Every time I think dairymen are starting to pull together, I will read some blog from a major magazine correspondent, and realize how difficult reforming milk pricing will always be.
But in this instance it was a good dairyman from Utah expressing his opinion (through the “Ag Week” e newsletter) that he was frustrated by all the efforts to mislead consumers into thinking “organic” or “grassfed” or “glass bottled” or any of the growing tide of specialty milk products gaining premium prices from the market were not just a big ripoff of ignorant buyers. Proof of his point was the profound statement—“milk is just milk”—proving to me that we are lucky he is not a cooperative director; in condemning all milk to the lowest common denominator of commodity definition, he robs all efforts at quality milk production of their profitability.
It is a good thing that farmers are not usually in charge of marketing their production, because they have no grasp of the science of marketing, which begins with understanding your product.
Is milk “just milk” really?
First thing to understand—“milk” is the lacteal secretion of any mammalian female, for whom a recent birth event has stimulated her mammary glands to produce nature’s perfect food (any food concentrated enough in nutrients and simple enough in digestibility to feed an infant is by definition a “perfect” food). Thus, a sow produces milk, as does a horse, as does an elephant, as do the millions of water buffalo milked from the Mediterranean Sea to the Ganges River.
So the first, most obvious, and least defined aspect of the “dairy industry” is that, in the USA, the bovine is the dominant species. Does this matter? Yes, because for much of the world it is the egalitarian goat that is the primary source of milk for humans—cows are for eating, or hauling wagons, not low cost enough to feed to keep around just for a few gallons of milk.
The cow became ascendant in USA dairying because (1) we had the volume of arable land to deal with a larger animal, and (2) our earliest settlers came from the regions in Europe where the skill in domestication of cows for dairy existed. Later (3) she became desirable as one of the markets our agriculture was developing for its favorite volume commodity, corn.
Both species and breeds alter milk composition
Second thing to understand—and it has proved hard for producers to understand, because bitter battles were fought to acknowledge what nature has always made abundantly plain in the way in which the federal milk orders price the “value” of milk—is that the uniqueness of milk is in its components—its unequal blend of butterfat for energy, protein for fiber, and minerals for its electrolytic and vitamin transfer benefits. Once the solids are removed from milk, its volume is just in its “water” carrier. So it is more an issue of “water is just water” – once you start to add in butterfat, protein and mineral solids, milk can become quite variable indeed.
The Jersey cow, for example, in her genetic encoding tends to put 20% more calcium and 16% more phosphorus per volume in the milk she produces. On average, she produces 25% more butterfat and 33% more protein per volume in the milk she produces. Did it ever make any sense to stand a glass of Holstein milk beside a glass of Jersey milk, fresh from their respective cow, and insist that milk is just milk?? But that is what this otherwise knowledgeable and articulate producer from Utah is implying in his rant on the “Ag Web” blog. It must then be admitted that he is wrong on two assertions—first, for being oblivious to species, and then for ignoring breed differences. (He is not alone in this—dairymen milking breeds other than the ubiquitous Holstein have always had to fight for the focus of milk pricing to be on the content of milk nutrients, and their ability to recover money from the user market, rather than the size of their bulk tanks.)
Further more specific genetic differences alter product recovery values
“Casein” is the technical term for the forms of milk proteins. There are alpha caseins, beta caseins, and kappa caseins, among others. Kappa Casein is interesting in its impact on the cheese curd forming qualities of milk—another way in which “milk is not just milk”.
There are two gene variants for Kappa Casein—A and B. They are, like all genes, passed in pairs at conception—you have AA, AB, and BB combinations possible in the bovine. The B variant increases the yield of cheese curds relative to the A variant. An animal (as is true for 80% of all Jerseys) that is “BB” will produce 15% more cheese yield per volume of milk than an animal that is “AA”, at the same levels of milk protein percentage. The animal with “AB” Kappa Casein will produce 5% to 8% more cheese yield per volume. Those animals that are “AA” Kappa Casein (as is true for 80% of all Holsteins) might better go into a bottle, they are going to produce the lowest common denominator of cheese yield, regardless of selection for higher protein% test levels. (The milk market has yet to reflect genetic milk differences in conventional milk order pricing. These sort of inequities lead to attempts at niche marketing.)
