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Tools for Survival: Weathering the Current Dairy Crisis While Maintaining Organic Integrity
NODPA held its 18th Annual Field Days for NODPA members and supporters on September 27th and 28th at Yarrowsburg Mennonite Church in Knoxville, MD. The title of this year’s event was Tools for Survival: Weathering the Current Dairy Crisis While Maintaining Organic Integrity. The two day event included two farm tours of nearby organic dairies, panels on financial analysis and recordkeeping, grass-fed milk marketing, and policy issues affecting the industry, a producer only meeting, and a rousing, albeit sobering address by Mark Kastel from The Cornucopia Institute. All told, about 50 people, including NODPA members and their families, and supporters, including representatives from University of Maryland Extension, The Cornucopia Institute, and the Maine Organic Farmers and Gardeners Association, came throughout the two days. This important annual event offers an opportunity for organic dairy farmers in the Northeast to share lessons about what works and what doesn’t, get updated on important developments in the industry and in the policy world, and, last but not least, build solidarity and think about how to best respond to the extremely challenging market conditions facing organic dairy farmers.
The Field Days kicked off bright and early on Thursday morning with a hay wagon tour of Myron Martin’s Peace Hollow farm, which backs up right next to Yarrowsburg Mennonite Church, where the meetings, panel discussions, and delicious meals were held over the course of the two days.
Myron has a total of 265 acres of land, including 65 acres of rented land; almost the entire farm is in pasture or hay; none of his land is currently in crop production. His cows do not eat any grain at all, feeding on pasture, hay or silage throughout the year, getting 30 lbs. of dry matter intake daily.
It has been almost ten years since he planted crops on the farm; he has concluded that grass is the best feed for his cows so he has designed the entire farm around making sure cows have sufficient access to forage year round. A key point Myron emphasized in the tour is that farmers have multiple options when it comes to infrastructure for cutting, hauling, and storing forage, let alone raising crops, and when you focus on just one option you can more comfortably invest in the best equipment for that approach without breaking the bank. Not only has Myron been able to minimize costs and simplify operations by not planting crops and eliminating all the associated equipment they require; he has also focused on silage production using bunkers as his primary system for feeding cows when they are not on pasture and when supplementation is needed. By doing so, he is able to capitalize on earlier investments he made that were compatible with this strategy. Before he went all grass in 2009, he had built several bunk silos; after switching to an all grass dairy he switched to using these bunkers for storing long-cut silage. He uses a Pottinger chopper hay wagon to chop and haul hay after it’s been cut by a disk mower. It is then put in the bunkers. Myron explained “you have choices, either an ag bagger, bale bags, or trenches. It’s best to pick one technology so you don’t have to invest in equipment for more than one method. This is where I put my money.”
To facilitate grazing, the farm has 7,000 feet of water lines running across the fields to bring water to the cows while they are grazing. The cows stay hydrated and on pasture, and it saves time that otherwise would have to be spent hauling water to the cows. Myron uses rotational grazing, with cows going through paddocks for one day, and returning again to the same paddock in 21-30 days, the interval depending on how much it has rained. Myron said he makes hay when it’s dry, even if it’s not ready, because otherwise he could lose it all. He often pre-clips about 12 hours prior to the cows entering the pasture. Myron's grazing season is from the beginning of April until October. He currently milks 80 milking cows. For three months of the year he’s not feeding them any stored hay crop –they only get grass from pasturing. They freshen in the spring and the fall.
He follows an unusual milking regimen that he believes reduces stress on the animals, especially given their no-grain diet, and works with his lifestyle. Cows are milked at 16 hour intervals, at 6 am, 10 p.m., 2 p.m. the next day, and so on. He has fine-tuned his practices over time as he has enhanced his knowledge of the biological properties of soil and figured out what makes the most sense for his farm in terms of soil health, milk quality, herd health, input costs, and personal well-being. For example, while he tried chicken manure once, he now applies liquid manure to his hay fields, but does not add any nutrients to his pasture land. Myron has come to believe that grazing animals and harvesting hay for them to eat simply makes the most sense. “God made this land to work,” he said.
Myron has been relatively conservative in terms of upgrading other equipment on the farm. He changed what had been a double 6 into a double 8 milking parlor in 1996. One person can milk all the cows fairly quickly, and while it is relatively old milking equipment he said “it works just fine.” He is milking 50-60 lbs. of milk per cow; given his production levels and herd size it does not make sense to invest in newer milking equipment.
