Thursday, June 22, 2017 A Special Supplement to the West Side Index & Gustine Press-Standard
2 | SALUTING OUR LOCAL DAIRY INDUSTRY
THURSDAY, JUNE 22, 2017
Dairy producers face ongoing challenge Tough economic times have persisted for the dwindling ranks of California dairy producers. A rally in milk prices late last year into early 2017 was cause for optimism, explained Annie AcMoody, director of economic analysis for Modesto-based Western United Dairymen, but that optimism faded as the recovery faltered. As of April, she shared, the overbase (or minimum) price being paid to producers was just over $14 per hundredweight, which lagged well below the average cost of production. By contrast, AcMoody told Mattos Newspapers, the cost of producing 100 pounds of milk stood at $17.78 for the fourth quarter of 2016, the most recent period for which those statistics were available. For a time, she com-
mented, the industry appeared to be on the rebound as 2016 progressed. “The first half of 2016 was rough, with overbase prices in the $12 to $13 range,” AcMoody remarked. “Things picked up toward the second half of 2016. We saw some improvement, and 2017 started with a lot of optimism building off that.” That rally pushed milk prices to $15.80 in December, she noted. While that was lower than the cost of production, AcMoody said, “that was the highest price since December 2014, so it was very much welcome.” But the recovery proved short-lived, as optimistic forecasts did not materialize. “Domestic consumption did not follow last year’s strong level, and our price was not very competitive
The dairy industry continues to be a leader in the local ag economy, but low milk prices are an ongoing challenge for producers.
See PRODUCERS | PAGE 3
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THURSDAY, JUNE 22, 2017
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CONTINUED FROM PAGE 3 with the global market,” AcMoody told Mattos Newspapers. “California milk production is declining but nationwide production is up. That created an unexpected dip in March and April.” The market appears to have stabilized, she added, but “there is still a lot of milk out there and product in storage. The recovery is definitely taking longer than expected.” Global market forces are impacting milk prices in California, AcMoody said, and the state’s dairy producers have much at stake in trade pacts such as the North American Free Trade Agreement (NAFTA). Approximately 36 percent of the milk produced in California stays in the state, while 34 percent goes elsewhere in the United States and 30 percent is exported. “Our No. 1 market is Mexico,” explained AcMoody, adding that NAFTA is a “very big topic” of discussion among dairy producers in California and across the nation. “Mexico is a very large market for California dairy products. Our industry is a bit concerned. We hope that in whatever negotiations happen the
industry does not get left behind,” she commented. Canada is the secondlargest market for U.S. milk, with that demand primarily met by Upper Midwest dairy producers. “If the producers there lose that market, it leaves that much more product in the U.S and everybody is impacted by that,” AcMoody stated. Global market forces exert their influence in a variety of ways, she added. For example, production of skim milk powder within the European Union increased significantly when quotas were lifted in 2015. That production has scaled back, AcMoody said, but a large inventory of milk powder remains. California milk producers could get a measure of relief if a federal milk marketing order is adopted for the state. A preliminary analysis suggests that adopting a federal order would increase California milk prices by about 50 cents per hundredweight, AcMoody stated. Ultimately, she said, producers will be asked to decide whether they want to adopt the tentative proposal released by the USDA earlier this year. In essence, AcMoody said, taking that step would change the way milk prices are regulated in California to make the
methodology more consistent with those across the nation. The milk pricing structure is not the only disparity facing California producers, she added. “It is frustrating for our producers. On top of the economics you often hear of the environmental regulations that don’t exist in other states and the new labor requirements (in California) that have passed with the higher minimum wage rates. Those are all impacting California producers’ cost of production,” AcMoody told Mattos Newspapers. The toll taken on dairy producers is reflected in one grim statistic: In 2016, 46 California dairy producers went out of business, leaving the state with 1,392 dairies. By way of comparison, California had 1,752 dairies operating seven years earlier, according to figures previously provided by AcMoody. The ranks of dairy producers continue to shrink, she added. “I have heard of more sales that are happening right now,” AcMoody said in May. “The prices are not as low as we have seen, but because we have seen such a long period of low prices it has caused a lot of financial stress for operations.”
