Raw Milk – Rx for Dairy Crisis

The New Jersey Department of Agriculture (NJDA) held a statewide Dairy Summit on October 11 to show the state’s dairies ways to survive the current crisis the industry is going through. The event was great testimony to how unfair the commodity pricing system, the Federal Milk Marketing Order (FMMO), is and how legalization of raw milk sales and/or distribution in the state can help dairy farms remain in business. In the mid-1970s there were over 500 dairy farms operating in New Jersey, today there are 48.

Earlier this year the state’s Grade A dairies were receiving around $14 per hundredweight (one hundred pounds of milk), that figure shrunk to $12 after deducting transportation costs (moving the milk from the farm to the processing plant of the farmer’s dairy cooperative). According to one of the speakers at the summit, the average cost of production for the dairies is $18.50, a path to bankruptcy.

Dairy farmers know the FMMO pricing system robs them of revenues they should be earning but the pricing is complicated enough so that it is difficult to figure out exactly how the FMMO denies them income that should rightly be theirs. Most dairy farmers are captive to the FMMO and the commodity pricing system; they belong to a cooperative which bottles and markets their milk. In that situation, individual farmers do not set their own price.

Four ways a dairy farmer can escape or survive the commodity system are:

• Own bottling and pasteurization equipment; this is a major expense most dairy farmers cannot afford.
• Find a creamery willing to bottle and pasteurize an individual farmer’s milk, something that’s not easy to do. Jared Weeks, a dairy farmer from Ringoes, who spoke at the summit, has been able to find a creamery in Pennsylvania to take some of his milk for bottling and pasteurization, but few, if any, other dairy farmers in the state have been able to make the same arrangement.
• Make value-added dairy products, such as butter, cream, and yogurt; again, this is typically a substantial expense most dairy farmers cannot afford.
• Sell or distribute raw milk for direct consumption – this is a less expensive way to escape or survive the commodity system whether the farmer is selling direct to the consumer, distributing direct to the consumer through a herd share agreement or selling to retail stores.

New Jersey is one of seven remaining states that do not allow any raw milk sales or distribution. Legislators began introducing raw milk bills in the New Jersey General Assembly back in 2006; since that time New Jersey has lost more than half of its remaining dairies.

The New Jersey Department of Agriculture is not opposed to legislation legalizing raw milk sales and/or distribution; it is the New Jersey Department of Health (NJDOH) that opposes raw milk legalization. The health department sees raw milk as a health threat but a recent Canadian study found, “The rate of unpasteurized milk-associated outbreaks [in the U.S.] has been declining since 2010. Controlling for growth in population and consumption, the outbreak rate has effectively decreased by 74% since 2005.” According to the Centers for Disease Control from 1998-2016, there were only seven (7) foodborne illness outbreaks attributed to the consumption of raw goat milk, an average of about one outbreak every three years.

Raw milk sales or distribution was not on the agenda for the Dairy Summit. The focus was on individual dairy farmers having access to or building a processing plant that would bottle and pasteurize milk as well as manufacture value-added dairy products. Jon McConaughy, the owner of Double Brook Farm in Hopewell, estimated that it would cost $450,000 to build a processing plant. Daniel Wunderlich, Dairy Program Coordinator for NJDA spoke about having a group processing plant that would bottle both conventional and organic milk. McConaughy said, at this time the New Jersey General Assembly had not allocated any money towards such a project. There were speakers for various agencies of USDA and other organizations who spoke about loans to farmers for marketing and dairy processing plants and equipment but how can farmers qualify for a loan when they are already deeply in debt and are losing money with every shipment of milk they make to their cooperative. Dairy farmers need a decent price for their milk more than they need a loan.

Even though the FMMO wasn’t a topic at the Dairy Summit, the information speakers presented was still an indictment of the commodity milk pricing system.

Tom Beaver, Director of Marketing and Development for NJDA said that New Jersey dairies produce one percent (1%) of the milk New Jersey residents consume. NJDA has established a Jersey Fresh logo that in-state producers of milk and other foods can put on their labels to promote their products. If it looks like the state is down to 48 Grade A dairies because New Jersey consumers don’t want to purchase milk produced in-state, that is not so.

Beaver said that NJDA recently conducted a Jersey Fresh Milk Consumer Survey throughout New Jersey and all five boroughs of New York City; 85% of those responding to the survey “indicated an interest in buying Jersey Fresh milk; 23% of those surveyed would be willing to pay a premium, with the average premium being $1.74 above what respondents are currently paying for a half gallon.” What is wrong with this picture?

Dairy farmer Pete Southway, owner of Springhouse Creamery in Sussex County, said that the fifty cows he milks only provide 7% of the milk residents of his county need. McConaughy estimated that producers free from the commodity system and the milk cooperatives could take in as much as $104 per hundredweight (about $9 per gallon). The demand for local milk is there, it’s not the lack of consumer demand as much as the commodity pricing system that are driving dairies out of business.

Retired dairy farmer John Pugh attended the summit. Pugh, who is 97 years young, recalled how once the FMMO went into effect that he switched his herd from Guernseys to Holsteins, placing greater emphasis on the quantity of milk production and less on quality. Legalizing raw milk sales and distribution in New Jersey is a way to put more quality milk on the market and to revive the dairy business in the state that the FMMO helped destroy.

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About the top photo:
“Let the Good Times Flow for National Dairy Month!”
Posted 6/4/2015 by Dana Coale, Deputy Administrator of the Agricultural Marketing Service’s Dairy Program
Source: https://www.usda.gov/media/blog/2015/06/04/let-good-times-flow-national-dairy-month