There has been bad news all over the dairy industry in the past year, it seems. First Dean Foods declared bankruptcy, then just a few weeks later Borden, and now this – In 2019 Wisconsin lost 818 dairy farms, the most ever in a single year. Over the last ten years we’ve lost 44% of our dairy farms, more than 5,600.
When I was a kid, there were ten or eleven small family dairy farms on the road we lived on. Today there are only two remaining. Our place, with 140 acres and milking about 40 cows, was actually the biggest farm on the road at the time. Today that size seems almost ridiculously tiny. The average dairy farm today milks 170 cows, but even that is misleading because most of those cows are now on farms where they’re milking 500 to several thousand cows. They still call them “family farms”, and I suppose technically that’s true because a single family is the majority owner of the corporation the farm operates under. But in reality those “family farms” are no more family farms than Walmart is a family company because Sam Walton’s descendents still own stock in the company.
Borden Dairy Company filed for bankruptcy. Borden said it had debts of $500 million and assets of only $100 million. It employs over 3,000 people. This doesn’t mean the company will completely go out of business, and the statement said the company will continue operations as it works out a way to get its finances straightened out.
Interestingly, Borden was listed as one of Forbes 2019 “Most Reputable Companies” back in May, where it was listed as number 16. Obviously Forbes didn’t look at the company’s actual finances when making up that list.
When companies like Borden and Dean Foods goes under, the pundits and the companies themselves are quick to point the finger of blame at anything and everything. The articles I’ve read about the Borden’s bankruptcy and the earlier Dean Food bankruptcy blame the decline in the consumption of milk, the increasing popularity of plant based “milk”, changes in diet, dietary fads, major retailers like Walmart building their own milk processing facilities, etc. They blame it on everything except the real reason, the company itself. Or, rather the management of the company. The company itself was unable to adapt to changing market conditions, and that is what drove them into financial failure.
Yes, consumption of liquid (drinking) milk has been declining. But this is a trend that has been going on for decades. They can’t claim that they were blindsided by this. Walmart made no secret of the fact that it wanted to build its own milk processing facilities. That was known for years before they actually did it. The growing interest in vegetarian and vegan diets that reduce or even eliminate the consumption of dairy products isn’t new either. This is a trend that has also been going on for years now. The same is true for the increased interest in grain and nut based “milk” products.
That Bordens and Dean couldn’t make it is due entirely to the failure of their own management teams being unable to adapt to changing markets.
I’m sitting here in eastern Wisconsin, just 20 miles or so south of Green Bay, and I’m surrounded by dairy companies that are doing pretty darn good. Over the last few years I’ve seen at least a half dozen major expansions by large processing companies, mostly cheese makers, including some multinational corporations. And they’re all doing pretty well. Why? Because they’ve been able to adapt to a changing market.
Dean and Borden failed because they didn’t adapt to an ever changing marketplace.
Dean Foods, one of the largest milk processors in the country, filed for bankruptcy on Tuesday and is in purchasing talks with Dairy Farmers of America, a huge co-op.
This is one of those situations that surprised me but didn’t surprise me, if that makes any sense. I knew Dean has been in financial trouble for some time, and there were rumors going back months already that it was looking around to try to sell itself. But I didn’t think the company’s financial situation was quite this bad.
Dean has been struggling for a long time. It lost a major contract with Walmart not too long ago. Dean had been supplying the retailer with milk under the Walmart house brand, and lost a major part of that market when Walmart opened its own milk processing facility. Dean’s major problem is that it has always been a supplier of liquid (drinking) milk and that market has been shrinking for decades. Dean has never been able to adapt to that. It’s tried various things, tried rebranding, different products, even tried investing in plant based alternatives to milk, but nothing ever really worked very well for the company. It hasn’t made a profit in over two years, and that just couldn’t go on any longer.
I find myself wondering how much longer milk as a beverage is going to hang around as a major factor in our diet. For at least twenty or thirty years now the consumption of beverage milk has been declining, and all the hype and propaganda being pumped out by the various milk marketing boards and the dairy industry hasn’t managed to reverse that trend.