Given that cheese production impacts dramatically on the protein component price, and that the cost of whey disposal is a major part of the cost of commodity cheese production, to continue to argue “milk is just milk” as cooperative or federal policy is to continue sending an inaccurate production signal from our milk cooperatives to their producers, allowing utility costs to take a bigger than needed bite from all the product processing and supply balancing facilities.
Recent genetic studies suggest other milk quality differences
The writer has made the usual mistake of “technocrats” in assuming that the consumer knows less than he knows as the producer, about the product he is producing or the processes used and the inputs employed in production. This is both an arrogant and a potentially disastrous state of mind that is all too prevalent in agriculture, and is drilled into our psyche by input suppliers who have vested interests in our continued belief in their scientific omniscience, and who have a better grasp on how consumer opinion drives demand for consumption products.
A growing body of scientific research, starting in New Zealand and Australia, spreading into Europe, capturing the attention of the UN’s World Health Organization, is the assertion of a difference in Beta Casein structures that seriously dents cow milk’s “perfect food” designation.
There are fourteen forms of Beta Caseins, but three main variants describe 98% of all bovines, the A1, A2, and B variants. For simplicity, “B” is benign, “A2” is desirable, but “A1” is now considered undesirable—linked in over 100 health studies to autoimmune diseases, such as juvenile diabetes, autism and alsheimers, afflictions that have grown in frequency in what we call the “western world” (North America and Europe).
“A2” is the form of milk that is being explored as a possible source of what some are calling “pharmamilk”—milk forms that can aid in recovery from cancer treatments, for example, as an aid to maintaining or rebuilding the immune system after it is ravaged by chemotherapy.
Unless you are a Guernsey breeder (the Guernsey breed is relatively free of A1 Beta Caseins) or a certified organic producer-member of CROPP (Organic Valley brands), you likely have not heard about the A2 vs A1 theory of milk quality. But you can bet the activist consumer has—because the Weston Price Foundation published a book “The Devil in the Milk” back in 2007, and it shows up in book stores and online reader services nationwide.
Our writer argues that farmers have science on their side, whereas consumers only have rumor and “unsubstantiated manure that” flows about the internet to guide them. Organizations like Farm Bureau, who preach status quo superiority in all aspects of production agriculture, have to realize that the land-grant University form of “scientific research”—too often tainted by a funding source in the input supply side of volume agriculture-- is not universally accepted by their scientific peers on the “pure” side of scientific research, who feed information to both the activists (Sierra Club, etc) and the consumer watchdogs (including government bureaucrats).
If the A2 vs A1 Beta Casein debate ever reaches a level of regulatory acceptance, you will face a clear refutation of the “milk is just milk” commoditization stance. Only 60% of Jerseys and 50% of Holsteins appear to possess the desired A2 Beta Casein gene, the world population of Guernseys being too small to impact quickly on the milk supply. No other breed appears to be any better than Jerseys in possession of A2 (some Red breeds are only 30%), and current AI genetic selection focus on CDCI-generated trait rankings in the conventional, volume-oriented dairy production tends to unwittingly be expanding the frequency of A1.
But Organic Valley producers, supplying milk to Stonyfield yogurt, for example, have begun an effort to focus member genetic selection within sources of the A2 Beta Casein variant. So in the eyes of activist consumers, yes, “certified organic” milk could deserve its premium in price over conventional commodity milk, on that basis alone—a concern for producing milk in a form that supports, rather than challenges, a consumer’s health.
