Editor’s note: This commentary is by Leonard S. Bull, of New Haven, who was chair of Animal Science at UVM from 1981-89 and taught for 20 years at North Carolina State University prior to retiring in 2009 and returning to Vermont. He was chair of the Vermont Ag and Forest Products Development Board for three years in its early existence.
[I]n full disclosure, I was raised on a Massachusetts farm (dairy primarily, diversified with egg, turkey and sheep operations), and worked in dairy cattle nutrition, waste management and related academia for 45 years prior to retirement in 2009.
It is 2017, and once again the dairy industry of New England in specific, and the nation in general, is hurting financially. The hurt is most severe at the farm level, with the future for many farmers not at all clear. And no, this is not being overly dramatic.
The marketing system (primarily but not limited to co-ops) is also hurting, because farmer members of co-ops share in the financial success or failure of the system. The historical attachment to fluid milk, while dampened with the growth in consumption of cheese and yogurt, still remains, despite the steady decline in fluid consumption, the commoditization of Greek yogurt, and an international export market that is far from secure. There is also an emergence of concern about what “milk” is. The widespread replacement of fluid cow’s milk and goat’s milk by almond, soy and a variety of other “milks” (including the longstanding term for the liquid from the coconut) ignores the fact that the reason that these alternatives have emerged is the failure of the industry to develop creative new “milk-based beverages.” Every time I make this comment, I get the pushback excuses that “company X is working on a milk beverage” that never appears on the shelf. Should it take making high sugar drinks unavailable to schoolchildren to get more milk consumed? That will never work; we tried that with margarine. Milk is a commodity. And there is no requirement for “milk” as a nutrient. There is, however, a significant requirement for specific nutrients that milk contains.
The touted National Dairy Research Centers of the 1980s (I helped form, fund and lead one for a short time) that were intended to be innovative in developing new products from and uses for milk, the commodity, were by almost any realistic evaluation a failure. What are the new products that emerged from that investment and what impact have they had on consumption of milk and milk-based products? Certainly less than those small changes that were developed by private innovators. What percentage of milk, the commodity, is marketed through those few new products?
Will it take another wave of products that wish to call themselves “milk” and with it loss of market share, to make the point?
When Cabot cheddar is voted the best in the world, that is great, just as when Ben & Jerry’s adds a new flavor. But those successes are not innovations and there’s little new demand for milk. The current major development of a cheddar cheese plant in western New York ($47 million) that will come on line in 2017 is not intended to draw milk from Vermont or New England, but it will compete for market share. The recent action by Canada to stop export of a filtered milk product from New York probably led to some of the decision for a new cheddar plant. Where will the market be for that increased cheddar? Domestic? Export? Is the global market saturated or near saturation?
And there is no shortage of dairy industry organizations of all stripes firmly established in their silos, competing with each other instead of advancing the industry, and skimming part of the sale value of milk that leaves the farm but delivering precious little return. (And what is the administrative overhead cost of those many organizations?) Some of those groups focus on exports, but history has shown the impact of an even small decline in exports on the farm-gate value of milk. In a world market, does the U.S. in its current model ever expect to compete with New Zealand? Or, of serious concern, with China, if it copies the best ideas from around the world and develops its own dairy industry — as it is doing and has done also with our pork industry? Will our own internal turf protection mentality continue to stifle the need for change?
The dairy industry needs to look carefully at the soybean industry and the turkey industry. They have run circles around the dairy industry in innovative new product development. There needs to be a serious effort to develop successful dairy-based beverages, with whatever enhancements to the base commodity milk needed to make it attractive, tasty, nutritious and sought by young and old people alike. We have the technology to do it, and need only the will to make a change. We know how to take water out of orange juice to reduce transport cost (we even transport it in milk tankers), and reconstitute it for sale. We have the know-how to do it with milk but we refuse. Why? What about an affordable reverse osmosis unit to be used on the farm to reduce transport cost (and probably on-farm refrigeration and storage costs as well), with reconstitution at the processing plant? Why not? Every tank of milk on the farm is measured and sampled prior to pickup, so we have a basis for payment based on weight and components. We are not in the business of selling the water in milk. As a source of leads, why not look at how the vertically integrated pig and chicken industries operate? I spent 20 years in North Carolina and had a chance to observe firsthand how those business models operate. Many of the parts are not applicable to the dairy industry, but some just might be. And there are many other ideas.
Will it take another wave of products that wish to call themselves “milk” and with it loss of market share, to make the point? Will new plants in our back yard which compete for a finite market share help? Not likely!
The leadership of the dairy industry needs to get into a room, locked from the outside, and kept there until a Vatican-like puff of white smoke is sent out. Difficult? Sure! But the easy things have long ago been done. The solutions will be varied, but they need to be developed. It is difficult to watch the industry go through ever recurring self-imposed cycles that threaten its future. It is time to act.
I remain optimistic but I am getting old.
