Key takeaways
Fowl flu has devastated dairy farms, with California hitting a 20-year low in 2024.
In contrast to eggs, milk costs stay secure resulting from federal value controls, however farmers say they will’t keep afloat.
USDA-approved pricing modifications improve prices for farmers whereas benefiting dairy processors.
America’s dairy business is being ravaged by hen flu, resulting in a major decline in milk manufacturing in lots of states, together with California, the nation’s largest dairy-producing state that hit a 20-year low in 2024. However not like eggs, which spiked in value as a result of hen flu’s impression on poultry flocks, shoppers aren’t prone to see an analogous improve in milk costs due to federal value management legal guidelines.
Nevertheless, whereas these value controls save grocery retailer consumers cash, dairy farmers say it’s pushing them out of enterprise.
“I can’t see how any dairy farm goes to maintain this,” mentioned Brenda Cochren, a Pennsylvania dairy farmer and agricultural reform advocate.
For many years, dairy farms have shrunk underneath the stress of company consolidation and value caps lobbied for by massive milk processors.
Now, with hen flu spreading by dairy herds throughout the nation and up to date updates to how milk is priced taking impact this yr, Cochren mentioned small dairy farmers are dealing with a disaster.
Many of the nation’s dairy farmers are paid by the Federal Milk Advertising Order, FMMO, an almost 90-year-old pricing system that creates each day minimal costs a milk processor will pay a dairy farmer for his or her milk.
Fluid milk is a extremely perishable and time-sensitive product that must be processed shortly earlier than expiring, which processors may use to their benefit in shopping for milk, in accordance with a 2017 report by the Congressional Analysis Service. The FMMO was created in 1937 to forestall these unfair shopping for practices.
The FMMO additionally establishes requirements for a way a lot cash is taken from a farmer’s pay to show milk into merchandise corresponding to cheese, yogurt and butter, sometimes called a “make allowance.”
In 2023, the Nationwide Milk Producers Federation, an business group based mostly in Arlington, Virginia, petitioned the U.S. Division of Agriculture to “modernize” the pricing system to permit processors to gather more cash from dairy farmers.
On Jan. 16, the USDA accepted a rise to the “make allowances” for each dairy product, with the biggest improve seen in powdered milk merchandise. The modifications go into impact on June 1.
The USDA mentioned dairy farmers ought to see a mean improve of 26 cents per 100 kilos of milk offered.
“There are many modifications that can have an effect on the worth of milk,” mentioned Matt Herrick, government vice chairman of the Worldwide Dairy Meals Affiliation. “A few of these profit farmers. A few of them profit different people within the provide chain. However the aim is to make sure that the modifications do ultimately profit farmers.”
Nevertheless, dairy farmers have been essential of the modifications, saying the small will increase don’t account for his or her rising prices and business consolidation.
Lynne McBride, government director of California Dairy Marketing campaign, a dairy advocacy group, mentioned farmers face an ideal storm of monetary hardship as milk manufacturing declines and dairy processors will pay much less for it.
“It’s going to worsen due to this improve within the make allowance — the quantity that dairy farmers pay — after which our milk manufacturing is just not going to align as effectively with market demand,” McBride mentioned.
McBride mentioned that the rise in “make allowances” primarily advantages dairy processors, not farmers.
“Traditionally, the price of manufacturing for dairy farmers has not been included in our milk pricing formulation,” she mentioned.
The price of working a dairy farm within the U.S. has almost doubled within the final decade, whereas the worth farmers obtain for his or her milk has fallen 15% in the identical time-frame, in accordance with an evaluation of USDA information.
Zippy Duvall, president of the American Farm Bureau Basis, mentioned he agreed with some parts of the ultimate order however believed the modifications would largely undermine dairy farmers.
“The optimistic modifications that can come because of these reforms won’t be uniform for dairy farmers throughout the nation and will probably be drastically offset by massive, unjustified will increase in ‘make allowances,’” he mentioned in a press release.
Worth controls maintain dairy costs low for shoppers however squeeze farmers
Whereas federal controls assist maintain retail milk costs low — milk costs elevated simply 2% final yr — the poultry business has elevated costs to mitigate its personal losses from hen flu.