I scoffed at reports some months back that claimed milk prices would climb to levels that are almost comfortable for dairy farmers. I shouldn’t have. Milk prices on the commodities markets have hit 20.18 for November and 19.73 for December. Of course that’s the price on the commodities market, not the price farmers are actually getting for their milk. That varies widely for a variety of factors. But for the first time in a long time dairy farmers are finally starting to get a price that might let them make a bit of profit and get some of their debt paid down.
I had to read this article twice before I realized that it wasn’t a belated April Fool joke and that they were serious about this. Yes, they’ve really built a kind of dairy farm on a barge floating in a harbor. Now I’ve tried to find out more information about this but all I’ve been able to find have been more PR fluff pieces, with little or no actual facts. The Beladon website link in the original story has been “in maintenance mode” for several days now (just what are they maintaining?) but there is a link to a site https://floatingfarm.nl/ about the farm itself. Sort of. If you like more PR speak, that is. (You’ll have to use Google Translate) And again, there are no actual facts, just lots and lots of enviro-babble and grand statements and “oh my, aren’t we wonderful!” silliness, and things like that tend to make me a bit skeptical.
I also noted that there is no mention of exactly what this white elephant cost them to build in any of the stories I found. It took a bit of digging to find that out and again, as with everything else about this, everything was more than a little vague. The only numbers I found were from about three years ago when they first proposed this project. They claimed at that time it would cost about $3 million to build this thing. $3 million… To house just 32 cows. (And they claim that traditional farming is wasteful???) And I’d be willing to bet that when all of the bills are added up, this was considerably more than that.
But then nothing about this project makes sense if you look at it closely. They claim that we need different methods of farming going into the future, that raising cattle is extremely wasteful in terms of land use, has pollution problems, etc. And they certainly are right about all of that. But this project doesn’t solve any of those problems.
They claim that moving the cows offshore onto a barge eliminates the need for large spaces for cattle to be raised. But the biggest use of land when it comes to cattle isn’t housing the cattle, it’s growing food for them. Millions of acres of cropland is used just to raise grain, soybeans and hay to feed cattle. The cows themselves are generally housed in feedlots or housing units that actually take up very little acerage. Simply moving the cows off the ground onto a barge doesn’t do anything to eliminate the need to grow food for them.
Now they claim that they’re going to grow 20% of the cattle feed right there in a sort of greenhouse on the top level using LED grow lights, and, well, good for them, but it ain’t going to happen. Do they even know how much cows eat? The average milking dairy cow eats about 100 pounds of feed per day. That means they need about 3,200 pounds of feed a day for their small herd. So their little green house will have to produce 640 pounds of high quality cattle feed per day. Ain’t gonna happen, as I said. But even if they did, that means they still need to come up with 80% of the cows’ diet from other sources, and they claim that’s going to come from human food waste. And there is a huge problem with that. Human food waste doesn’t make very good cattle feed.
Cows evolved to eat mostly grass with a bit of grass seed (i.e. grain) mixed in. And not much else. Modern cattle rations include soybeans and corn and other grains for added protein, mineral supplements and a lot of other stuff that isn’t part of a cow’s normal diet, but is added to improve milk production.
Now I don’t know about you, but here at the house we don’t eat a hell of a lot of grass, and what grain we do eat is almost all in the form of various baked goods like bread. Human food waste is made up mostly of things like spoiled fruit and vegetables, spoiled or outdated, highly processed baked goods, bits of fat, gristle and meat, and all of it thoroughly laced with salt, fats from a variety of sources, and lots and lots of preservatives, “flavor enhancers”, texture modifiers and other things that, while edible, aren’t really, well, food. Not for people and certainly not for cows.