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4 | SALUTING OUR LOCAL DAIRY INDUSTRY
THURSDAY, JUNE 22, 2017
Passion for dairy led Borba to new venture A passion for dairy which dates back to childhood led one local producer to build his dream facility from the ground up a decade ago. Bob Borba, who with his wife Doilinda owns and operates Dairy Central on Central Avenue a short distance from Hatfield State Recreation Area, saw the dairy facility he envisioned take shape from the ground up. Dairy roots are deep in the Borba family. His father and an uncle came to the United States from the Azores in 1967, found work on a dairy within a few days and saved money for years to have their own dairy. A third brother joined the dairy in a long-term partnership which spanned more than 20 years before the trio amicably went their separate ways, Borba reported. “That was when I split off,” he said. “I left in 1996
to pursue my own dairy. I rented a facility for about 10 years, and then bought this place and built the dairy in 2007. It was an old dairy. I demolished it and started fresh.” That Borba pursued a dairy path came as no surprise. His father and uncles were role models looked up to by the entire family, Borba recalled, and he shared their love for the dairy. “I always had a passion for this. At 8 years old, I was already loading feed into wagons,” he explained. “I would be in school daydreaming about coming home, feeding the animals and being around the dairy.” His dairy dream started with modest numbers, as Borba milked about 130 cows when he went out on
Bob Borba attaches a milking machine to a cow in Dairy Central’s rotary milking barn.
See BORBA | PAGE 5
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THURSDAY, JUNE 22, 2017
BORBA
CONTINUED FROM PAGE 4 his own in 1996. Purchasing the Central Avenue property was a turning point for the dairyman - and an opportunity to build from scratch the dairy that reflected his needs and approach. “This was an old dairy. I demolished it and started fresh,” Borba told Mattos Newspapers. “I would come up here on Saturdays when I knew I would not be disturbed and visualize how this needed to look. It took a while.” The dairy was completed in late 2007, and Borba began milking 800 cows in the new facility. He now milks 2,000 cows twice a day - and while the state of the art rotating milk barn is sized to accommodate an additional 500 head, the current size is comfortable. “I appreciate the down time for maintenance, so I don’t plan on doing much more,” Borba related. “I
don’t believe in pushing the cow - or my people - too much. “I take great pride in a low employee turnover rate,” he added. “Labor is a major challenge, almost a do-or-die challenge. I try to keep things in check so I can train and retain. It is no fun to train and lose (workers).” While the entire facility was planned with care and attention to detail, the milking barn is the centerpiece of the dairy. Rather than loading cows into a milking barn one string at a time, the rotary facility allows a constant stream of cows to step onto the slowly-moving deck, be hooked to the milking machine and then exit when milked. “This is very labor friendly, and we can milk over 300 an hour. It is on, off. It is pretty efficient,” Borba explained. The dairy design also provides free stalls which improves feed efficiency
See BORBA | PAGE 6
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6 | SALUTING OUR LOCAL DAIRY INDUSTRY
BORBA
CONTINUED FROM PAGE 5 and herd health, soakers and other elements geared toward cow comfort, and features that provide better working conditions for the dairy employees. Conservation was a key consideration as well in designing the facility. Borba said water coming into the milking parlor is recycled, used for three separate purposes before being released to become crop nutrient. “I was trying to be the tightest dairy in the state as far as wastewater,” he noted. Ultimately, Borba said, he envisions the day when dairy wastewater can be treated to a potable level - which in turn would open up new opportunities in terms of what can be grown in dairy fields. “With the fertilizer that we now processed we are forced to grow cow feed. If we can process our waste (to a higher level) we can look at different options in
