Another California exodus: Dairy cows leave for greener pastures in Texas, Arizona as farms squeezed by high milk costs
California dairy farming is at a crossroads, and a look at some of the companies in the San Diego area that provide milk, butter, and cream provides insight on what the future holds for this large industry.
One of California’s largest milk producers, Brawley’s, announced Wednesday that it will cut 30 percent of its milk production in the California dairy sector. According to the company’s CFO Mark Luehrmann, this decision comes from the increased competition. “We’re competing with not just a larger supply from California, but also lower prices from other markets,” Luehrmann said. “We’re also seeing a tremendous amount of competition from other areas of the country, so we’ve been forced to look at our business from a different perspective.”
But the decision may not be limited to Brawley’s, as one of the largest dairy processors in the country announced it would also cut production by more than 30 percent in the coming years.
“Milk is a product that’s been around for a long time and the industry has an amazing track record,” said Todd Rund, CEO of Butterball, Inc. “But it is a product that gets harder to produce as the market becomes increasingly competitive.”
Other dairy processors like Butterball, which provides milk to Kraft, also have had to make changes to keep their company on the right side of the trend. “Milk is definitely not a commodity,” said Bob Zeman, chief financial officer of Butterball. “We have to constantly monitor to make sure we’re producing the best product and giving our customers the best value. It’s a constant challenge.”
Meanwhile, dairy processors and farmers are also taking a close look at the impact of high milk prices, and are beginning to look toward alternative products such as butter, cream and cheese.
In the wake of high milk costs and increased competition, dairy and agricultural companies are expanding their own production. According to the California Department of Food and Agriculture, California’s production has jumped by more than 1.5