Feed quality has always affected milk flavor
Prior to the monopoly absorption of local and regional milk processors into the umbrella of Dean Foods—which now exerts a 70% market share in conventional milk processing, and has promoted the cross-country shipping of milk (mostly in an effort to lower FMMO utilization percentages, thus reducing class I premiums in higher cost orders) —there were many bottlers who went beyond the basic government milk facility inspection to demand higher standards for bacteria counts, somatic cell counts, herd health, etc, and developed closer relationships with producers to insure a quality milk supply, thus minimizing holding and transportation time and insuring the consumer a product with a full shelf life after purchase.
These local and regional bottlers could sense the flavor differences in milk, as well as changes in its composition, as a result of seasonal changes in how cows were fed. The milk produced in the “pasture” (fresh grass) season had a sweeter flavor, the milk produced from ensiled feeds in the “barn” (winter) season a more acidic flavor. Until the government imposed standards for butterfat and created the “whole”, “2%”, “1%”, and “skim” categories, flavor sold milk.
Butter made in the grass season had less need for artificial coloring to look like butter in its packaged form, as there was more carotene in the milk from the cows’ greater access to sunlight absorbed Vitamins. Creams from fresh feeds were slower to turn rancid. These differences reflected that milk was, in its fresh unprocessed form, a “living” thing. Prices for products often reflected these detectable differences, a big frustration for the bottlers stuck with the “lowest common denominator” of pooled milk suppliers.
Consolidation of farm milk marketing into cooperatives, and the USDA supported movement toward pooled milk supplies, was more of a boon to the indifferent dairyman, as it gradually eliminated the marketing choices of the highly skilled and premium breed dairymen. This is a transition in milk marketing that is largely forgotten by today’s production dairymen (many of the dairymen who exited dairy since World War II exited due to consolidation of supplies and loss of marketing choice—they understood commodity economics better than we do) and as a result, today’s dairymen do not recognize that much of the movement in food activism in dairy is to regain choice in product quality that processing consolidation has driven out.
“Raw milk” vs homogenized milk
The activist consumer demand for “raw” milk is trying to send conventional dairy a signal—too much processing is involved in the conventional milk supply.
How many dairymen realize a processor has two choices in milk pasteurization: (a) low heat (batch) pasteurizing, where targeted harmful organisms, such as tuberculosis and salmonella, are killed, but the naturally occurring digestive enzymes within milk remain viable—which is actually pretty important to those with sensitive digestion; (b) high heat (continuous flow) pasteurization, which is hot enough to kill everything, rendering milk an “inert” composite.
Why would a processor pick (b) over (a), if it alters milk? Mostly because, when you are dealing with huge volumes of milk to process, it was designed for faster processing. But in the main, it became necessary due to the government definition of milk into butterfat levels.
The only milk that might still be “straight run” is “whole milk”—a product based on USDA’s definition that contains a minimum 3.25% (commodity Holstein level) butterfat, and whatever nonfat solids (protein and minerals) the same milk contained normally (generally 7.75%).
All other packages of milk—2%, 1%, ½%, and skim—by these same definitional rules, still have to contain a minimum of 11% total milk solids (butterfat, protein, minerals). How are you to take milk from a bulk tank and turn it into 1% milk? You are thus required to add a few steps to processing—first, skim all the butterfat, then add back in the defined level of butterfat, then add additional nonfat milk [powder, reconstituted] to hit the targeted level of total milk solids. There is no other way to do this. Thus, in fact, all milk is not just milk, it is increasingly (as “skim” milk products took ascendancy over “whole” forms) what can only be described as a reconstitution of milk from individually processed components.
It takes as much heat—and more time-- to evaporate and then dry natural, skim milk into dry nonfat milk powders, and then it takes added water [we used to call that adulteration] to turn the dry powder back into a liquid form to blend with the base skim milk and re-added fat, to produce the “2%”, “1%”, ½%” and “skim” milk forms. Which is why, any time I have tried to drink this stuff USDA is recommending to our kids, I can sense a “burnt” taste—the impact of first evaporating, drying, and then reconstituting “milk” that was first subjected to high heat pasteurization.
