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Re: Not good news for US dairy producers [Re: can45] #6665634
11/14/19 11:24 AM
11/14/19 11:24 AM
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Posts: 6,004
East-Central Wisconsin
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bblwi Offline OP
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East-Central Wisconsin
Fluid milk sales have been declining in the USA for 50 years. The huge increases in cheese, now butter again and other dairy powder products are what drive the dairy market today. Deans had 2/3rds of their revenues coming from fluid milk sales and thus were a leading firm in a declining market. With 3-4 years of low prices the US dairy herd has shrunk enough to cause prices to rise in spite of export losses etc. Dairy farmers are very similar to most commodity producers when prices are good they expand to capture the profit, when prices are low they expand to keep their incomes up. Another thing is today the dairy industry can add 100s of thousands of cows in a very short period of time. when most herds were in smaller fixed facilities expansion was slow. Now with dry lots, loose housing and huge free stall barns cows can be added or subtracted quickly with little need to add facilities. Also there are roughly .45 calves and heifers for every cow in the USA. by lowering culling say just 10% and retaining more heifers we can add 300,000 cows in one year easily if wanted.
The average USA dairy cow today produces 23,000 lbs. of milk which is double what it was in 1975. We had surplus production in the late 1970s when we produced 110 billion lbs. of milk equivalent. Today we are closer to 220 billion lbs. of ME and our surplus percentage wise is less than in the late 70s. However costs of production are now much higher and margins are very small and thus investing in dairies today comes with far more risk than in prior years. In the 1950s, 60s, 70s, thousands of dairy farmers left the business to find better earnings in other jobs. Today most of the roughly 50,000 dairy farmers remaining leave because the can't make a living but don't want to leave.

Bryce

Re: Not good news for US dairy producers [Re: bblwi] #6665670
11/14/19 12:42 PM
11/14/19 12:42 PM
Joined: Dec 2006
Posts: 3,036
New York
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Fire Fly Guy Offline
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Posts: 3,036
New York
Honestly, why don't more dairy farms close shop? Out buy me they are buying up land like crazy, no one else can compete with the prices they pay. And machinery? Whens the last time anyone say a farmer work on a tractor? Most farms look like new tractor dealerships. I don't see were they are struggling.


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Re: Not good news for US dairy producers [Re: can45] #6665714
11/14/19 02:01 PM
11/14/19 02:01 PM
Joined: Feb 2010
Posts: 5,104
Henderson, N.Y. Jefferson Co.
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walleyed Offline
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Henderson, N.Y. Jefferson Co.
Originally Posted by can45
People aren't drinking milk anymore, switching to almond milk. USA has been exporting dairy cows to China. Milk is over supplied just like ranch fur, with decreasing demand.


I live in a big dairy farm community and see all the farm workers come in to the local store to buy lunch.

None of them EVER buy milk.

it's all energy drinks, red bull, gator aid, mountain dew, sodas but never milk.

I drink a lot of milk and they are never giving it away in my community. ALWAYS EXPENSIVE !!

W


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Re: Not good news for US dairy producers [Re: bblwi] #6665718
11/14/19 02:15 PM
11/14/19 02:15 PM
Joined: May 2009
Posts: 1,889
ohio
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tomahawker Offline
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ohio
We have around 5 maybe more mega dairies around us. None owned by Americans. I would hazard a guess at 8-10k cows within 5 miles of me. Every time I hear the milk market is in the tank, they build...another barn.

Re: Not good news for US dairy producers [Re: bblwi] #6665719
11/14/19 02:16 PM
11/14/19 02:16 PM
Joined: Dec 2013
Posts: 5,464
Greene County,Virginia
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run Offline
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Greene County,Virginia
The small Amish dairy farms in Lancaster county,PA are closing/ have closed up for good. I think it is a shame to cover that prime farmland with shopping malls and other development.

Re: Not good news for US dairy producers [Re: bblwi] #6665722
11/14/19 02:25 PM
11/14/19 02:25 PM
Joined: Dec 2006
Posts: 7,396
MN, Land of 10,000 Lakes
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Trapper7 Offline
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MN, Land of 10,000 Lakes
Pretty much impossible for the family farm to make it anymore. Neighbor sold his farm to a large corporation. Now, it's a corporate farm milking 1700 cattle per day.


If you think it's OK for Iran to have nukes, but not OK for law abiding Americans to have guns, you might be an idiot.
Re: Not good news for US dairy producers [Re: bblwi] #6665775
11/14/19 04:19 PM
11/14/19 04:19 PM
Joined: Mar 2007
Posts: 27,866
McGrath, AK
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white17 Offline

"General (Mr.Sunshine) Washington"
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Joined: Mar 2007
Posts: 27,866
McGrath, AK
Here's more from a different perspective. From Barron's today




Oat Milk? Millennials? Water? Here’s What Actually Killed Dean Foods.

By Al Root
Nov. 14, 2019 1:00 pm ET




Got milk? Dean Foods wishes more people did.

Americans don’t seem to keep much milk around these days. Per capita milk consumption is falling. That—as much as any other factor—led the largest U.S. processor and distributor of milk—Dean Foods (ticker: DF)—to file for chapter 11 bankruptcy protection on Tuesday.

But changing consumer behavior is only part of Dean’s problem. Investors interested in understanding the rest of the story should ask why people are drinking less bovine-based milk—because solving that question might help companies and investors face similar situations in the future.

One possible answer: growing environmental awareness among younger consumers. Brooke Barton, vice president at Ceres, a nonprofit dedicated to sustainable business practices, doesn’t excuse some possible poor strategic decision making at Dean, but says don’t rule out the power of green-leaning consumers or environmental issues themselves.