He has decided to consistently upgrade his hay making equipment, and recently bought a neighboring farm to secure more pasture and hay land. A few years ago he bought a neighboring farm with 100 acres for just short of $1 million, which was only made possible with $640,000 in assistance from a state farmland preservation fund. He also rents 65 acres for $50/acre.
Building off his focus on grass-fed livestock, Myron has developed a healthy side business in grass-fed beef, earning $60,000 last year from selling beef. He explained that with grass-fed beef, the marketplace premium is for grass-fed, not organic beef, as the nutritional and taste profile of meat from animals raised on grass is what particularly attracts consumers, with grass fed beef considered more heart healthy. The beef is not certified organic because the butcher he uses is not certified organic, and it does not make sense to try and find a certified organic butcher.
One challenge that Myron is dealing with right now is the stability of his milk buyer. He shipped for many years with Organic Valley (OV), but switched a few years ago to Trickling Springs Creamery, which distributes organic milk in glass bottles to independent stores in Maryland. In the course of a rapid expansion, Trickling Springs took on more debt than it could handle, and asked Organic Valley to take over its suppliers, but they are not full members of the CROPP Cooperative/Organic Valley. The current surplus in the organic milk market means Myron is in a precarious situation and not receiving the full pay price of other members, and he is considering all his options, including direct marketing as one possible alternative to solidify his financial situation.
Just as the rain started, the farm tour wrapped up and everyone returned to the Yarrowsburg Mennonite Church for a delicious hot lunch before the educational program kicked off. We were fortunate to have Janet Martin, Carissa Martin, and Beverly Martin cater all of the delicious meals, many of which used grass-fed beef from the Martin’s farm and other products from local and organic farms. Following lunch, the afternoon program got underway, and a summary of the program follows.
THE GRASS FED LABEL: IS IT STILL THE ‘SILVER BULLET’ OF ORGANIC MILK?
Panel Discussion with Myron Martin, Peace Hollow Farm, Knoxville, MD, Ron Holter, Holterholm Farms, Jefferson, MD, and Forrest Stricker, Spring Creek Farms, Wernersville, PA
The first afternoon panel focused on the market for grass-fed milk, including why it has emerged, what it means for farmers and consumers, and how it might be expanded.
Panelists discussed how grass milk, by keeping animals on a grass only diet leads to a different omega 3 profile in the milk. It is better for cows as they are designed to subsist on grass not grain, improves soil health as cows cycle nutrients while grazing, and is beneficial for human health. All these qualities potentially give it a significant price premium at the retail level compared to regular organic milk. Grass-fed milk constitutes a small, albeit fast growing share of the fluid organic milk market. For example, OV’s grassmilk label is growing 20% a year, compared to basically flat growth for its regular fluid milk. However, panelists suggested that this market could grow much faster and that there is a disconnect between milk buyers and farmers regarding the value of grass-fed milk. In recent years the science has caught up with farmer intuition regarding the value of grass for cows and their milk, and organic milk companies could be more proactive in touting emerging scientific findings on the nutritional benefits of milk from grass-fed cows.
Even with its 20% growth rate, CROPP only has a 64% utilization rate for its grassmilk pool, which means one third of the milk from farmers that have committed to producing only grassmilk, with no grain fed to their cows year round, is not being marketed as such. The implication is that this market could grow faster, with the utilization rate rising, if CROPP and other organic milk companies put more marketing muscle behind grass-fed milk.
In addition to more consumer education and marketing, an additional important step to advancing the grass-fed organic milk market would be the establishment of a 100% grass-fed standard. Requiring all organic milk farms using the grass-fed label to abide by one standard would level the playing field across all farms. In fact, it was asserted by one panelist that this is the only way to guarantee the viability of small scale agriculture. University of Maryland Extension Agent Dale Johnson reflected on whether or not grass based dairying functioned as a limit to scale. While it is hard to graze very large herds on grass, he surmised that one way around this limit would be to bring the forage to the cows in form of hay or silage. Cows could be 100% grass-fed, but it would not mean they were on pasture most of the time. It is details like this that will have important implications for the development of the grass-fed milk market, and for whether it will serve as a lifeline for smaller organic dairy farms struggling to survive in a difficult marketplace.
