Americans are drinking less milk these days, and that’s putting a hurting on dairy farmers — of which Lancaster County, a leading milk producer nationally, has many.
“The industry is struggling every day on how to become profitable in a market that is shrinking more and more,” said Mauricio Rosales, a Penn State Extension dairy educator.
Land O’Lakes Cooperative, a processor that buys a lot of the milk in the county, activated its quota system earlier this year. Cooperative members producing above their base production level are charged an additional milk check deduction.
Farmers are finding themselves forced to sell cows and produce less milk, dump it or incur the additional fee.
Rosales also noted that average milk prices for 2016 were below the break-even point for farmers, and that they haven’t gone up much.
“The dairy industry is not going well and it hasn’t been well in a long time,” said Lisa Graybeal, chairwoman of the Lancaster County Agriculture Council and a dairy farmer in the southern end of the county.
“We’re seeing farms say you know what,we can’t do any more years working this hard and getting this kind of price for our product,” she said. “It’s a long, slow row to hoe.”
As of 2015 Lancaster County had about 100,000 milk cows and was the top dairy county in Pennsylvania, ranking eighth in the entire U.S. for milk production.
People drinking less milk is a big contributor to dairy farmers’ problems, Graybeal said, noting that Lancaster County farms produce about 10.2 million gallons of milk a year.
Unlike some other local farms, hers hasn’t had to sell cows or dump milk, but “we’ve had a period where we’ve really had to tighten up,” she said.
Jayne Sebright, executive director of The Center for Dairy Excellence in Harrisburg, said the decline in milk-drinking has hurt Pennsylvania farmers particularly hard, because as of 2000, nearly half the milk produced here was sold for drinking.
Today, that market accounts for only about 32 percent of the milk here, she said, and farmers are scrambling to find other outlets for the surplus.
Milk-based products like butter and yogurt are growing in popularity, she said, so some of the surplus is finding a home there, and some farmers are setting up creameries to make their own cheese and ice cream.
But that’s not filling the whole gap, and some farmers are being forced to sell cows when they can’t sell enough milk.
Sebright said Pennsylvania had roughly 530,000 cows for several years running, but then last August it started to drop and it now stands at 525,000.
“We’re losing cows and we’re losing farms,” she said. “This is the first time in recent history in Pennsylvania that we have had farms with market uncertainty like this. It’s really a challenge right now.”
Sebright also noted that average production per cow rose enormously over recent decades, and continues to climb.
Even with fewer cows, she said, “We’re up 2.5 percent from where we were a year ago.”
Derek Frey, who’s in charge of procurement at Turkey Hill Dairy, said people drinking less milk isn’t great for that business.
But, he said, it has no problem finding farmers to buy milk from, and because it’s selling more ice cream every year, its overall milk utilization has stayed steady or even grown a bit.
However, he said, it’s harder for farmers, who get paid more for for drinking milk than they do for milk that goes into butter, cheese and other products.
Milk drinking has been declining for a long time.
Research firm Mintel says it decreased 7 percent in 2015, and is project to drop another 11 percent by 2020. Meanwhile, it said, in 2015 sales of non-dairy milks from sources like almond, rice and coconut grew 9 percent.
That dynamic has spurred the milk industry to start running ads emphasizing the protein content of milk and the additives found in plant-based milks.
The industry has also asked regulators to consider prohibiting the use of the word “milk” on beverages like almond milk and coconut milk, so far without success.
Graybeal said school lunch programs ditching chocolate milk also hurt, and that she’s hoping American consumers return to dairy milk the way they have to eggs.
Exports could also be a bright spot down the road, she said, as “ I think it’s coming back around a little bit as more developing countries are looking for sources of protein.”
Sebright said milk is a commodity business and “we’re in a period of significant imbalance.”
“We need to find that balance, and it’s either by creating new demand or reducing supply,” she said.
Dave Andrews is vice president of sales and marketing of Kreider Farms in Manheim, which with 1,600 cows milked is among the largest dairy farms in the county, in addition to selling milk, eggs, and ice creams under its own label.
“The decrease in consumption has been lowering the prices,” he said.
But although Kreider Farms feels that impact, he said, it’s going against the trend because its milk sales are on the rise.
“We’re growing because we’re increasing our market share,” he said, noting that last week the business introduced lactose-free milk.