A jump in dairy exports coupled with limited milk production has many Wisconsin farmers feeling like the big cheese.
The boom has led to a near-record high in the prices dairy farmers receive for milk from customers like cheese producers. One Sauk County business that specializes in supplying award-winning Wisconsin cheeses and other dairy products is scrambling to take advantage of the market conditions.
“There simply is more demand than we can supply,” said Doug Wilke, the executive vice president in charge of marketing and technology for Baraboo-based Foremost Farms, USA.
Combined with the near-record low prices they’re paying for corn to feed their cows, dairy farmers should see increased profits through this year, a leading dairy economist said.
“This is the dairy farmers’ year to enjoy,” said Mark Stephenson, the director of the University of Wisconsin-Madison’s Center for Dairy Profitability.
It’s also a year in which it pays for farmers to squeeze every possible drop of milk out of their cows. Nobody needs it more than the state’s cheese producers, which also are looking to take advantage of increased demand for their products nationally and internationally.
Cheese producers already take everything state dairy farmers can give them, and it’s still not enough. That’s why up to 15 percent of the milk used to make cheese in Wisconsin comes from other states, said John Umhoefer, the executive director of the Wisconsin Cheese Makers Association.
Since July, milk prices have risen steadily to keep pace with the increase of U.S. exports of dairy products like cheese, butterfat, milk powder, whey products and lactose. Dairy exports in 2013 increased
18 percent from 2012 to 1.8 million tons, according to the National Agricultural Statistics Service.
Class III milk (which is used for cheese production) increased $2.20 in one month to $21.15 — an 11.6 percent jump — for 100 pounds, according to statistics from the United States Dairy Association compiled by UW-Madison agricultural and applied economics professor Brian Gould.
The average price for all grades of milk jumped $1.20 to a record $23.20 for 100 pounds. The old record was $22.10 set in November 2012.
The good news for consumers is that the supply of milk sold in grocery stores has remained steady, limiting the increase in the price of whole milk to less than eight cents from September to December, according to the USDA. Liquid milk for retail consumption constitutes a small fraction of all milk produced in Wisconsin, and producers “walk a fine line” between making a profit and risking losing market share to competing products like sports drinks and other beverages, Wilke said.
“We have to make sure we keep the consumer engaged and coming back to buy dairy,” he said.
However, some dairy products like cheddar are getting harder to find in stores as production has shifted to hot export commodities like Italian cheeses and skim milk powder, which are in great demand in China and other Asian countries.
Foremost, the state’s largest cheese producer, is joining four other members of Cooperatives Working Together in seeking export assistance to sell 5.8 million pounds of cheddar, Gouda and Monterey Jack cheese and 551,156 pounds of butter to customers in Asia, Central America, the Middle East and North Africa by June.
The company’s fastest-growing exports are whey-based ingredients used in the production of infant formula and nutritional supplements for humans and animals, Wilke said. Whey, a byproduct of the manufacture of cheese, comes from the remains of milk after it’s curdled or strained.
The demand has pushed Foremost’s facilities in seven states to near-capacity.
But the company can only go as far as the milk it buys can take it. “Our best option is to grow the milk supply. Get more cows and get more efficient,” Wilke said.
The rise in prices has been a relief for smaller dairy farms, such as Odd Acres in Baraboo, which has 180 cattle and supplies milk exclusively to Foremost Farms.
“The price (of milk) is good,” said Odd Acres co-owner Janine Burton. “However, everyone is still kind of recovering from the drought two years ago.”
She said the drought didn’t lead to a reduction in the farm’s herd, but did cause health problems for some cattle due to the quality of feed.
Source: WISC News