There is a good reason these days why California has happy cows, as touted in the Milk Advisory Board-backed television advertising. It’s the same reason that could put a happy smile on the faces of dairy farmers in the Golden State.
The price of milk is moving up after a years-long slump in the market.
The rapidly expanding global demand for milk is what is behind the today’s rising milk prices, according to extensive data from the California Department of Food and Agriculture on the state’s dairy industry.
Those demands are coming from such countries as China and India.
Furthermore, with consumers becoming a “little more affluent,” their tendency is to “seek out higher-valued proteins for their diet,” according to the same report.
The same data indicated that a “significant portion of milk in California ends up in China and Mexico,” and that the international marketplace is begging for California milk.
California is the No. 1 milk-producing state in the United States followed at a distant second by Wilconsin, with Idaho in third place.
While dairy farmers are facing a “good deal of challenge” from the drought, “milk price now is very strong” and that it will continue to be in “strong demand in the world,” Western United Dairymen CEO Mike Marsh said from his office in Modesto where the trade association is headquartered.
A bonus aspect of that for California is that the state has excellent port access that makes moving the product to the rest of the world, “and that’s very good,” he said. In fact, “15 percent or more” of the milk product in the state is going overseas to foreign market.
“It does appear that, from economic data we’re looked up recently, global demand is not going to shrink; it’s just going to get bigger. So, for those dairymen still left in the business, they will be able to pay off debt accumulated since 2008 and maybe even look into putting some money into their retirement accounts,” said Marsh who formerly worked for the California Almond Board.
There is also a move afoot to teach the next generation of dairy farmers leadership to help them continue the family business.
Dairy farming is a family-dominated business and it’s very capital intensive, Marsh noted. The farmer has to either buy the cows or raise the cows, and then they need to feed them while they are being raised. They need to buy grain and “then have the financial wherewithal to invest in milking barns and corrals. So it’s very capital intensive and very much a family business because of that. It’s very cost prohibitive. Money generated stays in the family, and assets are passed on to the next generation,” Marsh said.