Despite the perfect storm of economic challenges affecting our dairy industry, cooperation and strategic reform can provide a more sustainable marketplace for our dairy farmers. Many dairies suffered steep financial losses as a result of the economic collapse in 2008 and 2009. Before equity recovery was complete, a nationwide drought struck in 2012, driving up feed prices and causing significant new problems. This belies the encouraging news released late last week that California gross farm receipts reached an all-time record of $43.5 billion in 2011, including a 30 percent increase in dairy. This gross revenue does not account for dramatic increases in input costs such as feed – an area where dairies are really struggling to compete.
This level of volatility is, unfortunately, the new reality for dairy farmers. If we have learned one thing from this crisis, it is that the current regulatory and pricing system needs to change and all sectors of the industry need to collaborate and develop reforms that can bring new markets and new stability to the marketplace. As CDFA tries to balance the interests of farmers with other dairy stakeholders—cooperatives, processors and consumers—it is clear to us that the pathway to future stability can be reached by tackling those reforms head-on
I am committed to working with the dairy industry to find long-term solutions. That is why I am forming the California Dairy Future Task Force. Last week, invitations were issued to 32 dairy farmers, cooperatives and processors to serve on the task force. It is imperative that task force members begin work as soon as possible and strive to develop recommendations by the end of the year.
All task force members and dairy stakeholders are being asked to familiarize themselves with a report by global management consultant Mc Kinsey and Company, which was commissioned by the California Milk Advisory Board in 2006 and provided concepts for long-term sustainability and industry growth over a 20-year period. The report is a common starting point upon which our task force can begin to build.
I am aware of the profound difficulties facing the dairy industry. As a farm kid who now owns part of the family farm, I know first-hand the anxiety and stress these uncertain times cause. My lifelong service to agriculture has taught me that no group perseveres better, adapts faster and is more creative than our farmers. That is why I am confident in my belief that there are many promising opportunities ahead, specifically in the export market. I am determined to work with the dairy community to make the changes necessary to position farmers to take advantage of those opportunities and maintain California’s status as a world leader in dairy production well into the future.