Dairy industry challenged by drought-induced higher feed prices.
Recovering from tough times, the dairy industry has a protein-rich new future.
Greek yogurt — a thicker, higher-protein alternative to the traditional kind — is boosting an industry that suffered through drought with the rest of the agriculture world.
Like other commodities, dairy has faced setbacks since rain stopped falling in the South Plains in 2011. Although cows don’t depend on rain as directly as cotton or corn, they’re still at the mercy of drought’s domino effect.
Turley, in town from Central Texas for a conference this week, told A-J Media dairy prices skyrocketed in dairy feed grains a few years ago. With milk prices set by the federal government rather than the market, producers had to find other ways to compensate.
Some producers even went out of business.
“It was so hard to pay the feed bill when we were going through the drought. … We’ve lost dairies of all sizes,” Turley said.
According to statistics from the association, in 2011 producers lost about 13 cents for each gallon of milk produced. Profitability continued dropping through negative margins and reached an all-time low in July 2012.
Good news could be coming, though. Higher milk prices and fewer producers in the market can mean a return to positive profit margins for those remaining dairies, Turley said. He also noted many operations are moving west from Central and East Texas and in from other states.
“We’re finally getting positive economics back,” he said. “… There is some optimism. We hope to have growth, especially in the Panhandle region.”
Osterkamp is one of those dairy-raising new Texans. The Muleshoe-based producer came from California a few years ago to escape what he described as tough regulations and high land prices.
And while Greek yogurt finds more and more space on store shelves, industry representatives keep watching the market for other trends to follow. Cheese is gaining popularly, Turley said, while ice cream is stable.
But despite changing demands — including those from an increasingly international market — some aspects of the industry tend to be more stable. Manual labor is one of them.
The image of a hard-working dairy farmer rising before dawn each day to spend hours feeding and milking his cows is fairly spot on, Turley said.
“Nearly all dairy farms are family farms,” he said. “It’s a 24-hour job that never ends. These families in the High Plains and across the state are working very hard for very little to produce the dairy products that everyone loves to consume.”
Source: Lubbok Avalanche-Journal