Granted, there are some human foods cattle can eat, but that material is going to have to be carefully selected (requiring labor and energy), is going to have to be processed (more energy and labor), is going to have to be tested (more energy and labor), other feed products are going to have to be added to make sure the cattle are getting a diet that meets their nutritional needs (still more energy, labor and added feed costs), and… Well, when you add in the labor, the energy, the supplements, etc., then add in the cost of running that LED lighted green house that’s supposed to produce 20% of the cows’ diet, this is going to be the most expensive cow diet of all time.
Then there are other questions I’d like answered, like where is the energy going to come from to operate this thing and what is that going to cost? This is going to be veryenergy intensive, far more so than a normal cattle housing operation. Robotic milkers, the LED lighted greenhouse, the sophisticated sewage treatment system on the lower level, heating, cooling, ventilation… This operation is going to suck up a lot of energy.
So, how much milk are they going to get out of this system so they can pay their bills? They claim they’ll get about 200 gallons a day out of those 32 cows, and while that sounds like a lot, it really isn’t. Running calculations are a bit tedious because the dairy industry doesn’t generally deal with gallons of milk, at least at the farm level. Farmers are paid by the pound, not the gallon. Milk weighs about 8.6 pounds per gallon, so 200 gallons would be about 1,700 pounds, and they have 32 cows so that would mean production of about 53 pounds of milk per cow per day, while the average dairy cow in Wisconsin produces about 64+ pounds per day on average and our best producing cows put out considerably more than that. So when you look at the cost per pound of milk, this operation is going to be ridiculously expensive to operate and extremely inefficient in terms of milk production.
And then why in the world float the whole thing on a barge in a harbor? How are they going to deal with storms, waves, flooding, connecting pipelines, electric cables, communications cables, etc. back to the mainland? All that is going to require special infrastructure that is going to have to be built from scratch and will be very expensive.
Now I’m all for experimentation and innovation. But there is nothing innovative going on here. Every single technology and technique that they’re touting here has already been tried and is already, if it’s useful, being used. Robotic milking? Already being done and spreading rapidly. Using human food waste? Already being done where financially feasible. Treating cattle waste? Already being done. LED growing lights? Been around for ages. There is literally nothing new here. All of the technologies and techniques being used here are already being used, or have been tried and discarded because they weren’t practical or economical, or, like putting cattle on a barge, are so fraught with problems and impractical on the face of it that no one would bother even trying.
Back in the Victorian era there was a fad where wealthy people would build ornate, ridiculous and rather silly structures on their estates for no other reason than they could. These structures were often technically advanced, attractive, even artistic. But ultimately they were useless for any practical purpose. These structures started to be called a “folly”. That’s what this is. A modern version of the folly. Interesting but ultimately useless and utterly impractical.
If you click the link above it will take you to a fascinating article at the Farm Journal (re-printed from Bloomberg News) about what’s going on in school food service with the focus on milk. Unlike the usual two or three paragraph news blurb that tells you pretty much nothing, this article goes into the situation in some depth and is pretty well written, and debunks a lot of the hype being pushed by various marketing boards.
It still puzzles some of my readers here that someone with his roots in dairy farming like me can be so critical of the dairy industry, but that same dairy industry stopped giving a damn about the health and well being of you and your family a long, long time ago. What it has focused on exclusively for decades now is trying to sell you milk and milk products any way it can. It has manipulated data, used misleading statistics, cherry picked information, ignored significant health issues, pressured retailers and school systems, and generally used every marketing trick imaginable to try to convince you that milk is good for you when there is significant evidence that indicates it isn’t.
The article isn’t just about milk, of course. It goes into details about the Obama era school lunch rules, the attempts to undermine them, shows how the big processed food manufacturers try to influence school lunch programs, and how so-called “experts” are used to try to influence things. One “volunteer adjunct professor”, whatever the hell that is, claimed that if a 16 year old girl didn’t drink milk and “doesn’t get enough [calcium] by the time she’s 30 her bones start to turn to dust”.
