms allowing smaller farmers to band together to access larger markets and better prices. The report warned that a decline in their numbers meant massive cooperatives were taking over and contributing to the demise of small farms.

The study was requested by Sen. Kirsten E. Gillibrand, New York Democrat, who told The Times in an email that “Congress needs to do more to ensure that our current policies aren’t failing our farmers.”

But the Dairy Farmers of America and others, including the National Milk Producers Federation, have defended the consolidations. They say it is a trend across all U.S. industries competing on the global stage.

“Farmers who belong to a cooperative have an assured market, and in today’s volatile times, this is increasingly important,” John Wilson of the Dairy Farmers of America wrote in an email about the GAO report.

In California, where the Giacomazzi Dairy sold into the Land O’Lakes Inc. cooperative, Mr. Giacomazzi said he will miss his cows. But he is excited about the almond trees his farm has planted and will soon harvest. He believes the trees will be profitable.

“I also won’t have to get up in the middle of the night to solve the almonds’ problems,” he said.

• Dan Boylan can be reached at dboylan@washingtontimes.com.

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