So when my Utah friend attempts to claim “milk is just milk” because he believes the milk he produces conventionally is “just as good” as some organic dairyman, he could be more or less right, but only at the point of farm production. As soon as his milk hits that semi-trailer, which is going to haul it a thousand miles to a large commodity processing plant, and it goes through all the industrial processing that the evolving “organic” structure is trying to avoid, it becomes a truly different product—what should be more properly called a reconsitituted milk based beverage product, but USDA standards have redefined it [legally] as “milk”.
In the earlier days of milk bottling, when milk was mostly in reusable glass bottles, it was also batch pasteurized and went whole into a bottle. Thus the term “creamline” milk—the cream (which contains the butterfat) would rise and sit at the top of the bottle. So Moms usually had another jar for cream, would pour off the cream to use for cereal, coffee and baking, and we kiddies drank the skim residue, which was still a “live” (relatively unprocessed) milk.
But somebody in industry decided some Mom’s probably were not adept at pouring off and using the cream, so they invented “homogenization”—a process wherein you passed milk at great pressure (and high heat) through a fine screen, that broke up and hardened the butterfat globules into a hard little kernel that would stay in suspension.
This came into vogue when the food industry faced the “fat is bad” fad and all the foods with a natural fat content had to figure out ways to reduce it or hide its presence.
But now the cardiac care industry has been suggesting that those hardened fat globules are not as digestible, and are sticking to arterial walls, adding to the epidemic of arterial blockage that is making most heart surgeons wealthy men.
Butterfat in its natural form, by contrast, is highly digestible and remains a source of desirable “quick energy” for the athlete and manual laborer. It does not clog our arteries.
How much of the difficulty of conducting (and believing) research such as the A1 vs A2 Beta Casein studies, is complicated by our increasingly processed [adulterated?] forms of delivery for “nature’s perfect food”?
Should “grassfed” earn any market premium?
I am fully aware that various food activists, sometimes bolstered by studies conducted from research institutions other than the land-grant University branch of industrial agriculture, have taken this position. Their position is not specific to milk—they are equally adamant in the case of beef, and you have entire cultures (like Argentina) where “grassfed beef”, cooked by slow broiling (after searing to contain the juices) is considered the ultimate in premium beef.
I do know that, prior to industrial agriculture’s general revisionist approach to agricultural history, grass was not (as Monsanto claims) a “weed”, but the primary forage for ruminant livestock, and the natural soil-saving cover for a majority of arable land surface.
I have since learned that as much plant breeding expertise and effort has gone into improved grass varieties in places like NW Europe, as we have focused on corn, soybeans and wheat.
The annual milk or beef yield from a cultivation of dutch ryegrass competes with the annual yield of hybrid corn forages. This is a huge challenge to the US chemical industry’s near-monopoly investment in GMO corn, soybean and alfalfa culture, thus “grass base” farming’s intrusion into dairy poses a serious threat to their corporate share of our milk checks.
Production minded dairymen are thus being programmed into the “grass is a weed” and by imputation, “grass dairymen are socialists” frame of thought. Why allow such subversive elements an opportunity for a premium price on a product that undermines our national farm structure? Ignore the fact that, like Camenbert cheese, grass-based products were always among the sources of premium income (and higher profit margins) to cattle farmers globally.
But if US dairymen (or, more importantly, those dairymen who have lifetime appointments as directors of our cooperatives) could ever grasp the economics of commodity production, they would see that the “grassland” movement offers the dairy industry three large benefits:
(1) Creation of a niche market for “grassfed” products removes production from the lowest common denominator commodity supply, thus helps support basic commodity prices.
(2) Each niche market represents a salvaging of dairy consumption by consumers who have chosen to distrust industrial dairy products, thus were lost to the dairy industry.
(3) Acceptance of the presence of grass-based dairy aids the industry in meeting demands
from the activist environmentalists, intent on restraining “factory farming”.
