Stronger financial returns at the cooperative level helped take some of the sting out of lower milk prices at the farm, Dairy Farmers of America (DFA) leaders told members attending the organization’s 18th annual meeting, March 21-23, in Kansas City, Missouri.
The theme for this year’s meeting was “Dairy Reimagined,” as DFA leaders looked back at nearly two decades of industry and cooperative changes, and looked ahead to the future.
A challenging year for producers
Randy Mooney, chairman of DFA’s board, noted 2015 was a challenging year for the cooperative’s nearly 14,000 members.
“After 2014, 2015 was in many ways a jolt back to reality, providing most members with, at best, average farm financial returns,” Mooney said. “More frequent and more dramatic boom-to-bust commodity cycles are becoming the norm rather than the exception.”
Reflecting global supply and demand imbalances, weaker milk and dairy product prices translated into much lower DFA member milk prices. The 2015 average DFA milk price was $17.18 per hundredweight, down almost $7.00 from the $24.17 per hundredweight average in 2014. The 2015 average was the lowest in the past five years.
As a result, milk payments to members totaled $7.94 billion in 2015, down more than $3 billion from the $10.94 billion paid in 2014.
DFA counted 8,448 member farms in 2015, down from 8,768 the year before. Despite that membership decline, DFA members marketed 46.2 billion pounds of milk in 2015, up from 45.3 billion pounds in 2014. By quartile of production, DFA member milk marketings in 2015 came from:
- 110 farms with an average of 4,274 cows
- 220 farms with an average of 2,145 cows
- 582 farms averaging 810 cows
- 7,478 farms averaging 63 cows
Including non-member milk, total milk marketed by the co-op was estimated at 62.0 billion pounds, or about 30 percent of the U.S. total.
Fortunately, the strong domestic U.S. dairy market is providing some insulation from the worst of the global volatility, said Mooney, who operates a dairy farm in Rogersville, Missouri.
Co-op performance summarized
Rick Smith, DFA president and chief executive officer, said the co-op’s diversity provided marketing and financial assurance for its members when milk prices and income margins were lower on the farm.
“I know you’re feeling ‘stung’ at home,” Smith said. “But you need a strong cooperative you can count on and not have to worry about.”
With lower milk and dairy product prices, DFA reported net sales of $13.8 billion in 2015, down from about $17.9 billion in 2014, but still the second-highest total in the past five years.
However, with lower milk costs, operating income totaled $56.7 million, up from $36.7 million the year before. Net income totaled $94.1 million, more than double the $43.1 million in 2014.
Offsetting some of the individual farmer financial stress, DFA returned $35 million to members in equity retirement and patronage dividends in 2015, up from $28 million in 2014.
“As a member-focused cooperative owned by dairy farmers, we are always working to strengthen and evolve our business so that we can continue to provide value to members,” said Smith. “We do this by seeking out new opportunities, focusing on innovation, and making decisions today for the cooperative we want to be in the future.”
Members of distinction
DFA’s “Members of Distinction” program honors members in each of seven regions who embody the cooperative’s core values and excel in their operations, communities and in the dairy industry.
The 2016 honorees are:
- Hanke Farms Inc., Sheboygan Falls, Wis.
- Thomas Farms of Stark County, Louisville, Ohio
- TLK Dairy, Mountain Home, Idaho
- North Harbor Dairy, Sackets Harbor, N.Y.
- Harmony Grove Dairy, Waynesboro, Ga.
- Scot-Tex Dairy, Scotland, Texas
- Alderson Family Dairy, Gerber, Calif. PD
PHOTO 1: More than 1,500 DFA member-owners, staff and guests attended the cooperative’s 18th annual meeting, March 21-23, in Kansas City, Missouri.
PHOTO 2: Randy Mooney, chairman of Dairy Farmers of America’s (DFA) Board of Directors, delivers his chairman’s report to member-wners and guests at the cooperative’s 18th annual meeting.
PHOTO 3: Rick Smith, DFA president and CEO, provides a business overview to member-owners and guests. A DFA member-owner looks at a display featuring DFA’s 2016 Members of Distinction. One member farm from each of DFA’s seven national areas is honored each year.
PHOTO 4: A DFA member-owner looks at a display featuring DFA’s 2016 Members of Distinction. One member farm from each of DFA’s seven national areas is honored each year. Photos provided by Dairy Farmers of America.
- Progressive Dairyman
- Email Dave Natzke