US dairy farmers dump 43 million gallons this year
An ocean of milk flows from U.S. dairies each year. The U.S. Department of Agriculture estimates a record production in 2016; more than 24 billion gallons of farm fresh milk produced by the nation's 51,000 dairy farms.
But this year a depressing quantity of that milk is being wasted.
"More than 43 million gallons' worth of milk were dumped in fields, manure lagoons, (used for) animal feed, or have been lost on truck routes or discarded at plants in the first eight months of 2016," states a report from the Wall Street Journal published Oct. 12. "That's enough to fill 66 Olympic swimming pools, and the most wasted in at least 16 years of data requested by The Wall Street Journal."
A majority of the spilled milk has accumulated on fields and in pits in the Midwest and Northeast, where the regions' overwhelmed dairy companies are unable to stay ahead of the rivers of milk flowing into processing plants.
"Desperate producers are working to find new uses for the excess," reported WSJ reporter Kelsey Gee, "like getting more milk into school lunches, and in revamped tacos and Egg McMuffins. But many can't even afford to transport the raw milk to market at current prices, which have plunged 36 percent on average since prices hit records in 2014."
Many Montana ag producers will recognize the market forces driving the milk dumps. Historically high raw milk prices prompting dairymen throughout the world to increase production.
The world's top exporter of milk, New Zealand, set export records in 2015 and the European Union ended production limits that had been in place since 1984. The global production of milk hit an all-time high in 2015, exceeding 135 billion gallons. Milk prices crashed, stranding U.S. dairymen in a market that barely meets the cost of production.
"A few years ago we were probably getting $24.50 a hundred weight," said Fort Shaw dairyman Wilmer Amstutz.
The price an individual dairy producer receives is measured in the weight of milk they deliver. Raw milk weighs roughly 8.6 pounds per gallon. In August 2014, Amstutz was getting about $24.50 for every 11.63 gallons of milk his cows produced, or about $2.11 a gallon.
"This year we're down to about $16.50 a hundred weight (roughly $1.42 a gallon)," Amstutz said. "That's a little extreme."
"Raw milk is a struggle right now," said Roy Hall, a district sanitarian for the Montana Milk and Egg Board. "Most dairymen in the United States are struggling, that's a given fact; but to my knowledge there has not been any useable milk landscaped (dumped on the ground) to be disposed of in Montana. It's all been utilized in some fashion."
Across the landscape of dairy production in the U.S., Montana is almost a non-existent player. According to U.S. Department of Agriculture statistics, California is far and away the nation's largest supplier of milk, producing more than 4.9 billion gallons of milk annually. Montana's 91 commercial dairies produce less than one percent of that; about 35 million gallons of milk annually – barely enough to cover the state's consumption.
"Montana does provide somewhat of a surplus," Hall said. "That's shipped out of state to cheese plants."
Dairy processing in Montana is controlled by two companies; Meadow Gold, owned by Dean Foods of Dallas, Texas; and Darigold, owned by the Northwest Dairy Association with headquarters in Seattle, Wash.
Meadow Gold declined to comment for this story; however, Darigold's Board Director, Dave Lewis, offered to provide some industry perspective on the nation's dairy economy and the recent destruction of so much milk.
"First off, nobody wants to dump good food," Lewis said, "because they get zero value for it."
Milk is substantially different from other food commodities because of its perishable nature. If a Montana wheat farmer doesn't like the price he's offered at the elevator he can opt to store it in a bin until prices rise. If a rancher doesn't get the price he wants for his calves he can buy extra hay and hold them over until the following spring. Milk doesn't work that way.
By law, raw milk must be processed within 72 hours of leaving the cow. If the local processing facility doesn't have room for it, there are few other options.
"When there's not enough capacity to process it, it's gone," Lewis pointed out. "What else can you do with it?"
Lewis said he was unaware of any milk dumping incidents in the Pacific Northwest, but admitted that dairymen across the nation are struggling with what to do with the surplus.
"Most of us are producing now for break-even or below the cost of production," he said. "I would imagine most of the dumps in the Midwest and Northeast were skim milk. I would assume they took the butter fat out to garnish most of the value, and they probably dumped the skim milk because the cost and logistics of getting it somewhere where they could powder it were more than the value they would have received."
Many people posting comments on the WSJ web site expressed outrage and dismay at the amount of milk being wasted.
"With all the people affected by Hurricane Matthew in Haiti and in the South, isn't there a way to get this milk to those people in need?!" one commenter posted. "There are so many homeless people that can't afford a decent meal. So many babies that need milk. There is shelf-stable milk that does not require refrigeration. Why are we wasting such precious food while so many people are starving?!"
"It's a nice idea, but it doesn't hold up," Lewis said. "The point of the Wall Street Journal story was there was no capacity to process it. Could a producer ship a truckload of milk three states away to the nearest powdering facility? Maybe, but if it costs an additional $2,000 to truck milk that's barely breaking even to a plant that might be able to process it – is it really worth it?"
Two-tenths of 1%
Lewis also pointed out that while 43 million gallons of wasted milk is a shockingly high volume, it still amounts to less than two-tenths of one percent of all the milk processed in the United States – and much of that was likely lost during the normal course of processing.
"There's a certain amount of 'shrink' no matter what," Lewis said. "When you unload a milk truck there's milk that gets left in the hose, there's milk that gets washed down the drain from the pipelines and tanks when you clean everything. I read an article in a trade magazine recently that suggested as much as 25 million gallons of milk is lost this way every year."
Ultimately the price dairy producers receive for their raw milk in the U.S. should correct itself as global stocks of powdered and shelf-stable milk decline.
"If you lower the price on powdered milk long enough, these countries that maybe haven't bought milk because the U.S. dollar has been too high will return to the U.S. market," Lewis predicted.
He then turned to an oft quoted axiom of the agriculture market.
"The cure for low prices is low prices," Lewis said.
Top five dairy producing states by gallons of milk produced annually
1. California - 4.923 billion (20.5 percent of U.S. total)
2. Wisconsin - 3.232 billion (13.5 percent of U.S. total)
3. Idaho - 1.613 billion (6.7 percent of U.S. total)
4. New York - 1.597 billion (6.7 percent of U.S. total)
5. Pennsylvania - 1.240 billion (5.2 percent of U.S. total)
37. Montana - 35 million (0.0015 percent of U.S. total)
Source: USDA, National Agricultural Statistics Service