Does New York have a milk shortage?

Photo by http://www.flickr.com/photos/mindyhertzon/. Some rights reserved.

Julie and I have been working on some reporting for future stories on this issue.  We'd like you to help us.

On one hand, the massive and much vaunted Greek yogurt boom in New York gives the dairy industry what many call a once in a lifetime opportunity.  Today, Senator Chuck Schumer announced legislation to create special savings accounts to help farmers grow their herds:

Upstate New York was recently dubbed the ‘Silicon Valley of Greek Yogurt’ and I want our dairy farmers to have the financial tools to keep pace with that exciting growth in a way that stabilizes risk for them during the up-an-downs of the market. That is why I am launching a two-pronged plan that will create a savings bank to help dairy farmers manage profits during boom years, and also lower dairy farmers’ tax burden when they expand. Upstate farmers have got milk, and now we need to help them get more of it on store shelves across the country to keep the dairy engine revving in New York State.

Schumer says milk production in New York has to increase by 15% – 336 million pounds of milk in the North Country alone.

On the other hand, many dairy farmers I've spoken to scoff at the idea of opportunity.  They say the federal milk pricing system makes it almost impossible to get ahead and expand their herd.  Rather, they're often paid below the cost of production.

Cornell University researcher Andrew Novakovic dubbed this "The Chobani Paradox", according to the Wall Street Journal:

You'd think that a growing business can go to their supplier, whether you're talking about rolled steel or paper products or chip makers, and the supplier would say 'Great, I'd be glad to help you,' " said Andrew Novakovic, a Cornell University professor who wrote a paper titled "The Chobani Paradox" about how New York's dairy farmers have struggled to capitalize on the Greek yogurt industry. "In this case it's not so straightforward.

Meanwhile, at least one yogurt plant says it's not a problem at all.  Julie visited the North Lawrence yogurt plant in northern St. Lawrence County today.  The plant manager said, because the plant is owned by the Upstate Niagara farmer cooperative, their production is simply based on the amount of milk they can get from their members.  Upstate Niagara is planning to roll out its own label of Greek yogurt this summer.

As we work on stories about this issue, we'd love to hear from you dairy farmers out there.  Milk shortage or no?  Will you – can you – milk more cows to sell more milk to Greek yogurt plants?  Is this a golden opportunity for New York dairy, or a mirage?

 

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9 Comments

  1. This yogurt boom is definitely an opportunity for NY dairy farmers. It is important to remember that we are in an international market for milk. Our prices will be largely determined by the global situation, with only a small impact being local. If the price gets more than a dollar or two higher than other regions, it becomes possible to for outside milk to be trucked in. If the government is going to impact milk production it will have to come in the form of making it easier to do business; less onerous regulation, or more favorable tax structure like Schumer is proposing. These kinds of things will have a minor effect, but will not be able to overcome the global dairy economic picture. We will make more milk if it is profitable. The other thing that is currently having a bigger effect is the grain situation. Right now growing grain makes more money with less work and less investment than milking cows.

  2. All great points, Aaron. So if the milk price is more affected by global supply, then does the Greek yogurt boom matter to New York dairy at all? Except in that it's getting politicians to ease regulations.

    • Yes. It does matter. Over the long term it should have the effect of supporting the milk price incrementally, maybe by 10% or so. In the long term, this kind of price advantage will matter, keeping more producers in business, or encouraging a few more expansions. It is alot more nuanced than the flashy plant building that processors do but over time it does help. I don't think that we can or should use government policy or dollars to encourage any kind of industry, this only leads to people cheating, or milking the system. The best role for government is to get out of the way, allowing growth rather impeding growth as many regulations do.
      None of this will matter if the global situation is really unfavorable to producing milk. If no one can make money, locality will not matter. However, I for one think that the dairy business is, and will continue to be a profitable one, so the added advantage of processors of yogurt needing more milk is one more push in that direction.

  3. I think schumer is on the right track, however yogurt plants should be given incentives for only buying NY milk, and penalties for buying out of state. As a young farmer i would love to expand my business but i am not going to do it to benefit everyone but me

    • Well said Robert. Why would farmers want to work so hard for no profit and such a huge chance for loss.
      Could someone explain how current milk price policies will work in the new "yogurt economy". Are there special new changes, or is it the same old stuff.

  4. This is a complex situation: Milk for yogurt is based on class 3 prices, Fluid consumption is class 1. If yogurt plants payed producers Class 1 prices they would be happy to ship their milk to the yogurt factory. I don't believe there is a shortage of milk in NY State, just a shortage of places willing to pay the farmer what it is worth.

  5. If farmers are getting paid less than what it costs to produce it or what their milk is worth how is that they can remain in operation under the vaunted "capitalism" economic system? Are the milk price supports provided under the Federal Dairy Price Support Programs within the Farm Bill, passage of which is currently held up, part of the "capitalistic" system or are they they simply "socialist welfare" for the farmers which enables them to expand their farm sizes to produce more milk which they contend they cannot sell for what it costs to produce?

    Am I the only one who observes that the individuals who benefit the most from "socialist" programs in the US decry the application of and incessantly call for the repeal of similar programs directed toward less fortunate citizens.

    • No, you are not the only one who notices the inconsistency of lobbying for benefits while decrying other people's benefits. I find it extremely frustrating to be told by farm groups to ask for lower taxes, while asking for money through farm programs. I will ask for lower taxes and less regulation. I will not ask for handouts. The farm bill can go ahead and die as far as I'm concerned.

  6. I don't know if there is truly a shortage of milk when we are always being told that we can't get a decent price for our milk because there is too much of it. We are being told that all these yogurt plants need more milk and the Gov wants to do all these things to encourage more milk production, but no one gets what we really need-a fair price for our milk!

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