Grade B producers lose market with Scenic Central
SAUK CITY - Because of a change at a southwest Wisconsin cheese factory, a group of Grade B dairy farmers were told by their dairy cooperative that they will either have to convert their farms to Grade A status or lose that market for their milk. It’s a trend that’s been going on in the industry for at least a decade, said one co-op official.
Scenic Central Milk Producers Cooperative, which procures milk in south-central and southwestern areas of the state as well as the Packerland region in northeastern Wisconsin, was notified by one of the its long-term customers that the plant would no longer accept Grade B milk; June 30 was given as the compliance date in the move that affected farmers in the southwest region of the state.
The co-op procures milk from 340 farms in the Wisconsin, Minnesota and Iowa and ships that milk into 17 different dairy markets for processing. Only Grade A milk can be used for fluid consumption and products like yogurt. Grade B milk can be used for manufactured dairy products like cheese, butter and non-fat dry milk, but it cannot be used in the fluid market.
Terryl Adams, the co-op’s quality manager and field services supervisor, told Wisconsin State Farmer that 16 farmers were notified of the change by Scenic Central. The farmers were told in May that they had until the end of June to make changes or suffer the loss of their milk market. Adams said the farmers had known about the impending change for about a year and the co-op tried to work with them to make changes.
According to Adams, “75 percent” of the farmers have worked with the co-op to make the necessary changes to become certified as Grade A, which requires a new state inspection. One retired from dairying and there may be a couple of other retirements from the group, he adds. One farmer found an alternative market for the B milk.
“The industry as a whole is moving in that direction,” he said. “There are still some plants that take B milk but a lot of B farmers have lost their markets. This has been a trend over the last 10-20 years,” he said.
Other dairy watchers have said that the glut of milk that has been present in the marketplace for many months – including milk shipped in from Michigan and other states with huge surpluses – makes it easier for buyers of dairy products to specify that they would only purchase cheese made from Grade A milk. But Adams doesn’t think that played a role in this change.
“These farmers have known that this was coming. For processors it comes down to logistics, pooling and simplicity. If you put one Grade B farm’s milk on a truck, that whole truck becomes Grade B. Not having milk that needs to be segregated just simplifies the whole process,” he said.
Many state milk plants won’t accept Grade B milk for processing, including Foremost, Grande, Bel Giosioso, Galloway and Arla. Keeping Grade B milk segregated in the processing plant is cumbersome and costly. In many cases it’s a question of logistics and plant silo space, but in other cases it’s because the processors’ buyers are specifying “Grade A only.”
“Having all Grade A milk coming into the plant gives these processors more marketing opportunities. It’s the same as going rbGH-free,” he said. “It comes down to the opportunities plants have to market their milk. There’s no doubt that everybody in the manufacturing sector is trying to better their sales and if going to all Grade A milk can help, that’s what they’re doing.”
With shrinking markets for Grade B milk, sometimes it becomes necessary to haul that milk long distances while keeping it segregated and that is something the current system can’t do, said Adams, adding that in the current market it’s hard to find any new market for any kind of milk.
Farmers who were shipping through Scenic Central were encouraged to make the changes that would allow them to qualify for a Grade A state license. “We’ve been steering them in that direction, telling them for quite some time of the things they needed to do to become Grade A shippers,” he added. “They knew this day was coming. At the beginning of May we let them know of this deadline.”
In some cases, the farm’s water well is the only thing keeping a it from being Grade A. Some farmers have wells in their milkhouse or too close to their barn, or have the wrong kind of pumping mechanism, which dictates that the farm be considered Grade B. At least one of the farmers in this group decided to put in a new well to upgrade his farm’s license.
But Adams said that some of the requirements between Grade A and B farms have been disappearing over the years, making production requirements more stringent in both categories.
Veteran dairy field representatives, including Adams, noted that many farmers have not wanted to move to Grade A because they only wanted one visit per year from the milk inspector. In the past, Grade B farms may have only been inspected every few years.
Once the change is made with this small group of farmers, all of Scenic’s southwest procurement area will be Grade A.
Wisconsin’s Agricultural Statistics Service in Madison shows there are currently 478 Grade B farms in the state, shipping their milk from bulk tanks. There are an additional 605 Grade B dairy farms that ship their milk in cans, according to state statistics.
Wisconsin now has 9,106 dairy farms, so the statistics show that nearly 8.5 percent – 1,083 -- of the state’s dairy farmers ship on a Grade B state license.
Adams said it has been his impression over his 20 years in the business, that the state doesn’t have any interest in shutting off Grade B farmers, or eliminating that category of production, preferring to let the industry send its own cues to farmers.