terms of what we grow. It is technology that is on the horizon and looks practical.” Dairy Central has also incorporated a number of technological advances in the daily operation - including radio frequency ID tags and electronic cow records that can be pulled up on cell phones by Borba and his workers. “We don’t need laptops. If we are out with the cows, we can get individual information pretty quickly. We do an excellent job of keeping track of an animal’s history,” Borba stated. “Before you relied on memory or paper records. Now it is programmed in.” Genetics and sound nutrition are of utmost importance, he added. “We try to go above average with our genetics. We want a good, healthy productive animal that has longevity. I don’t want to burn my cows out. I want them around,” explained Borba. A California Holstein on average has a longevity of 2.4 lactation cycles, he pointed out. “We like to do
THURSDAY, JUNE 22, 2017
four-plus,” Borba said. Diversity has helped the dairy weather tough times. Borba said the dairy grows about 65 percent of its feed. “That has been our salvation,” he declared. He also does some custom farming, and about six years ago launched a dairy lagoon cleaning business which uses a drag hose technology to inject slurry into the soil rather than trucking it away. Operating the dairy has not been without financial challenges, he acknowledged. “A lot of us are having a hard time. If you did the average over the decade we are probably at a 2-3 percent margin. Many times it is zero or less,” said Borba. Still, he reflected, perseverance and pride are ingrained in those whose livelihood revolves around the dairy cows. “You start something, you want to see it through. It has always been in our DNA,” Borba remarked. “There is a lot of passion and pride in what we do.”
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THURSDAY, JUNE 22, 2017
Mendes meets challenge of evolving industry GUSTINE - A rural Gustine dairy is continuing to evolve to meet the everchanging challenges of the industry. The ongoing emphasis on the Cottonwood Road dairy operated by the father-son team of Manuel and Scott Mendes is not on growing larger but on become more efficient. Those improvements range from embracing technology to adopting management practices which emphasize cow comfort - all with an eye on being as efficient as possible without sacrificing production from the 730 cows milked twice a day. “You don’t want to save a dollar (up front) to lose two on the other end,” emphasized Manuel. Dairy runs deeply in the family line for father and son. Manuel was born and raised in the Azores,
where his father was in the business. He came to the United States at 14 years of age to join older siblings in search of better opportunities, and gravitated back into the dairy business. “I thought the opportunity here in the dairy business was much greater than back (in the Azores),” Manuel explained. “It was always dairy,” Scott chimed in. “He was always either milking for somebody or doing something on a dairy.” In 1982, the senior Mendes had the opportunity to launch his own dairy. Manuel started with a facility in the Modesto area and a herd of 200 cows, and stayed there until moving to the West Side in 1989. “I like the West Side. The dairies were not as
Scott Mendes and his father Manuel have seen their Cottonwood Road dairy evolve through the years.
See MENDES | PAGE 8
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MENDES
CONTINUED FROM PAGE 7 crowded out here as they were in Modesto and Turlock,” Manuel recalled. And he was able to purchase rather than rent and in time add acreage to grow commodities, paving the way for expansion to the dairy’s current size. Like his father, Scott was raised around the business. “It was pretty much all I knew,” related Scott, a 2005 Gustine High graduate. “If I wanted to hang out with dad I had to be working. He was out there all the time.” Their respective roles have evolved through the years. “When I was younger, I was doing a little bit of everything, filling in, feeding or taking care of the calves. When I was in high school we started farming, and I took care of the discing and everything,” Scott recalled. “Now we have more ground, so I do
THURSDAY, JUNE 22, 2017
more of that. I also do all the computer work and I help manage the feeder as well.” A number of physical improvements have been made to the dairy through the years, with several upgrades geared for cow comfort. “We are raking the free stalls every day and filling them more often. You make sure that everything is as clean as possible and nothing is broken, so there is nothing anywhere that the cows can hurt themselves on,” Scott explained. “We have a newer barn in the back which is a little higher and cooler, as well as soakers, and we just recently upgraded the fans in the milk barn.” The importance of cow comfort cannot be stressed enough, Manuel added. “You can feed all these commodities, but if the animal is not comfortable it will not produce,” he emphasized.