If it sounds like the dairy industry is growing increasingly desperate to sell you milk, that’s because it is. Right now the US alone has about 1.4 billion pounds of excess cheese in storage. That is not a typo. 1.4 billion pounds. Every year milk production goes up while at the same time demand is trending down. The demand for liquid drinking milk has been declining for decades now, and even cheese consumption has been flat or even declining a bit. In a rational world what happens when you have too much of a product is that you stop making so much of it. But one thing I learned long ago is that rationality seems to be in short supply.
Go take a look at the article if you have some time. It makes for fascinating reading and will give you an idea of how the food industry in this country is being manipulated.
I hadn’t really planned on talking about a2 milk but it’s started to show up at a few stores locally and some people were asking me about it. I thought I’d covered so-called “a2” milk here before in depth but a quick search through the archives only turned up a couple of brief comments about it. I know I wrote about it before so either the search failed to turn it up in the archives or I published that piece somewhere else. I suppose it could have been on my defunct Tumblr blog. So I’m going to take a look at it again and if I did publish this before, well, it won’t be the first time I’ve repeated myself. Hey, I’m old. I’m lucky if I can remember my phone number some days.
Now, the news…
Back in mid summer a2 Milk (the company) got itself a new CEO, Jayne Hrdlicka, brought over from Qantas Airways because apparently selling airplane tickets is just like selling milk.
Just two months later, in September, Hrdlicka abruptly sold all of the stock in the company that she owned, some 357,000 shares.
Now when the brand new CEO of a company abruptly sells every single share of the company she heads up, a lot of people sort of stare and go WTF??? The company issued a statement saying that she did so to meet “tax obligations”. And, of course, everyone sort of chuckled and said “yeah, sure she did”. Especially after those people found out that the company’s CFO, Craig Loutit, sold off 150,000 shares in the company a couple of weeks before the CEO did, and, well… Makes you wonder, doesn’t it, when the CFO sells off a large percentage of his shares in the company and the new CEO who has been on the job for only two months sells off all of her shares in the company?
And then came the announcement that Nestle is jumping into the “a2” milk market by selling infant formula based on “a2” milk in China, a major market for the A2 Milk company and…
Well, let’s sum things up here: The CFO of the company sells off a large chunk of stock in the company. Shortly thereafter the new CEO sells all of her stock in the company for “tax obligations”, and a few weeks later Nestle announces it is moving into what had been A2M’s exclusive territory with a virtually identical product… Nope, nothing to see here. Let’s move on, shall we?
What the heck is a2 milk anyway?
There is a lot of different stuff in milk, and some people are sensitive to some of the things in milk or are even outright allergic to some of the components. My oldest son, for example, is mildly lactose intolerant.
So prepare for your eyes to glaze over because I’m about to get all sciencey here for a few minutes. Or you can take a nap until I’m done with this and pick it up when I’m finished with this part.
The biggest problem people have with milk is lactose intolerance. Lactose is a type of sugar found in milk. People who are lactose intolerant are unable to fully digest the lactose in milk, resulting in gas, bloating and even diarrhea after eating dairy products. They don’t make enough of an enzyme called lactase which is needed to digest lactose.
Or is it? Here’s where it starts to get complicated and more than a little controversial.
One of the components of milk is a protein called beta-casein. It is present in significant quantities, making up about 30% of the total proteins in milk. There are two different types of beta-casein, a1 and a2. The only difference between the two is a single amino acid. Beta-casein contains a total of 209 amino acids whether it is a1 or a2 type. The difference is that at position 67, a1 milk has a histidine and a2 has a proline. Now when digested in the small intestine, this histidine may cause the release of a peptide called beta-casomorphine-7 or BCM-7 because that’s a hell of a lot easier to spell. And BCM-7 is what causes the controversy. (I say may produce BCM-7 because there doesn’t seem to be any consistent proof that BCM-7 is even produced in the human digestive system in the first place. But let’s ignore that for the moment.)
Back in the 90s there was a study that indicated that BCM-7 was not a good thing, well, in rats, anyway. There was a claim that it caused diabetes because apparently some rats in the test that were fed a1 milk produced BCM-7 and got diabetes, while rats that weren’t fed the stuff didn’t.
