Dairy industry challenges, from the heat to the marketplace
By Darren Turley, TAD executive director
Texas’ red-hot summer is underway.
Most of our dairy regions once again are suffering the beginnings of a terrible drought. No matter where you are, the conditions could definitely be better.
Central Texas corn was harvested early and with lower starch levels than expected. Hay is already scarce and in big demand across most of the state. But as we have seen before, dry weather is usually good milking weather.
Production remains strong this year and will be able to almost fill the new Select Milk Producers plant in Littlefield when it comes on line in less than a year. Some farmers are considering building a new facility, but can the market handle the milk? It is hard to tell a farmer not to build a new facility or that no one wants their milk. If the state’s production falls to only a 3 percent growth, a new 4 million gallon per day plant will be needed every few years. Add in the fact that most growth will inevitably be in a lower profit margin export product, and profit margins continue to tighten.
We’re starting to again hear discussion about curbing production. This coming at the same time we see Canada’s dairy system deal with the reduction of their tariffs that help to secure their market for decades. This has kept their market filled primarily with their dairy products with few imported products. Reducing this tariff will inevitable eat away at their market as the overproduced northeast and upper Midwest areas of the United States are poised to compete with Canada’s dairy products. These tariffs have protected our northern neighbors from our dairy production for many, many years.
How do you make more money in the dairy industry? Milk more cows. That has long been the system most dairy farmers have grown to operate under. However, excess milk that has to be marketed at little to no profit takes money from everyone. These decisions are very difficult to make and even harder to implement.
The dairy industry has changed so drastically in such a short time in Texas that it is easy to relish in the idea of normalcy for a while. But things will continue to change. Build another plant or control production? Neither option is easy, but one thing is for sure: the industry will continue to evolve in Texas.