A new calf barn has been among the improvements to the rural Gustine dairy of Scott (left) and Manuel Mendes since the senior Mendes moved to the West Side in 1989
See MENDES | PAGE 9
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THURSDAY, JUNE 22, 2017
MENDES
CONTINUED FROM PAGE 8 Other improvements or management practices have the dairy employees in mind - in terms of both safety and ease of completing the necessary tasks. In addition to Manuel and Scott, the Mendes dairy employs five workers. The longest-tenured has been with the family dairy for 17 years. While the essence of the dairy industry has remained unchanged through the years, technology, changing management practices and improvements in genetics and nutrition have revolutionized the field. Computers are now an essential tool in maintaining cow records, managing breeding programs and developing rations with pin-point accuracy. “We have a new program for feeding which keeps track of exactly
what commodities we are using and what the feeder is putting in,” Scott said. The program tracks milk production and feed costs on a daily basis, Manuel added. That information is critical in making management decisions - which is doubly important when the dairy industry is mired in tough financial times. “One reason we got the program was just to be more efficient in feed costs,” Scott commented. “It tells us exactly what (the feeder) is putting in.” The efficiency extends to growing as many of their own commodities as possible, which this year includes alfalfa for the first time. Consistency is important as well, Scott pointed out. “When you have something that works well, you don’t want to change it,” he said of the feeding program. The dairy has, however, seen a number of changes through the years, includ-
ing a shift to a younger herd. “We are cycling animals out at a younger age than in the past,” Scott noted. The combination of factors and management practices has resulted in greater overall production - which Manuel said is critical given the increasing costs of operation. “When I started, a six gallon average (daily per cow) would have been good production,” he stated. “Today, we shoot for nine to 10 gallons.” Even top production does not guarantee a profit for dairymen, however, as the roller-coaster cycle of milk prices often sees producers being paid a price that falls short of their costs. That is the case this spring, as milk prices slipped after showing gains in late 2016. “When things are high you secure the foundation. You have to learn how to ride these waves,” Manuel reflected. “I get more scared when (milk prices)
Rural Gustine dairymen Manuel (left) and Scott Mendes rely on long-time employees such as milker Jesus Hernandez, who joined the family-owned dairy operation 14 years ago. are high because I know they are going to come down. You wonder how low they will go.” The cyclical nature of milk prices is part and parcel of being a dairy
producer, and are accepted by the father-son team. “We have bad days, but we really enjoy it,” Manuel commented. “We never grew real big because it might take some of the fun
out of it. By staying smaller we are able to enjoy it more.” “It is ours,” Scott added. “It is what we do, and we take a lot of pride in it.”
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10 | SALUTING OUR LOCAL DAIRY INDUSTRY
THURSDAY, JUNE 22, 2017
Sunshine translates into energy savings on West Side dairy CROWS LANDING - The relentless summer sun of the San Joaquin Valley is expected to translate into lower energy costs for a local dairy family who invested in solar energy. Moonshine Dairy owners Rich and Jacquie Dyt made the decision to dedicate more than three acres of land to the solar arrays which are expected to offset the majority of the energy demand on the Kilburn Road facility. “I think that a dairy lends itself to solar because of the demand and the availability of space. It works out,” Rich reflected. “A dairy is very energy intensive. Dairies have a
constant energy demand.” The Dyts researched the solar opportunities for about a year, contacting several providers in the process before settling on a company and launching the project. “They didn’t get it on line until mid-August of last year, so we missed the peak of summer,” the Dyts related. “This will be the first full summer. We are very excited to see the lower PG&E bills.” The dairy has already seen a significant reduction in its energy bills, Jacquie explained, and expect the difference to be even more pronounced through the summer months.