When a rooster checks optimistic for the hen flu, its complete flock is killed. As of the start of the yr, greater than 134 million birds have been killed within the U.S., with the bulk being industrial egg layers.
When a whole flock of egg-laying birds is killed, it may take months for a farm to turn out to be absolutely operational once more, making a scarcity that contributed to a 65% improve in retail egg costs final yr.
Some dairy cows have died from the virus, however many are quarantined, leaving the remainder of the herd to supply milk.
When a herd checks optimistic for the virus, it’s quarantined for at least 60 days. After that interval, and offered there are not any medical indicators — fever, drops in milk manufacturing, or respiratory issues — the quarantine is lifted.
California dairies, after being launched from quarantine, are then positioned on a surveillance listing by the California Division of Meals and Agriculture and flagged for weekly monitoring by their dairy plant as part of routine operations.
The company urges dairy operators to take care of excessive biosecurity and supply private protecting gear, or PPE, to farmworkers who’re in direct contact with uncooked milk throughout the milking course of. Contact with uncooked milk is among the most typical methods for people to turn out to be contaminated with hen flu.
Almost each case of hen flu in people in California is instantly linked to dairy staff. The state’s dairy business, as of January, includes greater than half of the nation’s 68 human instances, in accordance with the Facilities for Illness Management.
The state’s agriculture division is one in all many within the U.S. that has left the dealing with of PPE distribution to native companies, making entry to PPE combined throughout main dairy states.
California Gov. Gavin Newsom issued an emergency proclamation in December 2024 that offers native and state companies extra flexibility round staffing, contracting and responding to the virus, from testing to PPE response.
“This proclamation is a focused motion to make sure authorities companies have the assets and suppleness they should reply shortly to this outbreak,” Newsom, a Democrat, mentioned in a press release.
Anja Raudabaugh, CEO of Western United Dairies, a commerce group representing lots of of California dairy producers, mentioned California dairies have fallen quick on manufacturing contracts with milk processing firms and have paid steep prices to switch cows killed by the virus.
Even when a milking cow comes by quarantine and is virus-free, long-term results are nonetheless current in dairies.
“Dairies haven’t seen the manufacturing come again to the place it was,” she mentioned.
California has been a hotbed for hen flu outbreaks in dairy cattle herds since August 2024, with lots of extra instances than different states.
The state’s milk manufacturing declined 9% final yr — the state’s largest dip in additional than 20 years — with main drops occurring within the late summer season, close to the time studies of contaminated dairy cattle herds started, in accordance with an evaluation by Examine Midwest.
When milk manufacturing drops, dairy farmers face a troublesome selection: wait out the illness or spend hundreds on changing sick cattle. All of the whereas, a drop in milk manufacturing means much less cash of their checks.
McBride, with the California Dairy Marketing campaign, mentioned the current federal value management modifications didn’t account for the rising value of farming. Now with hen flu transferring by dairy herds, farmers are seeing elevated prices to switch sick cattle and pay for veterinary visits and medication.
“Whenever you proceed to ramp up these allowances and take from farmers who haven’t got their value of manufacturing coated, it is simply going to result in a larger attrition of dairy farmers across the nation,” she mentioned.
Raudabaugh mentioned the federal milk pricing guidelines are designed to guard shoppers from seeing inflationary value modifications in dairy merchandise.
“(Egg costs) are topic to the regulation of provide and demand, and that’s not the case for dairy merchandise,” Raudabaugh mentioned.
When the primary hen flu case at a California dairy farm was introduced on Aug. 29, 2024, there have been roughly 200 whole instances in dairy cattle nationwide.
Two months later, California alone surpassed that quantity.
Since late August, greater than 700 dairy herds in California have been contaminated with hen flu.
“You do not need this virus in your farm — it’s catastrophic,” mentioned Raudabaugh.
Dairy processors rejoice guidelines replace
The brand new federal milk charges got here after main dairy business teams petitioned the USDA to think about a rise.
Over a interval of 49 days in 2023, dairy teams met in Carmela, Indiana, and offered proof and proposals to the USDA for what modifications ought to happen.
The Nationwide Milk Producers Federation, which had almost $60 million in annual income in 2023, mentioned growing allowances would supply producers some value aid but in addition maintain shopper costs low, in accordance with its assertion to the USDA.
