National Dairy Crisis Continues—Part 2
February 25, 2016
National Dairy Crisis—A Way Forward, Part 2
By Laurie Greene, Editor
In our continuing coverage of the national dairy crisis marked by high inventories and below-production costs-prices, industry proponents are considering ‘market responsive’ ways to help with inventories, such as donating to the Feeding America organization or to other food banks. Tom Van Nortwick, owner and publisher of Fresno-based Agribusiness Publications, which has published a dairy magazine for 35 years, has been closely involved with hundreds of dairy producers from 2009 through June 2014 in the organization and establishment of the National Dairy Producers Organization. This nationwide organization focuses on keeping dairies profitable especially when market conditions squash dairy pricing.
Van Nortwick, who believes donating excess milk would be relatively easy and painless for the dairy industry, commented, “We are not going to specially package it; it is going to be what it is and where it is. It is then their responsibility to deal with it after that. The milk has already been processed and stored, and it's waiting to be sold.”
In picking up all these excess dairy products, food banks such as Feeding America would dramatically reduce inventories. Van Nortwick explained, “We have found in studying these inventory levels, that when inventory gets to a certain level, it starts to impact the value of what someone is willing to pay me—a dairy producer—for the milk that I am pulling out of our cow today. And so we are recommending to our dairy producers that it might take literally 15 cents to impact the price of milk today which is currently $5 under the price of production and $7-$10 away from profitability.”
"The idea," he continued, "is to have producers put up 15 cents per hundredweight into a savings account, which, when needed, would buy up excess inventory on the finished product side—the milk, cheese, milk powder and butter markets. Producers would then donate the purchased product to churches, food banks and Feeding America.
Tom Van Nortwick further expounded, “What if you invest $1 and get a $10 return? What if you invested 15 cents and got a $10 return? Is that a great plan? That is a great plan. The 'investment' is actually buying up [excess] inventory from the inventory [of processors and manufacturers] so it is no longer there. Because all of that is tracked, everybody knows how much there is and where it is. So if you are watching the market, you know if you should be buying more cheese, or making more cheese, or more powder. GM doesn’t make more cars than the dealers can sell; otherwise GM shuts the plant down. Everybody screams and hollers, but guess what? They know if they are going to survive, they have got to back off and not make more cars until the dealers, the selling organizations, pick up the slack.”
Van Nortwick says the dairy industry needs to focus more on the milk after it leaves the farm, “It is vitally important that we in the dairy producers sector start paying attention to what is going on with the milk, and the products being manufactured from milk after it leaves the farm. We are doing a wonderful job in how we produce it, the care and keeping of the animals, the sustainability of the environment, the recycling of the waste material; all of that we do better than anybody else in the world."
"Do we need to be ever watchful?" he asked. "We have a new program called, ‘Picture Perfect’ in the industry, especially agriculture. All of agriculture needs to be ‘Picture Perfect.’ Do you know why? ‘Because everyone has a camera. Everyone’s got their own video recorder and anything can be seen anytime and filmed anytime. And a picture taken can go viral tomorrow, or tonight—even while we are asleep. So, we have to be picture perfect. We already do that.
He implored, "I want to say to dairy producers across the country, ‘You win. You make the most. You make the best. But that is not what we need right now in order to be sustainable. We need you to pay attention to your milk and what happens with your milk after it leaves the farm.”