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Unity key for farmers in global dairy market

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POSTED August 6, 2013 1:29 a.m.

Jane O’Brien said dairy farmers “need more unification to have the strength to fight the government.”

She speaks with a lot of conviction, and sadly, out of a painful personal experience. O’Brien (not her real name) and her husband were among the many dairy farmers who were forced to sell their dairy in the last decade, in part, “because of all the bureaucracy.” The couple had a dairy farm in the Manteca area.

Unity among dairy farmers, and everyone on the “whole supply chain” is a major key in the battle to obtain a major stronghold in the global market for milk, cheese, and other dairy products, said Rachel Kaldor, executive director of the Dairy Institute of California.

“We’re not in a regional small environment anymore. We’re an international market. So, the question is, how much should government do and that’s the question that need to be talked about by the industry,” Kaldor said.

In a statement release recently, Kanlor warned that the Golden State’s “complex regulatory pricing system needs to change if California dairy farmers and processors are to compete in the new global market.

“Our current regulatory system was not designed for today’s marketplace. Dairy farmers need to join us in understanding that competition builds markets for their milk, which leads to more farm income for them. We need to create a market-driven system with high levels of investment, vigorous competition and growing global demand for our products,” Kaldor said.

“We are hopeful that dairy farmers can see themselves as more active partners in the whole supply chain,” she added.

In the global market, New Zealand is a “huge competitor” for the United State’s dairy products, she said, as is the European Union along with South American countries such as Brazil and Argentina.

But just as important, noted Kalder, is the question: who will be the United States’ next competitors. If the country were to compete in the global market, “how do we get prepared with a lot of global competition?”

The “very important answer” to that question, she said, is to “keep our customers satisfied with our products and our prices.”

Pricing reform is key to the effort to become a major competitor in the global market.

Milk price control the U.S. has become “pretty archaic in the sense that when the government became involved in milk pricing, that was back in the Depression. It was necessary at the time because the entire farm economy collapsed,” Kaldor said.

The government intervention was a safety net for dairy farming.

“But that’s when we left milk cans on the road,” she noted.

Today, she said, “we need pricing that reflects what’s really happening. Now, we’re not just part of a regional market. We’re global. We’ve come to the end of the road in this kind of pricing structure.”

Kaldor was happy to note that the news from California at this point in time is “very optimistic.”

Data released recently by the United States Department of Agriculture indicated that California dairy farmers received $400 million more during the first and second quarters of 2013 than they received during the same period in 2012 from California cheese makers and other dairy processors.

With that bit of good news on the economic horizon for dairy farmers, cheese makers and other dairy processors, Kaldor said, “We feel very, very optimistic that dairy farmers are doing better, and have been doing better for this part of the year,” and is hopeful that they are “on their way to full recovery.”

Dairy farmers are “active partners…; we need their milk and they need us. It’s a mutually beneficial situation,” she said.

Milk was the number in the top 10 crop for 2011 in San Joaquin County, according the report from the county agricultural commissioner. During that year, it was worth $453 million which translated to 20 percent of the year’s total ag value. Grapes at $287 million (13 percent) and walnuts at $287 million (12 percent) came in a distant second and third, respectively.

On the national front, California is the number one milk producer in the United States. The state’s major competitors in terms of manufacture products are Idaho, New Mexico, and Texas. Idaho is a major competitor because there are big dairies there and the prices are not regulated like California, noted Kaldor.

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