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Dairy farmers milking more revenue
A pair of dairy cows relaxes on cool hay at a dairy farm in rural south Manteca. - photo by ROSE ALBANO RISSO

There’s good news for a change for the Golden State’s dairy ag business.

Data released by the California Department of Food and Agriculture indicates that during the first six months of 2013, the state’s dairy farmers received over $400 million more from California cheese makers and other dairy processors than they did in 2012.

That’s a jump from $3.2 billion in 2012 to $3.6 billion in 2013 for the same period from January to July, said Rachel Caldor, executive director of the Dairy Institute of California. There are just under 120,000 dairy cows in San Joaquin County that generated $542.8 million worth of milk or one-seventh of California’s overall production.

“That $400 million in additional revenue translates to about $250,000 more per dairy farm this year,” Kaldor said during a telephone interview from her office in Sacramento.

These are, for the most part, family-owned dairies, Kaldor said. “All dairy farms are pretty much family-owned; they’re not corporate,” she said, adding dairy farming is “not that big in corporate farming.”

There about 1,500 small dairy farms in California, with each farm having 750 cows, she said.

She said the two reasons for the higher revenue posted this year over last year was a combination of increased market demand plus lower feed costs.

There’s even more good news as far as the cost of feed is concerned. Kaldor said feed costs are expected to decline dramatically over the remainder of the year, down about 40 percent from last year’s drought-driven highs.

“So all of these trends are very good news for California’s dairy farmers,” she said.

Dairy farm margins are also improving, Kaldor said. “One of the most common ways to gauge dairy farm profitability is to measure farm income over feed costs. For the most recent two quarters reported, dairy farmers are enjoying an average 57 percent improvement in their margins over the middle of last year.”

During the economic collapse of the last Great Recession, everybody was hit hard – “whether you were a farmer, a salesperson, or someone who worked in restaurants or in manufactured cars.

“We were all hurt,” Kaldor said.

“But the farmers recovered. It was a hard time for dairy farming and almost everyone,” she said.

The industry bounced back a little bit. But in the summer and fall of last year, drought hit the Midwest and corn prices spiked.

“That was when dairy farmers here were really again challenged to stay in business,” Kaldor said.

With the economic silver lining from the increased revenue during the first six months of 2013, and with the combined higher milk price and “much lower feed cost,” California’s dairy farmers are again “moving forward” with a more positive outlook, she said.