ORGANIC MILK SHORTAGE IN CALIFORNIA RESULTS IN A PRICE HIKE
As California continues to face it’s fourth consecutive year of drought, consumers are feeling the pinch with organic milk supplies witnessing a shortfall. The shortfall coupled with high demand has caused a price hike with one gallon of organic milk currently priced at a whopping $9 in certain places.
All-milk production in California as of February 2015 declined by 3.8% compared to the same period in 2014. Thanks to rising consumer awareness and a switch to healthier lifestyle habits, organic milk sales in the first eleven months of 2014 showed a 9.5% jump as per USDA (U.S. Department of Agriculture) data. So, what exactly is organic milk and why is it so popular?
According to the USDA definition, ‘organic milk’ comes from livestock grazing on the pasture for at least four months of the year. The agency also states that 30% of the feed must come from grazing. Organic cows cannot be given growth hormones or antibiotics and their feed must be 100% organic; no use of pesticides. The USDA further states that if the animal falls sick and is treated with antibiotics it must be removed from the organic production line. However conventional milk producers continue to support artificial hormones.
Non-organic cows are fed a genetically engineered hormone called Recombinant Bovine Growth Hormone (rBGH). Animals are given this hormone to increase their milk output. Due to genetic manipulation cows are forced to maximise their milk output thus jeopardizing their health.
Many health experts and research papers have proven that organic milk has more health benefits compared to its conventional counterpart.
CALIFORNIA’S DROUGHT WOES
With California facing one of it’s severe droughts on record, Governor Jerry Brown declared a State of Emergency in January. State officials were directed to take all necessary actions to prepare for water shortages. To tackle the water shortage a slew of restrictions have been enforced ranging from residents not being allowed to use hoses to wash their cars without shutoff nozzles and farmers are reducing acreage and installing more efficient irrigation systems.
According to a report in CNBC, no dairy farm has been built in California over the last 10 years. Data from the The California Milk Dairy Board data shows that California accounts for more than 20% of the nation’s milk production. According to USDA data as of April 2015, 76% of cattle in California were located in areas with exceptional drought.
According to Theresa Marquez, Mission Executive, Organic Valley, dairy farmers had to truck water last year and will most likely be hauling water this year as well. While supply remains steady, production costs increase thanks to the hauling expenses. She further adds that dairy farms in California are likely relocate to states with better water resources. States like Texas, Nevada, Iowa and Kansas among others are wooing farmers from California to a favourable business environment and of course abundant water supply.
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Apart from a balanced and nutritious diet cows in organic dairy farms need plenty of water and fresh air. According to Marquez, cows in organic farms need at least 50 gallons of water per day.
The severe water shortage is forcing milk producers to import hay and animal feed from other states. According to Marquez, “Our current projection is that 70% organic soy and 25% organic corn is being sourced outside the country. Organic barley is being sourced from Canada, specifically Saskatchewan and Alberta. Organic feed is also coming from China and Eastern Europe.” Organic hay is not easily available and is also priced 25-50% higher than its conventional counterpart. With a booming corn production in the country, farmers are using it as a cheaper alternative for animal feed. According to the USDA, farmers in California are resorting to feed dairy cows with grain and raise them on dry patches rather than giving them hay and grazing on green pastures.
According to a 1999 University of California, Agricultural and Resource Economics report, organic dairy producers are usually certified by an accredited certifying agency. In California, certifying costs can run anywhere from $2,000 to $3,500 annually. Organic milk production also involves high labour costs. The report further adds that, “In organic farms, human labor is required to hand-weed pastures for thistles and other noxious weeds, since organic producers are prohibited from using herbicides in their fields.” Herd replacement costs are also significantly higher in organic farms compared to the conventional ones.
Leading industry players have expressed concern over the grave situation in the state with some of them believing that livestock will eventually have to leave California. A rise in input costs and the need to increase profit margins for farmers has brought about a price hike.
According to Marquez, “It was painful to hike prices for consumers as we still want organic milk available for everyone. However it was necessary to raise prices to keep organic dairy farmers on the land farming.”
Dairy industry experts like Organic Valley believe that better and wider adoption of drought resistant grasses and good soil building can help the soil to retain more water. For now it is a wait-and-watch situation for California’s dairy farmers.
(News Desk - Neha Raghunath & Kavita S)