There are generally higher production costs, at least in the “learning phase” of adapting to a different production process, thus the premium prices “organic” producers (by USDA organic rules now also “grassfed” by definition) are receiving are not in themselves giving your few organic neighbors a net income advantage over the easier, more infrastructure supported route of conventional production. But the typical cow response to a “grass based” forage program over the conventional (grain based) TMR program should give many conventional producers pause—“can I learn from these innovative, experimental dairymen and lower my costs of milk production, thus improving my financial picture?” Yes, you can.
The financial studies done of the grass based dairy sector compared to the conventional model of confined herds and 100% stored feeds consistently show a net income advantage to the new “grass based” model. Dairymen need to quit fighting and learn from each other, and in that all would benefit, as the squeeze on profit margins caused by a constant uptick in input costs would not force us so relentlessly into the expansion mode that is the true cause of current dairy production unpredictability and income instability
There should even be a place for raw milk
We used to have a legal “certified dairy” system, and it worked. Consumers will pay more for choices. Consumers can do their own “risk vs benefit” analysis. Give them their freedom.
“All milk is NOT ‘just milk’ ”
The dairyman who thinks any individual or collective producer effort to better their financial returns by a different production or marketing concept is wrong, or deceptive, rather than being market responsive, is clearly missing the real issues in dairy today—and screaming “milk is just milk” is admitting we still do not understand the consumer, not the milk cooperative or the government, is the true source of our income. It is past time we learned that our chances at greater income from milk production depends on all the ways in which milk can be different—not in condemning it to a mediocre commodity sameness.
I find it sad that we can swallow the belief that painting milk mustaches on overpaid celebrities or killing cows at random through the CWT, or begging and bribing congressmen to throw us a subsidy bone or two, is a long term future for stability in dairy fortunes. The fact you cannot find a sane banker to lend money to a dairy farm today is proof that we have made some wrong choices—we are an entire industry that has earned a label as financial delinquents.
Commodity production is the toughest game in the world. The reason is that in commodity economics, the price you receive is always dictated by the lowest price some producer will accept. It is like an auction where you have sixty cows to sell, and five farmers bidding, each wanting to buy ten cows—fifty will sell for the limit each farmer is willing to pay, but the extra ten offered will only bring beef price. Thus, the average of all 60 is lower than if we only had sold the best 50—but in a “free market” auction, the buyer (the “cow consumer”) can choose which to buy and which to leave, and note it is on the buyer’s definition of “value”—not the seller’s assertion of equal value. Thus, if all cows are unequal in value, and we accept that as reasonable, we must also accept—and try to embrace—that all milk is unequal in value also.
Trouble is, when we sell milk, we agree to let our nice cooperative sell it for us, they pool ours (at 100,000 SCS) with our lazy neighbors (at 400,000 SCS) and by the time it gets to town, the entire load is near 300,000 SCS, thus not salable to bottle at $17, so we powder it and get $10. The “blended” price comes out at $13.50, where (as we all know from 2009) none of us made any money. By rights, if the auctioneer (the “free market”) was allowed to sell your quality separately from your sloppy neighbor, you would have received $17, and your neighbor would receive $10. If the checks flowed in that manner, our Utah friend would be proud to say “my milk is different from your milk” – in other words, he would have been fully paid for his effort as a “good” dairyman. His decision to go with the peer pressure and not seek a better price, leads him to believe (and write) what are really unsupportable statements.
We cannot blame consumers, congress or USDA (well, maybe a little, they forced cooperative marketing and commodity definition on all of us), the economy, bankers, chemical companies, European subsidies and tariffs, the Canadian quota system, the weather, or environmentalists for our lack of profitability. We must blame ourselves, for avoiding any responsibility for the competent marketing of our production, and for allowing “pooling” (and minor considerations like hauling costs, linked by bad marketing decisions to pooling) to destroy all our efforts and opportunities at differential pricing on quality.
July 15, 2010