Only that was mostly bunk, as it turned out. The study was seriously flawed. As were others that claimed a1 milk caused not just diabetes but heart disease as well. A paper published in Nature (you can read it yourself here) debunks the whole theory that a1 type milk caused any such problems in human beings. The conclusion of the paper was that:
“there is no convincing or probable evidence that A1 beta-casein in cows milk is a factor causing DM-I diabetes.“
It was also concluded that the same was true when it came to chronic heart disease. There was no evidence that a1 type milk was a factor in causing CHD. Another study supported the study published in Nature (abstract here) and says that
“Evidence from several epidemiological studies and animal models does not support the association of milk proteins, even proteins in breast milk, and the development of T1D [type 1 diabetes]. Ecological data, primarily based on A1/ A2 variations among livestock breeds, do not demonstrate causation, even among countries where there is considerable dairy consumption.”
So how did these health claims for a2 milk get to be ‘a thing’ as they say? Why does so-called “a2” milk even exist as a product?
In the 1990s someone came up with a genetic test to determine if a cow would produce the a1 or the a2 type of protein, and a company called A2 Corporation was started in New Zealand in 2000 to try to make money off it. They started a campaign to try to make people terrified of a1 milk by claiming that a1 type milk was responsible for heart disease and diabetes, and even tried to link it to schizophrenia and autism. It even launched a campaign to try to force the New Zealand government to declare a1 type milk a health hazard and require warnings on packaging.
Then the push back began.
First the New Zealand Commerce Commission turned up and pointed out some labeling issues. The company was claiming there was no a1 protein in its milk. But there was. Testing indicated there was indeed a1 type proteins in the a2 labeled milk and finally the company had to admit that they “could not be certain that there was no A1 in A2 milk.”
Then the NZ Food Safety Authority and Australia’s Ministry of Health and Food Standards got involved. Warnings were issued, threats were uttered, and finally the company had to withdraw its claims about the health effects of a1 and a2 milk, fines were issued, companies linked to the product went under, and, well, the whole thing was a mess.
The company itself, now called “The a2 Milk Company Limited” withdrew health claims for its product except the claim that it may cause less gastric distress for those who have problems consuming other types of milk.
That is the only alleged health effect that has any kind of actual scientific backing, but even that claim is dubious. There were a couple of apparently independent studies, very small ones, that gave some indication that for people who experience gastric distress from consuming milk, consuming “a2” milk might cause fewer symptoms in a few cases. But those studies each looked at only about 40 – 50 people, and the results were self-reported in at least one of those studies, so it isn’t really known if what they were experiencing was accurate or not.
But that hasn’t prevented a lot of other people from making the same unsubstantiated and outright false claims that the original company and its founders tried to push. While scrounging around doing research for this piece I found dozens of websites making the same health claims that got the company in trouble back in the early 2000s.
Let’s wrap this up because this is getting longer than I really wanted.
Despite what some of the promoters of this stuff claim, “a1” milk does not cause disease in human beings.
Despite what some of the promoters claim, “a2” milk does not cure anything.
The only difference between “a1” and “a2” milk is a single amino acid in a single component of a milk protein.
All dairy cows produce both the “a1” and “a2” type proteins, whether they have the so-called “a2” gene or not. The only difference is that cows with the genetic marker produce a larger percentage of the “a2” type. So-called “a2” milk still contains some “a1” type proteins.
If you are truly lactose intolerant, you still should not drink “a2” milk because it contains normal lactose. You will still experience the same discomfort, bloating and other symptoms.
If you are allergic to any of the components of milk you should not drink “a2” milk because it still has all of those components.
The only alleged health benefit with any kind of actual proof is an indication that a small percentage of people who experience gastric distress from consuming milk experience somewhat less gastric distress when consuming “a2” milk, but even those few studies are questionable.
So why do people pay extraordinary prices for the stuff? As H.L. Mencken allegedly said, “No one ever went broke underestimating the intelligence of the [American] public.”