Idaho dairy industry faces challenges but also ‘incredible’ opportunities

By Sean Ellis

Idaho Farm Bureau Federation

BOISE – Idaho’s top agricultural commodity – dairy – faces a lot of challenges and headwinds, including a dramatically increased cost of production.

But the Idaho and U.S. milk industry also has some tremendous opportunities.

That was one of the main messages delivered during Dairy West’s annual meeting, which was held Nov. 9-10 in Boise.

“You all are seeing unprecedented market volatility and pricing constraints,” Dairy West CEO Karianne Fallow told several hundred dairy industry members during the event. At the same time, she added, “Incredible opportunities lie ahead for the dairy industry.”

Fallow said milk producers are facing a lot of headwinds, including supply chain constraints and soaring production costs.

The nation’s dairy industry also faces a rise in the introduction of alternative meats, lab proteins and cultured dairy products, which are all becoming more mainstream.

Despite those challenges, she added, U.S. dairy consumption is at its highest lever ever, at 667 pounds per person.

“Ninety-six percent of households in the U.S. have dairy in their home; that’s a lot,” she said.

U.S. dairy exports are at a very healthy level and inching higher, and volumes of plant-based alternatives are on the decline, Fallow said.

She said farmers continue to rank very high on surveys that measure trust. “Inspiring Trust” was the theme of this year’s Dairy West meeting.

“I hope you will continue to trust that you produce the healthiest, most delicious, most affordable protein in the world and consumers know it,” Fallow said. “They are drawn to your products every day.”

Dairy is Idaho’s No. 1 agricultural commodity in terms of total farm-gate receipts and the state’s 376 dairies brought in an estimated $4.2 billion in revenue during 2022.

The prices that Idaho dairy operations received for their milk touched record levels for part of the year and the state’s dairy industry enjoyed a profitable 2022, said Idaho Dairymen’s Association Executive Director Rick Naerebout.

But, he added, the cost to produce milk has soared and dairymen have a wary eye on what this next year will bring financially.

While the break-even cost of milk production in the state was around $16.50 per hundred pounds a couple years ago, it’s closer to $22 now, he said.

“The average dairy producer made good money in 2022,” Naerebout said. “Overall, they’re going to be in the black and had a pretty healthy year.”

However, he added, with feed costs up substantially and farm-gate milk prices trending downward, there is a lot of concern about 2023.

“How much of that profit from 2022 are they going to give back and what does it look like for 2023?” Naerebout said. “We just don’t know. That’s what has a lot of guys concerned. The margin hasn’t elevated with the increased risk it’s taking just to produce milk.”

There are about 650,000 milk cows in Idaho and they have to be fed and it’s gotten a lot more expensive for dairies to do that.

Cost of production has elevated at a pretty aggressive pace and a lot of that is related to feed costs, Naerebout said.

More than half the average milk check for dairies goes to feed and because most dairies have locked in feed costs, there isn’t a lot of opportunity for them to drop in the near-term.

“There’s just a lot of uncertainty about how this next year will shape up and what that will mean for our dairy families,” he said.

Dairy West was formerly known as United Dairymen of Idaho and now represents milk producers in Idaho and Utah. It was created five years ago with the goal of expanding the market reach of Idaho’s dairy industry.

“Consumers in a lot of ways don’t see state borders any more on digital mediums, so we can really take advantage of that,” Fallow said. “Dairy farmers in Idaho and Utah now share a single staff, a single budget and we can do things more effectively and have a bigger impact because we can do it consistently across the region.”

Awards

During the Dairy West meeting, Frank Veenstra of Hagerman was inducted into the Idaho Dairy Hall of Fame and Scott Wayment of Ogden was inducted into the Utah Dairy Hall of Fame.

Fallow said the Hall of Fame is a legacy award.

“The award is generally given to dairy farmers who have had tenure, have a great reputation for the businesses they run, and who are committed in terms of their service to the industry and the community,” she said.

Fryslan Dairy of Marsing was presented the industry’s 2022 Idaho Milk Quality Award.

This award is based on a dairy’s routine monthly tests for somatic cell counts, which are an indicator of quality, and bacteria counts, which reflect the cleanliness of cows and the facility.

All of Idaho’s dairy’s produce quality milk but “this award is given to the crème of the crop,” Fallow said.