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Business Observer Wednesday, Jan. 12, 2022 6 months ago

Dairies in distress: Florida dairy farmers lobby for pandemic relief

‘This is a business where if you are not making more product, increasing production, your days are numbered,’ says one farmer.
by: John Haughey Contributor

They come to Dakin Dairy in Myakka City three days a week to tour the stall barns, see cows milked, learn how milk is pasteurized in the bottling plant, make their own butter and sample cheeses, ice cream and chocolate milk made on site.

The 90-minute ‘Where Milk Comes From’ guided tours of the 1,200-acre dairy, with its 2,400 cows, is a popular east Manatee County attraction. It tells visitors the story of how milk travels from the farm to the local supermarket dairy aisle.

But that story is changing dramatically amid rising land values, high cost of equipment, finance crunches, labor shortages and a federal regulation that makes Florida milk among the nation’s most expensive, with corporate dairies in the Midwest shipping milk into the state at lower prices than local dairies can produce it.

As a result, owners and operators in Florida’s $1.2 billion dairy industry — mostly decades’ old family businesses — are facing pressure to either grow or sell their pastures to developers.

In 2015, there were 130 dairies across the state, where 123,000 cows produced approximately 277 million gallons of milk a year. Now, according to Florida Dairy Farmers, there are about 125,000 dairy cows in Florida that produce 300 million gallons of milk annually — similar production, but by about half as many dairies as seven years ago.

“We’re down to 66 dairies,” says Jerry Dakin who, with his two brothers, has owned and managed Manatee County’s last three dairies since 1973. “The way we’re going, in another eight years or so, there will be none left.”

Tough times

If not zeroed out, maybe something close.

“Well, I don’t want to say (the state’s dairy industry) is terminal, but it certainly is challenged,” Florida Dairy Farmers President Matt Lussier says. “If you are a Florida dairy farmer right now, you are losing money every year and you look around, look at the capital invested, at your (income) opportunities and at the value of your land, and it is apparent you are not going to be able to do what you need to do to stay profitable. And in Florida, land sells.”

The latest Florida dairy to disappear is the century-old H.C. Dairy in Lakeland. That was Polk County’s last commercial dairy, where developers will now build a 170-home subdivision in the coming year.

Lussier, who has owned Lussier Dairy, Inc. and Hawthorne Creek Creamery near Gainesville for nearly 30 years, says Florida dairy farmers are unfairly penalized by the United States Department of Agriculture’s Federal Milk Marketing Order (FMMO), specifically 2017-24 Blend Order #6, That order requires 85% of the state’s commercial dairy product be fluid rather than cheese, yogurt, butter or powder.

“Florida’s Class 1 utilization (85%) is the highest Class 1 (fluid) utilization in the country,” Lussier says, noting California’s Class 1 utilization is 13%. “The pricing formula favors other parts of the country and causes a lot of economic harm” in Florida.

File. Dakin Dairy Farm in east Manatee County was one of several farms in Florida forced to dump hundreds of thousands of gallons of milk in the early days of the pandemic.

“Florida historically has always had the nation’s highest milk prices. It is a very fluid-based market and fluid is least storable and always priced higher than these other dairy products. We needed the high price because the cost of production in Florida is challenging,” University of Florida Department of Animal Sciences Professor Albert DeVries says. “So, it gets down to how milk is priced. (Lussier) certainly has a point. Is it fair to Florida producers? That is a good question.” 

U.S. Rep. Kat Cammack, R-Gainesville, doesn’t think Florida’s 85% Class 1 utilization order is fair. She and U.S. Rep. Al Lawson, D-Tallahassee, sit on the House Agriculture Committee and plan to address “longer-term issues dealing with market-pricing” in developing the next federal farm bill, which must be adopted by December 2023.

“We are really focused on delivering longer-term solutions to address the market-pricing issues that the Southeast and Florida, in particular, face,” Cammack tells the Business Observer, calling for “more emphasis on producers. There’s not enough attention on production and in helping producers. We’re going to make right a lot of the wrongs.”

Because of the 85% Class I utilization FMMO, when the pandemic closed schools and restaurants in spring 2020, Florida’s dairies were forced to dump hundreds of thousands of gallons of milk — incurring an estimated loss of $35 billion from January 2020 through February 2021. A scene like that played out multiple days at Dakin Dairy early in the pandemic, to cite one example, where trucks parked and milked flowed into the ground.

'The life of a farmer, you are a price-taker not a price-maker. We are trying to be a price-maker.’ Sutton Rucks

In a joint Oct. 4 letter to USDA Secretary Tom Vilsack, Cammack and Lawson raised issues with FMMO “inequities” and say Florida's dairies warrant compensation from the Pandemic Market Volatility Assistance Program (PMVAP).

“These federal agencies have never been more flush with cash in their history than they are presently. This is a good opportunity for this administration to recognize the strain,” Cammack says. “Florida dairy farmers were disproportionately affected by the volatility in the market. These are family operations that can’t take these losses.”

Other options

Lussier says if state dairy farmers can’t find relief from the USDA or Congressional action, it may be time to “decouple from the federal system” by establishing “a Florida Milk Commission” in tandem with Southeast Milk, a cooperative based in Belleview, outside Ocala, that markets dairy products on behalf of 158 dairies in Florida, Georgia and South Carolina.

“That would be the consensus with most Florida dairy producers, including myself,” says Sutton Rucks, whose family has raised cows since the 1950s in Okeechobee, where he operates The Milking R, a 1,400-cow “22-member family farm.”

“We all know milk is a perishable product,” Rucks continues. “The Florida consumer will lose out if we get pushed out of business. We are just trying to be a little innovative here. The true answer to the survival of the milk industry is (creating) a so-called milk commission with some form of pricing mechanism to protect the product.”

Courtesy. Jerry Dakin was recently named Florida Farm Bureau's 2022 Florida Farmer of the Year.

“You know, a milk commission, it’s always floated around,” says Dakin, recently named Florida Farm Bureau's 2022 Florida Farmer of the Year. “The challenge either is not that many farmers are left and the farmers (who) are left have to come together. At the end of the day, there’s got to be more revenue in the marketplace. The United States has the cheapest food of everybody. If we don’t get more money to farmers, the younger generation, they see all the stress, the tough times — it’s a tough industry – and they’re not going to want to do it.”

“We are hemorrhaging dairies,” Lussier says. “Everything has gone up except the price of milk. We’re not looking to have a windfall but to, at least, be competitive.”

“Its survival of the fittest,” DeVries adds. “You have to be on top of your game, doing everything right — employee management, growing forages, getting things done efficiently every day. This has resulted in more farms going out of business but also the farms staying in business getting larger. I see them growing. I see fewer farms, but the remainders getting larger.”

Rucks agrees. “We have to grow internally,” he says. “We milk more cows than we did 10 years ago. This is a business where if you are not making more product, increasing production, your days are numbered.”

Diversification and innovation are also key. “We created our own brand since COVID-19 to market our own milk. Have 45 to 50 stores and coffees shops signed on,” Rucks says. “The life of a farmer, you are a price-taker not a price-maker. We are trying to be a price-maker.”

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