“To craft an answer that benefited the dairy business and all dairy farmers – a lot of whom are invested in manufacturing vegetation by their cooperatives – a change within the make allowance was mandatory and applicable,” NMPF spokesperson Alan Bjerga mentioned in a press release offered to Examine Midwest.
Dairy Farmers of America, the nation’s largest milk co-op that operates greater than 80 processing vegetation nationwide, mentioned it agreed with the make allowance will increase set by the federation.
The co-op and the federation have shut ties as three members of the federation’s government committee work for DFA, together with chairman Randy Mooney.
Nevertheless, not the entire business is aligned on these modifications.
In a briefing despatched to the USDA, Mark Lamers, president of Lamers Dairy, a Wisconsin milk processor who sells throughout the Midwest, mentioned proposals submitted by the Nationwide Milk Producers Federation would try to squeeze more cash out of the fluid milk market.
“If NMPF members need their farmers to get more cash, all they need to do is pay them extra, ” Lamers wrote.
The Worldwide Dairy Meals Affiliation, a D.C. lobbying group representing dairy product and processing firms, wrote in a Might 2023 letter that the modifications in “make allowances” have been essential to replicate precise processing prices.
Over $6 million in lobbying was spent between the Worldwide Dairy Meals Affiliation and the Nationwide Milk Producers Federation from 2023 to 2024, when the FMMO was being up to date and drafted, in accordance with federal lobbying disclosures. Nevertheless, dairy business teams aren’t allowed to foyer the company about FMMO updates as a result of it’s a authorized continuing.
Bjerga famous that the federation’s position within the advertising order listening to and replace was a expensive affair. “This was a serious effort that encompassed all of our members, the highest authorized and financial minds in our business, and quite a few business stakeholders. It could be surprising if that didn’t come at a major expense,” he mentioned.
Examine Midwest reached out a number of instances to main dairy processing firms with vegetation in California and throughout the nation, corresponding to Saputo, Dairy Farmers of America and California Dairies, Inc., and didn’t obtain a response.
Different states hit by hen flu additionally see milk declines
California isn’t alone in its historic decline. New Mexico, a state that produced greater than 6 billion kilos of milk in 2023, additionally skilled its lowest stage of milk manufacturing in 20 years in November of final yr, in accordance with an Examine Midwest evaluation.
McBride mentioned the excessive hen flu rely in California may very well be as a result of it has been testing greater than different states, mixed with the state’s dominant place within the nation’s dairy business.
A California Division of Meals and Agriculture spokesperson mentioned a excessive focus of dairies in shut proximity is a possible trigger, however analysis remains to be ongoing to find out different elements.
Amanda Starbuck, analysis director for the environmental advocacy group Meals & Water Watch, mentioned the nation’s reliance on consolidated meals manufacturing has exacerbated the continued outbreaks in California.
“As hen flu spreads quickly by California’s mega-dairies, it’s extra apparent than ever that fixing this technique would require transferring off manufacturing facility farms,” Starbuck instructed Examine Midwest in a press release.
Whereas California noticed massive drops in milk manufacturing, different states with hen flu instances in dairies noticed a rise of their annual manufacturing.
Texas, the primary state to substantiate a hen flu outbreak in dairy cattle, noticed an uncommon improve in annual milk manufacturing by the tip of final yr. The state had 27 instances of hen flu in dairy cattle herds final yr.
Darren Turley, government director of the commerce group Texas Affiliation of Dairymen, mentioned the state has been in a position to pull by on its milk manufacturing as a result of it was one of many first to have main outbreaks, which began in March of 2024, and had time to get better by the tip of the yr.
“No person ever dreamed it will present up in dairy cows,” he mentioned.
Like different states hit by the outbreak, producers needed to resolve between changing elements of the herd or ready for contaminated cattle to get higher, Turley mentioned.
From March to June, Texas noticed a 4% drop in manufacturing because it handled hen flu outbreaks. Since then, the state’s dairy manufacturing elevated by 6% total.
Turley mentioned he expects excessive manufacturing numbers this yr, barring a resurgence of the virus.
“We’re hoping that we ran our course and it is not right here,” he mentioned.
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