PLANNING FOR THE FUTURE OF YOUR FARM IN DIFFICULT TIMES
Panel: Jeff Semler, Extension Educator, University of Maryland Extension, Washington County, Dale Johnson, Farm Management Specialist, University of Maryland Extension, Department of Agricultural and Resource Economics, University of Maryland, Curvin Eby, Green Acres Farmstead, Hagerstown, MD.
Maryland organic dairy farmer Curvin Eby started off this session by stating—“Success is not final; failure is not final; what counts is the courage to continue.” When conditions are daunting, it takes creativity and perseverance to find a pathway to a better place; likewise, one can never rest on one’s laurels and assume that the good times will continue forever. Eby and Dale Johnson then used this as a jumping off point to engage in a detailed analysis of the Eby farm over the last ten years, with a spreadsheet distributed to participants detailing farm income and expenses over this timeframe for the farm.
The analysis started with a discussion of how the Eby farm dealt with the recent milk glut, and in particular the need to reduce milk production as CROPP had imposed a quota on its members and Eby’s farm was over the quota. It was imperative to stay within the production because all milk produced over the quota would sell for $20 less per cwt (currently $16 per cwt). Estimated net income and profits for 2018 are projected to be down significantly from the average of the last three years, but Curvin has taken important measures to lessen the pain caused by the milk glut, and lay the groundwork for a well-managed, profitable farm operation going forward. Feed costs for this 50 cow farm have been fairly high for several years, averaging $52,000 annually from 2015-2017. This amounted to almost twice as much per cow as a comparison group of seven organic farms with an average of 75 cows.
Eby saw where things were going with the milk glut and quota requirements and decided to take action. He renovated his pastures to increase grass production, reduce feed purchases, and thus lower his production costs for milk. The results have been remarkable; in January of this year it was projected that the year’s feed bill would be $50,000, and now it is projected to be only $5,000 for the year, a 90% reduction! While feed costs may go up in future years, this case illustrates how much one can impact the bottom line with careful attention to pasture management. Eby also is adjusting the size and mix of the herd, as he is keeping more heifers to increase herd size, and aiming for higher butterfat content through genetics and the shift to almost no grain feeding. CROPP’s quota is based on volume, not butterfat, with significant bonuses paid for high butterfat given the high demand for organic butter, so this tactic can help stabilize income even as production goes down to meet the quota.
There were two other line items in the spreadsheet that stood out in the analysis, and these could affect overall farm profitability significantly. Depreciation, which measures the decline in value of farm equipment and structures over the course of a year, is meant to budget for future equipment and infrastructure purchases. However, Johnson and Eby agreed that this $17,000 line item may have been overstated by $10,000. Counterbalancing this positive boost to the bottom line, though, is the absence of any payments for health insurance, which is often a particular problem for small family farms like this one. Otherwise, rental lease payments have largely been replaced by property tax and insurance payments. Overall, this financial analysis was a very useful exercise in showing how different choices can affect farm finances. Although one can never depend on market conditions being stable, farmers can sometimes lower their base production costs to reduce their vulnerability to sharp fluctuations in input or output prices.
MAXIMIZING NET INCOME AND PLANNING FOR THE FUTURE OF YOUR FARM: LEARNING HOW TO DO MORE WITH LESS
Jeff Semler, Extension Educator, University of Maryland Extension, Washington County, and Jacki Perkins, Dairy Specialist, Maine Organic Farmers and Gardeners Association (MOFGA)
This session started out with a quick brainstorm around the room of important challenges affecting farm viability. These challenges then were grouped together into four groups, with each group charged with working through a particular set of related challenges and then sharing their insights with the entire group.
After the brainstorming session four groups were formed. Here are some of the key issues each group covered.
This session ended with some broader reflections on the importance of sharing practical knowledge—from farmer to farmer. Meetings like NODPA Field Days facilitate this sharing, and Agricultural Extension and other organizations can play a key role in encouraging the transmission of this informal knowledge from farmer to farmer. Furthermore, this peer to peer farmer education takes on increased importance given the budgetary pressures that the Extension Service is facing, and the withering of its “research in service of the public good” mission.