Last year, she noted, the dairy’s energy bill topped out at $38,000. The system was sized to meet 75-80 percent of the existing demand, the Dyts explained. “We have yet to see how far it will come down,” Rich said of the dairy’s energy bill. Jacquie said the hope is that, through greater efficiencies, the solar essentially offsets the energy demand on the dairy - or at a minimum brings the monthly bill to less than $5,000. She estimates that the
See DYT | PAGE 13
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CONTINUED FROM PAGE 10 investment in solar will be paid back in six years or less. “This summer we will be able to quantify (the savings and payback time frame),” Jacquie added. A tax credit and USDA grant helped make the project feasible, Rich noted. “Without those it would make it a lot tougher to pencil out,” he stated. The Dyts hired a grant writer and submitted a wealth of information to support their application. Nonetheless, their decision to move forward was still, to a point, a leap of faith. “We had to commit to the project before we knew if we were going to get the grant,” Jacquie told Mattos Newspapers. “It still made sense, we just weren’t as excited about it,” added Rich. Energy is an ever-increasing expense, he added.
Improvements such as added fans for cow comfort and a switch from a twice-daily to three-timesa-day milking schedule also come with higher energy consumption, the Dyts noted.....and the Pacific Gas & Electric Co. rates were only going up. “It is always important to be as efficient as possible,” they emphasize. The solar arrays are placed on a site where an old dairy once stood, Rich noted. “We did not have to take any land out of production,” he explained. The Dyts opted for a single-axle system which allows the solar panels to track the sun as it moves through the sky, maximizing production. They can track energy output through a computer program. In the event of strong winds, the system will automatically put the panels in a level position to minimize the risk of damage. Keeping the panels clean is the primary - and most
Improving efficiency without sacrificing production is an ongoing goal and particularly critical in challenging economic times, emphasizes Rich Dyt, who with his wife Jacquie owns the rural Crows Landing Moonshine Dairy.
important - maintenance chore, Rich stated. “They said we could clean them twice a year, but you probably need to clean them every two months or even more in the summer,” Rich said. “They
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get dirty fast.” “It is critical to clean them,” Jacquie stated. “The first time we cleaned them, our efficiency went up 25 percent.” Feed and labor are the leading expenses on the
dairy, the Dyts explained, but energy is high on the list as well. The Dyts moved to the West Side from the Chino area to start Moonshine Dairy in 2003. They built the dairy from the ground
up, and currently milk about 2,000 cows daily. “We’re not looking to grow now, just to get more efficient,” Jacquie commented. “I think this is a good way of doing it.”
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THURSDAY, JUNE 22, 2017
Fun facts about California’s dairy industry • California has been the nation’s leading dairy state since 1993, when it surpassed Wisconsin in milk production. California is ranked first in the U.S. in the production of milk, butter, ice cream and nonfat dry milk. California is second in cheese production. • California accounts for 19% of the United States’ milk production. In 2016, California produced 40.4 billion pounds of milk – more than one-fifth of the nation’s total production. • Milk production per cow in California
has increased 55.1 percent from 1986 to 2016. • Dairy farming is a leading agricultural commodity in California, producing $6.2 billion cash receipts from milk production in 2016. • Approximately 46% of all of California milk goes to make California cheese. • Currently there are more than 1,300 California dairy families, whose farms house 1.74 million milk cows. Approximately one out of every five dairy cows in the U.S. lives in California.
• The average California dairy cow produced 22,968 pounds of milk in 2016. • According to the most recent data, around 33 percent of the total U.S. exports of dairy products are coming from California in 2015. • California’s milk standards exceed federal standards because California processors add nonfat milk solids which offer improved taste and nutritional benefits. California milk exceeds the federal guidelines for the amounts of calcium and protein in each serving.
• In 2016, Tulare County was the highest milk producer in California, with more than 27% of the state’s milk production. • In 2016, Merced County was ranked #2 in total milk production in California, with an increase of more than 15% in the past year. Sources: California Department of Food and Agriculture, California Milk Advisory Board
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