By Greg Palen
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.
(1) Pasteurization
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”.
(2) Homogenization
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