Following the afternoon workshops, there was time to relax and enjoy the social hour. Folks snacked on cider and cheese and crackers while visiting with all of our Trade Show vendors. Everyone had a good opportunity to catch up with old friends and to make new ones, many of whom were from the Maryland area and new to NODPA. The NODPA Annual Meeting followed and was held during the dinner banquet. After dinner, Mark Kastel delivered the keynote presentation.
Keynote address: The Crisis in the Organic Dairy Movement: History, Analysis, and What Farmers Can Do to Level Playing Field, Mark Kastel, co-founder of The Cornucopia Institute
Mark Kastel started out by talking about the emphasis in U.S. food policy on cheap food and some of the problems it may entail. “We have the cheapest food, bar none, and the most expensive healthcare.” In the last 70 years healthcare and farming have taken each other’s places as a percentage of GDP, and it may very well be that this helps explain why U.S. health outcomes are so poor in comparison to other developed countries.
This set the stage for a discussion of the organic movement, the rise of organic milk, the current crisis, and Cornucopia’s work as an organic watchdog.
HISTORY OF ORGANIC MOVEMENT
Organic food and farming emerged from two impulses—consumers wanted food that wasn’t grown with toxic chemicals, and farmers were looking for a new way of farming, one where they wouldn’t always be “chasing their tails paying inputs suppliers and getting sick from chemicals.” In the early years of organic in the 1960s and 1970s it was all about informal farmer to farmer education. While the first phase of organic farming focused on fruits and vegetables, organic dairy emerged in the 1980s very much as a response to the dairy crisis of the 1980s. Organic dairy was put forth as a strategic response that could stem the bloodletting and keep farmers in business by garnering them premium prices from consumers concerned about the health impacts of chemicals on their food supply.
Kastel explained how his personal journey to organic happened when he experienced severe health problems and had to shift his entire diet towards organic, whole foods, and grass-fed livestock products. As he put it—“People who buy organic food are selfish—we’re wired to always be on the look-out for food. Consumers seek out better quality food when children are around, and are willing to fight for better food….But consumers are not just being selfish when buying organic. [They] think they are doing something good for society, good for animals. Advancing economic justice for people who produce our food should be part of the price. They’re not buying the milk; they are buying the story behind the milk.”
INDUSTRIALIZATION OF ORGANIC DAIRY
Kastel transitioned from telling the story of organic’s origin in health, environmental and economic justice concerns to recounting the industrialization of organic dairy. It has now gotten so extreme that six organic dairies in Texas produce more milk than 453 organic dairy farms in Wisconsin.
Cornucopia has done multiple flyovers of these giant organic dairies, which vividly show the paucity of cows on grass; no more than 10% of these giant herds are outside at any given time. Kastel explained that “CAFOS are ruining our reputation” and that farmers need to make common cause with consumers to save the organic label from ruin by a few bad actors.
Aurora Dairy, started by the founders of Horizon, is the leading producer of store brand organic milk, and has created four organic dairy locations, each with several thousand cows. Kastel explained that “their mission was to make organic affordable….[But] now organic and conventional are in the same boat. You can’t say organic is a better, more stable life for farmers, whereas before now, except for 2009 during the great recession—the market absorbed all the organic milk, even the CAFO milk. It’s a different story now.”
According to Kastel— “We’ve been a victim of our own success. Multiple standards and certifiers were causing lots of problems—we needed a level playing field….But as soon as dollars were involved—the National Organic Program stacked the National Organic Standards Board with industry reps—under Democrats and Republicans.”
Under President Obama the organic industry had high hopes as organic pioneers were appointed to key positions, including the Deputy Secretary of the USDA, but Kastel asserts the “age of enforcement” proclaimed by NOP Director Miles McEvoy was “a big bust.” Under Obama, as under Bush, organic CAFOs continued operations largely unimpeded.
Kastel argued that parallel to the industrialization of organic dairy we are also seeing increased competition for organic milk from plant based beverages. “It is much easier to crush a few soybeans in water than pay you good folks a good price for your milk. [Doing a nutritional comparison to milk—not much in them.] These products are way more profitable than milk. They can be organic. Organic milk sales are flat, while plant milk sales are growing much faster.”
WHAT TO DO?