“Millennials are asking how products they consume are produced and Dean couldn’t address that,” she tells Barron’s. Milk production requires a lot of indirect land and water use to grow feed crops and manure management is a big issue for dairy farmers. Milk’s environmental footprint, of course, isn’t the only reason people are drinking less of it, but is part of the equation.

(All of this also makes Dean’s 2013 decision to spin off its soy and nut milk franchise look like a major misstep.)

Consumers’ environmental awareness leading to stock trouble admittedly feels like a bit of a stretch at first glance. There is, however, some early evidence that environmental issues such as water management can affect stock volatility.

Ceres recently published the third edition of its “Feeding Ourselves Thirsty” report, which includes a data set ranking 40 major food companies on the environmental factor of water management. Dean ranked 17 out of 18 packaged food companies and 33 out of 40 companies overall.

Barron’s looked at average and median stock returns of the 40 firms Ceres ranked. Returns are similar across the board. Better or worse water management doesn’t appear to affect returns on a one- and three-year basis.

But the stock return volatility of firms scoring below 50 (out of a possible 100 points) is three to four times higher than companies scoring above 50. That observations holds if Dean Foods is excluded from the data set (Dean’s stock, obviously, has lost nearly all its value, potentially skewing results).

Dean didn’t do a great job managing water risk. The company doesn’t have processes that measure up to peers for monitoring dairy or feed suppliers, according to Ceres. Poor supplier oversight could be one reason the stock traded poorly for the past few years. Dean Foods didn't immediately respond to a request for comment.

There are examples of companies addressing environmental issues such as water risk—the environmental factor Ceres measured—more directly.

Ceres finds that more than 75% of food companies now list water as a material risk in financial statements, up substantially in recent years. (Dean does not.) And water is getting attention at the board level too. One-third of food companies Ceres looked at have director-level water oversight compared with only 10% a few years ago.

Where else should investors look next to assess water or environmental risk?

“Meat and dairy have the lowest scores,” says Barton. “Modern livestock [producers] are excellent at low-cost production, but there is some short-term externalization of environmental risks.” That just means protein producers aren’t he ones paying for environmental impacts of production. Publicly traded Tyson Foods (TSN), Sanderson Farms (SAFM), and Brazil-based JBS (JBSS3.Brazil), for instance, all scored in the bottom quarter of the Ceres water report. Tyson referred Barron’s to its website detailing water management practices, while Sanderson referred us to its recent corporate sustainability report.

“There are some [meat industry] positives,” adds Barton. Smithfield, a large hog processor that was once publicly traded, “has partnered to reduce [fertilizer] overuse and run off,” she adds.

There is another bit of evidence that environmental factors are influencing consumer choice. A smaller environmental footprint is one key reason behind the rising popularity of Beyond Meat (BYND) products. Don’t forget, plant-based milk and proteins essentially bypass the “animal factor,” meaning less land is used to grow crops to feed livestock.

In fact, Tyson and other protein producers are investing in alternative meat too. Maybe that will raise their water sustainability scores in Ceres’ future reports.

No matter what the cause, Dean’s fall from grace is breathtaking. Its bonds are trading at pennies on the dollar and the stock is at about 12 cents per share, giving the company—with more than $7 billion in sales—a total market value of less than $300 million. Dean Foods was valued at more than $7 billion as recently as 2010.


Mean As Nails
Re: Not good news for US dairy producers [Re: bblwi] #6665778
11/14/19 04:23 PM
11/14/19 04:23 PM
Joined: Aug 2011
Posts: 21,906
james bay frontierOnt.
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Boco Offline
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Fifth paragraph down-They didn't know how important C+T is to the modern consumer.-Dummies.

Last edited by Boco; 11/14/19 04:24 PM.
Re: Not good news for US dairy producers [Re: bblwi] #6665911
11/14/19 07:25 PM
11/14/19 07:25 PM
Joined: Dec 2013
Posts: 5,464
Greene County,Virginia
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run Offline
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Greene County,Virginia
I think you are on to something, Boco. Canadians seem to have respect for their farmers. Plus they use quota.

Re: Not good news for US dairy producers [Re: run] #6666185
11/15/19 12:16 AM
11/15/19 12:16 AM
Joined: Dec 2006
Posts: 6,004
East-Central Wisconsin
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bblwi Offline OP
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East-Central Wisconsin
That is the capitalistic force that most business leaders have. They will buy and expand as they feel they can and will succeed while others fail and if they fail that is more opportunity for them. Many very large dairies are over built for their land base which means their buildings have marginal value if they are not used for milking cows, so if they have liquidity and leverage they will buy the land they need or want. Dairy farming creates a lot of liquid manure and if they are typical in amount generated they will need 1.5 to 2.5 acres per cow of total land to apply manure and be in compliance. If they don't own or rent it they will create agreements with other land owners to be able to use acres to spread. Here in WI many lenders will not lend for dairy facilities or major expansions without sufficient land base for manure application be that owned, leased or signed agreements.

Based on what has happened over the last 60 years the future has belonged to those that took the risks and managed well as is the case for almost all industry. Farm programs add some security to the large risk and investments that are made to grow the businesses. When we move away from smaller more self-sufficient farms with lower investments and family labor the playing field changes dramatically. Moving into larger business models means that more monies are used to run the business as well as managing hired labor. Those that do that better or like that type of business model will succeed and those who don't will struggle more to stay in business.

Bryce

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