Monday, March 11, 2013
Dairy farmer sees promise in exports
MONROE — Dairy farming is getting tougher all the time in Snohomish County, but at least one thing offers promise to local farmers: the Chinese are developing a taste for milk.
Exports are becoming a crucial part of dairy farming in Washington State as demand increases for dairy products overseas, particularly in Asia.
That's a shift for Pacific Northwest dairy farmers, who until about 15 years ago used to sell almost all of their products to local customers or ship domestically, said Jim Werkhoven, a dairy producer who owns and operates a 1,200-cow dairy near Monroe with his brother, Andy, and their respective wives, Dolores and Gloria.
"This is absolutely the future for this area," said Jim Werkhoven, who also serves as chair of the Northwest Dairy Association cooperative board, which owns Darigold. "Any growth will come out of exports."
Nationwide, 13 percent of dairy products are shipped out of the country. Nearly half of what Darigold produces in Washington, Oregon, Idaho and Montana is exported. That's significant because Darigold processes virtually all dairy products produced in this state.
Washington exports more dairy products than any other state in the country, except for California.
Most of the dairy products shipped overseas from the Pacific Northwest are processed into whey or milk powder first, then reconstituted and added to other products overseas.
On a recent trip to China, Werkhoven found a wider variety of milk products in a corner convenience story than he would here, including milk drinks flavored with papaya and peanuts.
Some countries may not have the land for dairy farms or the infrastructure to ship the products domestically, he said. That's where Washington's dairy farmers can step in. But the U.S. has to compete with other exporters for that business, such as New Zealand, Australia and the European Union
Washington has an advantage over other areas of the country because of its ability to ship easily to Asia. Plus, cows like the mild climate here better than California and produce more milk, Werkhoven said.
Mexico is this state's top customer, buying $98 million in dairy products exported from Washington in 2012. Right behind are the Philippines ($39 million), Indonesia ($32 million), China ($13 million) and Malaysia ($7 million).
The state's premier processor, Darigold, has done a lot to get that overseas business, said Kima Simonson, U.S. Dairy Export Council board member. She's also owns a dairy farm with her husband north of Spokane.
Although the milk her family farm produces goes mostly to the region around her farm, the success of exporting business benefits all dairy farmers in the state because of the cooperative nature of the business.
Washington dairy farmers produce plenty of milk to meet the needs of domestic customers. If the extra wasn't exported, it would mean depressed prices here.
There's a certain amount of pride with the ability to feed other countries, she said.
"We take a lot of pride in how we take care of our farms and our cows," she said. "We're proud of the quality of the milk we produce."
While the interest in Washington dairy products is heartening to dairy producers, exporting is not a panacea.
Dairy farmers everywhere are struggling. Milk prices are more volatile than in years past.
What's hurting dairy producers most is the high cost of feed. Last summer's drought in the Midwest pushed up the price of grain crops. While it used to cost Werkhoven $5 a head daily to feed his cattle, it now costs $7. That tightens his profit margins.
Exporting numbers have been on the rise, beginning about 15 years ago. When the economy fell apart, so did exports in 2009. The numbers have nearly returned to pre-recession numbers.
Dairy export numbers dropped by 20 percent last year, from roughly $291 million to $233 million, according to statistics from the state Department of Agriculture.
The potential for growth offers promise to dairy producers.
"The dairy business isn't an easy business," Werkhoven said. "It's not for the faint hearted. But exporting is one of the most helpful things we have."