Kastel argued that key to building farmer influence in the organic dairy world is getting support from consumers. “The higher authority is the consumer and their money….there are too few farmers to have a big influence on policy. Our secret weapon together is consumers. They care about our story— and they don’t know how bad it is [for farmers].” Kastel urged those in attendance to educate consumers on a regular basis about the challenges they face and why their milk is superior to conventional milk. “You’re competing against Aurora and the ‘not-milks.’ We need to leverage our voices.”
Friday, September 28, 2018
On Friday morning there was the Producer only meeting which is reported on in the NODPA Desk on page 3. After a delicious breakfast, the morning program was started with a viewing of the video ‘Voices of Organic Dairy: Healthy Cows, Healthy You, Strong Communities’ created by the NODPA Listening Project and Social Media Committee members Sonja Heyck-Merlin, Annie Murray, Liz Pickard, and Nora Owens. The video was recorded at the NOFA-NY Organic Dairy and Field Crops Conference on March 6, 2018. The video was edited by Kate Morrison, Clovercrest Farm, Charleston, ME. Despite some technical limitation, this was received with great enthusiasm and will be available for use in other venues and for other groups to promote.
ANALYZING YOUR DAIRY PROFITS
Dale M. Johnson, Farm Management Specialist, University of Maryland Extension
The video was followed by a presentation from Dale Johnson of the University of Maryland in Hagerstown, Maryland. Dale kindly stepped in to take over from Sarah Flack who had a family emergency and could not attend. Dale’s presentation was focused on the practical issue of taking information from simple software like QuickBooks or the Schedule F tax form and using it to forecast an annual budget and also compare year to year performance. He was able to take what could have been a difficult topic and turn it into an easy-to-understand evaluation of success or the need to improve. The concept of net worth and balance sheet performance are an extension of the usual operational profit and loss but an understanding of both are essential to good decision making, especially when operational losses cause stress on budgets and managers. Dale highlighted the data that showed net worth which for too many producers is in their land and livestock. Net worth might only be realized when one retires but is an important measurement when the producer is investing in the land, equipment and livestock. The dramatic cut in pay price for most producers has many caught in a cash flow crunch. Dale was able to show that with the use of simple accounting and using records such as the Schedule F tax form, producers can show performance over a 5 or 6 year period, including an increase in net worth over some if not all of the previous years. This can be used for making operational decisions about the farm’s level of profitability while making plans for future years or in going to the bank to borrow money to temporarily finance operations. It can also be used to make decisions about what pay price is needed to survive and whether to change production practices to save on inputs or increase yield.
What could have sent attendees to sleep not only stimulated good discussion and input of personal situations, but also ran over time; a true test of a great presentation!
NODPA took some time to introduce all the trade show vendors to the attendees and allow for some discussion with Peter Miller, the long time and very knowledgeable CROPP representative.
The DC policy and update presentation was shortened but didn’t suffer because of it, as many of the topics had been covered in Ed Maltby’s report the previous evening. The Farm Bill was stalled at that point and hasn’t moved at all as we move into a lame duck session. We were fortunate to have Patty Lovera, Food and Water Policy Director and a great supporter of producers, and her team at the meeting and she reassured us that we weren’t missing much of importance in DC. One final point was made to encourage attendees to take every opportunity to educate their Congressional and State representative about the benefits of organic production and the need for an open and transparent process around rulemaking.
The last half hour before lunch was used by Ron Holter to give a preview of what folks would see at his farm, Holterholm Farms in the afternoon. His presentation was informative, witty and finished exactly on time as he promised.
Lunch followed with the raffle for door prizes of some excellent and very practical items.
Friday Farm Tour: Holterholm Farms, Jefferson, MD
Friday’s field trip to Ron Holter’s Holterholm Farms gave us a chance to stretch our legs again and walk over beautiful pastures on this spring seasonal, grassfed dairy. Ron spoke of his pasture management style for his milkers, and talked about his success with raising calves on cows, kept in a separate pasture. One point that was interesting is that he grafts other calves onto a nurse cow; she does not raise her own calf. Ron felt that this allows her to raise the calves without having a “favorite”. He talked about how he brings his Jersey cows in to the parlor slowly, so that all the manure is captured in the pasture. A modern milking parlor with circular holding area and lots of ventilation made it seem like it would be a breeze to milk the herd there. Farmers from northern areas of our region looked a bit stunned when he told them his grazing season began about April 1 and lasts until the end of October. Spring comes early in these parts.