Geographically, the Central Federal Milk Marketing Order (FMMO) stretches across Oklahoma and Kansas, large portions of Colorado, Illinois, Iowa, Missouri and Nebraska, and into counties in Minnesota, South Dakota and Wisconsin. Milk pooled on the Central FMMO in 2022 came from as far away as Michigan and Oregon, with large volumes flowing from New Mexico and Texas.
Focusing on six of those states, preliminary USDA data shows cow numbers in Oklahoma, Kansas, Colorado, Illinois, Missouri and Nebraska averaged about 620,000 head in 2022, down about 4,500 from the year before. Milk production totaled about 14.23 billion pounds, down just 0.1%. The USDA’s January 2023 Cattle report indicated those states are starting 2023 with about 618,000 cows. A popular region for raising replacements, the number of dairy heifers (greater than 500 pounds) numbers is up 17,000 from a year earlier, to 413,000.
Milk marketings have undergone dynamic changes in recent years. An October 2022 snapshot from the FMMO administrator’s office showed a small number of farms make up a disproportionate share of the total: Of the 1,534 farms marketing milk on the FMMO that month, about 4% of the farms marketed 50% of the milk. Producers serving the Central FMMO saw a statistical uniform milk price of $23.13 per hundredweight (cwt) in 2022, up nearly 39% from the $16.66-per-cwt average in 2021.
Kansas: Every year a challenge
A regular contributor to Progressive Dairy’s “State of Dairy” is Lynda Foster. With her family, Foster operates a 180-cow robot dairy. For her, the general mood among Kansas producers starting 2023 is one of caution.
“It really depends on the individual dairy producer,” she says. “If their debt load wasn't too bad, then they're probably going to get along OK. If they were having issues in 2022, then they're going to have more issues in 2023.”
Challenges and concerns mirror those throughout the U.S. “I think the industry as a whole is at a crossroads,” she says. “But then, what's new in the dairy industry? Every year has always had its challenges.”
The 2022 drought hit Foster’s area hard, adding to feed supply issues and costs. The Fosters had to turn to hominy and corn starch to stretch the corn supply.
Climbing interest rates, tight labor supplies and environmental regulations are concerns. Supply chain issues affect everything from getting farm machinery parts to moving products to grocery stores.
“Dairy farmers are adopting new technologies which help with labor issues and help them be more efficient,” Foster says. “The number of robots being installed is really increasing, including smaller producers. Our farm is currently working with a company which wants to build a digester and add food waste with the manure to produce natural gas. Time will tell.”
The time is now for meaningful change on dairy policies, “without throwing the baby out with the bathwater,” says Foster, who is concerned too many dairy producers don’t fully understand federal orders and how they work. “We don't need to change things just to change things. There needs to be merit to it.”
Adding optimism to producer outlook is a new Hillmar plant being built in Dodge City, which could spur growth in western Kansas.
“I think the fact that demand is still climbing lends itself to feeling that there is still a need for providing good nutritious dairy products,” Foster says. “So while I'm cautious, I'm still optimistic because I love the dairy industry and I love what I do. If I wasn't optimistic, it would be hard to keep going out every day and seeing that cows are milked and fed, dairy tours are given, and grandkids have a place to work and grow up and play.”
Nebraska: The ‘Next Dairy Frontier’
Nearly half of the milk produced in Nebraska each day is shipped out-of-state to be processed. Kris Bousquet, Nebraska State Dairy Association (NSDA) executive director, wants to see that change, and he’s seeing more optimism surrounding that effort.
“We are starting to see growth. Farms that have closed their doors are re-opening with new owners. A new, small farmer-led co-op is creating another marketing option for producers, and we are seeing more competition for milk. Our balance is starting to shift in a good direction, and we are hopeful that we will see significant growth within the next three to five years,” he says.
“Nebraska has all of the tools and resources to facilitate significant growth, but the limiting factor is the availability of processing in our state,” Bousquet continues. “That is why the NSDA has prioritized growth and development and is investing time and resources to recruit processors and producers.”
Supported by government and business leaders and other agricultural producers, those efforts include communicating with companies looking for areas to grow milk processing capacity in an environment that has the potential to increase milk production.
“The I-80 corridor/Platte River Valley is the most sought-after area of the state,” he says. “Nebraska is the number one state in the country for irrigated crop acres and significantly needs manure to grow its corn crop. The state has never been more unified behind the livestock sector than they are now, and our ability to site and zone new farms is exceptional.”
While the drought creates challenges in the western U.S., Nebraska’s Sandhills and water management have enabled it to maintain groundwater aquifer depths, he said.
"Long story short, Nebraska has the feed, water and common-sense government to make our state the ‘Next Dairy Frontier,’" Bousquet says.
Bousquet adds Nebraska producers want three things in FMMO reforms: They must create transparency, fairness and be simple to understand. “As our industry evolves, we want to be sure that our producers aren’t victims to a system that is antiquated and immobile,” he says.
Colorado: Guarded and concerned
For Ashley Edstrom at Sugar Hill Dairy, in Kersey, Colorado, the mood among dairy producers is “guarded.” The higher milk prices in 2022 put producers in better position to weather the economic challenges they face in 2023. New labor overtime laws going into effect in the state are affecting the fiscal sustainability of businesses, while water is an ongoing issue.
Through competitive pricing of production history within the Dairy Farmers of America (DFA) council area, some producers without a next generation to take over have found exit strategies, she says. That’s allowed other producers to align their production history to cow numbers.
Addressing other economic and environmental concerns, diversifying into dairy-beef is providing additional opportunities. More manure digesters are coming online, and more producers are turning to robotic options for their facilities, Edstrom says.
Corey Gillins, chief operating officer for the DFA’s Mountain Area, also sees concerns related to softening milk prices and higher input costs and interest rates among dairy producers. While the current winter has been encouraging in terms of water across the region – stretching from Kansas and Colorado northwest into Washington – the drought and increased competition for water resources with urban areas causes concern.
Supply management programs are helping keep milk production and processing capacity in balance. “In the Mountain region, there is some pent-up demand for on-farm expansion,” Gillins says. “However, we will need some additional investment in processing for this to happen.”
“A few of the ways our producers are adjusting to meet these challenges include modifying heifer replacement strategies, making adjustments to feed rations, and increasing wages and benefits for employees,” he says. “There are several sustainability projects with anaerobic digesters in the works, which is exciting.
“Dairy farmers are resilient and make the best of challenging situations, but they will need some relief in 2023 in the form of lower input costs and/or the ability to grow to some extent,” Gillins says.
