NYT - America's Cheese State Fights to Stay That Way
June 28, 2001
America's Cheese State Fights to
Stay That Way
By DAVID BARBOZA
WATERLOO, Wis. — In an old red barn set
amid green pastures, Eugene Kegler is
milking cows in the late afternoon and
wondering whether the sun is about to set on this way
of life.
"We don't know for sure," Mr. Kegler says,
methodically hooking up 70 cows, one by one, to a
stainless steel milking machine as his wife, Ruby, and
their son Glenn, who is 36, help with the work. "We'd
like to make some changes, but building costs are so
high. How can you justify spending half a million
dollars just to keep milking cows?"
Mr. Kegler, 61, is a second-generation dairy farmer who scrapes by in a region best known for its rolling meadows
and Holstein cows. But milk prices are in a slump these days, and the dairy industry is moving westward, to states
like Arizona, California, Idaho and New Mexico, where large-scale agriculture is being adopted more rapidly.
Consolidation is also reshaping the landscape, as large dairy processors seize a greater share of the market. As a
result, the little red barn with 50 or so dairy cows is on the way out, and the giant 2,000- to 3,000-cow operation
pioneered in the West is replacing it.
Wisconsin, which still has 18,000 dairy farmers, is struggling to keep pace.
But as the state navigates a complicated path between trying to preserve its
small family farms and adopting the more efficient factorylike operations,
its milk production is stagnating along with that of the entire region.
Seven years after California unseated Wisconsin as the nation's biggest
dairy state, Wisconsin is still searching for a way to reignite growth in one
of its most important industries. But now California is even vying to replace
Wisconsin as the No. 1 cheese producer. California is planning a
double-edged approach: branding its cheeses in ways that resemble its
success with premium wines and hoping to lure plants eager to churn out
tons of mozzarella and other commodity cheeses next to its rapidly growing
milk operations. The result could be devastating for Wisconsin's $18 billion
dairy industry.
No one expects Wisconsin's dairy industry to disappear overnight. But the
state's reluctance to speedily adopt big-scale dairy farms to bolster growth
and offset the annual loss of scores of small farmers could be aiding the
westward expansion of the cheese and dairy industry, agriculture experts
say.
To retain a strong cheese industry, Wisconsin needs to produce more milk;
85 percent of the state's milk is used to make cheese. But uncertainty about
the state's outlook is one reason Land O'Lakes, one of the biggest dairy
producers, recently decided to scrap plans to build a $200 million cheese
plant in Wisconsin. The company is building in California instead. So how
serious is the issue here?
"It is approaching a crisis stage," said John Umhoefer, executive director of
the Wisconsin Cheese Makers Association. "Milk production has been flat
for a decade. But we need more milk in Wisconsin to satisfy the cheese
industry."
The problems have a kind of ripple effect, dairy experts say. Fewer
farmers means falling milk production; and less milk means higher prices
for cheese producers, which forces them to head west, where the price of
raw milk is lower.
"It's just part of the problem of the industrialization of agriculture," said
Todd J. Duvick, a food analyst at Bank of America. "States in the Midwest
have laws against corporate agriculture. There's a mentality of preserving
the family farm. But in the process they're losing an entire industry."
There was a time when Wisconsin was undeniably "America's Dairyland,"
when small farmers, growing their own feed and milking herds of 40 or 50
cows, made a good living under government-supported milk prices. And
the state is still proud of its status, as the number of cheeseheads at any
Green Bay Packer football game will testify.
But the economics of the dairy industry started to shift in the 1980's, when
California began experimenting with large operations that lowered the cost
of production. The dairy operations that emerged were more efficient,
better managed and generated far more milk per cow. Today, cows in
California produce on average 21,000 pounds of milk a year, compared
with 17,000 pounds for Wisconsin cows.
With the California-style operations, as they are called, about 2,000
megafarms, with an average herd size of 650 cows, produce more milk
than 18,000 mostly smaller farms in Wisconsin, where the average herd is
80.
Seeing the benefits accruing to low-cost producers in California, farmers in
other Western states built their own big dairies in the 1990's. Farmers in
Arizona, Idaho and New Mexico said their climates were nearly as
temperate and suitable to dairy cows as that of central California. And in
most cases, energy and land costs were cheaper. And there were fewer
environmental hurdles.
Those states are now emerging dairy powerhouses, with Idaho leading the
way, becoming the nation's No. 6 milk producer, up from No. 12 a decade
ago. The cheese plants have come, too. The Western United States now
produces more milk and cheese than any other part of the country.
"Dairies out there have learned to use new technologies, and they're willing to make huge investments," said Jack
Prince, an executive vice president at Land O'Lakes, based in Arden Hills, Minn. "You're talking about $10 million to
$20 million."
