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Global Milk Supply Insights: United States

The EU abolished milk quotas in April, but what is the state of play in other parts of the world? Rhian Price and Charlie Taverner of Farmers Weekly investigated effects being felt in Canada, as well as New Zealand, the United States and the Netherlands. Previous articles have explored the issues being felt in New Zealand and Canada, and look for the final article that will focus on the Netherlands.

United States
• USA had 9.2 million dairy cows in 2013 and more than 50,000 dairy farms
• Average US cow yielded 9,892litres in 2013
• Total milk production was 90bn litres in 2013
• For most states, marketing orders mean milk prices are set at federal level by the Federal Milk Marketing Order based on supply and demand. Farmers are paid based on the classification of their milk. There are no national quotas.
• California has its own pricing system called The California Pool. Its price is set on a formula using commodity prices from the Chicago Mercantile Exchange.
• Currently talks are ongoing and California could move to the FMMO

Neil and Jessica McIsaac of Petaluma, CA. Photo courtesy of Farmers Weekly

Neil and Jessica McIsaac of Petaluma, CA. Photo courtesy of Farmers Weekly

• Farm facts:
• Milking 350 organic, Holstein cows
• Cows are grazed during the summer months and housed in free-stall barns in the winter.

California is the largest milk producing state in the US, accounting for 21% of total production. The state has its own pricing system and uses quotas. But it is not limiting production like Europe.

Neil and Jessica McIsaac milk 350 Holsteins in Petaluma, northern California, producing organic milk for Clover Stornetta.

They produce 21,000 pounds (9,500 litres) of milk a cow a year and have quota for 3,000lbs (1,360litres) of organic production and California quota for 1,750 pounds (790 litres) of solids.

Quota costs roughly $500 (£324) for every pound of solid. But it acts like a long-term investment, explains Mrs McIsaac, with producers receiving $1.70 (£1.14) back in their milk cheque for each pound of solid they produce.

Although Californian farmers don’t have to have 100% quota Mrs McIsaac believes tighter restrictions on milk production would give milk producers a more level price.

“California price swings up and down. There’s so much variation. A lot of people are pushing to do away with the California price and go to the federal system.
“When you have no base people produce way too much milk and your country will have that problem [post quota].”

The McIsaacs chose to become organic for a higher and more stable price. They currently receive $37/100 lbs (53p/litre) milk – the highest it’s ever been.

Despite having quotas, this doesn’t restrict growth, as The Californian Pool is required to pick up all of the milk produced on farm.

“If we wanted to expand our organic milk buyer would take the milk because there’s a very big shortage for organic milk and demand is high.”

But with 255ha the maximum the farm could hold is about 400 head, she says, which is partly why they chose to become organic to get a premium.

Another big factor limiting production is organic feed quality and supply. The family relies on feed imports from South America and China, which can also be sporadic due to problems with the ports or railroads.

“Earlier this month we went for two weeks without any protein and production fell by close to one gallon a day (3.7 litres). We went back up about one quarter but not all the way.”

But other Californian dairymen have expanded, she says.
“When the price is high dairymen just keep adding more cows and it drives the price down because there’s too much milk.”

Mrs McIsaac is unwilling, like many Californian dairymen, to relinquish quota, which is not surprising as they’re valued at £1bn statewide.

“It is something my family has invested heavily in so we have a higher pay check every month. If they remove it we would lose that money.”

She believes the milk price wouldn’t be as volatile if they were more heavily regulated.

“I think there are advantages to limiting what people can produce. In Canada it seems like the farmers can be more profitable.”

By: Rhian Price and Charlie Taverner of Farmers Weekly

 


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