Wisconsin's dairy industry leaders insist the state can still compete. But not with small dairy operations. Instead,
farmers here are starting their own California-style dairies. Cheap land, low energy costs, quick access to Eastern
markets and an ample supply of water and cheap grain could help Wisconsin compete with California and Idaho, the
experts say.
"Wisconsin is far from dead," said Robert Cropp, a professor of dairy marketing and policy at the University of
Wisconsin at Madison. "We don't look like California, but you're seeing more 400- and 800-cow farms."
One of the first to adopt the California look was the Crave Brothers Farm, just two miles east of Mr. Kegler's farm.
George Crave, 43, and three of his brothers own 600 dairy cows that produce 18 million pounds of milk a year.
The 12-worker operation has a large free-stall barn, a new milking parlor, a feed bunker, five tractors, a manure pit
and a calving barn. There is even a small cheese plant being built across from the milking parlor, on property that
includes 1,300 acres of crop land.
"Each brother specializes in something," Mr. Crave said. "We have two advantages here: the economics of volume
and scale."
Dozens of other big farms are sprouting up, mostly in the eastern part of the state, where the land is flat and more
conducive to handling the tons of waste. The big operations here are also turning to the influx of Mexican
immigrants as cheap labor.
But the changes are not coming without a battle. Politicians, environmental advocates and some community leaders
have tried to block big operations from opening, saying they threaten to alter the picturesque landscape, foul
waterways and bring ruin to traditional family farms.
Gov. Scott McCallum of Wisconsin insists the plight of the small dairy farmer is really about the complicated
government support system that has resulted in lower prices for Wisconsin dairies.
The real problem," said Lisa Hull, Governor McCallum's press secretary, "is milk prices."
Many, however, say size, and not price, is the more crucial issue, and that political obstacles have simply stalled the
development of big dairy operations in Wisconsin, where special permits are required for herds of 1,000 or more.
"We've got people who have this locked-in perception of a farm, and they don't want that changed," said Tom
Thieding, a spokesman for the Wisconsin Farm Bureau.
"They'll fall over each other to get a Wal-Mart," Mr. Thieding said, "but they'll also fall over each other to stop a
large dairy operation from coming in."
Part of the problem is that Wisconsin is struggling with questions about culture as much as economics.
"There's not a lot of family involved; it's working and overseeing," said David Schuster, a 42-year- old
fourth-generation dairy producer who milks cows with his father and son on a farm in Marshall, Wis. "I can't get
past that part. I don't know if I'd make it as management."
Concerned about the emergence of big farms, one entrepreneur decided to experiment by building a 300-cow dairy
with a modern milking parlor. He said he built it to see whether a family of two or three could profitably operate
what by Wisconsin's standards is a relatively big dairy farm.
"Is it possible to buck the trend?" said the entrepreneur, John Gehl, who own Gehl's Guernsey Farms, a milk
processor in Germantown, Wis. "Is it possible for a father and son to compete against a megafarm?"
Mr. Gehl says he invested more than $1 million in the project because he was frustrated with the pace of change in
Wisconsin. But he also does not want to see the demise of the small family farm.
"Not many think my farm will survive," he said. "But I'd rather have 10,000 farms with 400 cows apiece than 2,000
farms with 2,000 cows apiece."
Whatever happens, people in Wisconsin contend the state will hold onto one of the top spots in milk and cheese.
Dick Groves, editor of the Madison-based Cheese Reporter, predicts that California will overtake Wisconsin as the
nation's "Big Cheese" by 2005. But he sees no doomsday situation.
"Yes, Wisconsin is losing market share, but I don't see them giving up," Mr. Groves said. "Too much is at stake
here. Chances are you're going to have two states with about 2.5 billion pounds of cheese a year."
Most experts agree that Wisconsin will remain a top-tier dairy state as big dairies win greater acceptance here, if
only to keep pace with the broader consolidation in the food industry. In April, for example, two of the nation's
biggest dairy processors, the Suiza Foods Corporation and the Dean Foods Company, said they would merge to
create a coast- to-coast milking mammoth. The question here in the Midwest is whether the move to California-style
dairies is happening quickly enough. Indiana, Michigan and Minnesota are asking the same question.
Mr. Kegler in Waterloo does not particularly like the size of the new farms. But he says they are inevitable.
"There's a lot of vitriol whenever someone wants to put in a 2,000-cow operation," he said. "But the people here in
Wisconsin have to change their mind because the smaller guys are getting too old, and they don't want to milk
anymore."
Copyright 2001 The New York Times Company |
