The nation's biggest dairy state keeps getting smaller.
USDA's official ledger says total milk production in California in February was up just a bit versus the year before (0.55 percent). But that's only because of leap year and a 29th day.
On the basis of average production per day, February 2016 output was actually 2.90 percent less than February 2015 . . . which itself was 3.47 percent less than February 2014.
So let's sum up the latest monthly milk production report for what it really is: another decline. That makes California's streak 15 months in a row going back to December 2014.
It's a slow motion retreat that becomes more fascinating the longer it lasts. It has to end eventually, but there are no compelling reasons why it will be anytime soon.
Uncertainty about water supplies, competition for land, ever-increasing environmental rules and scrutiny, and declining local feed supplies are a few reasons why cows and/or producers are leaving the state.
Milk prices and pricing are another big one, according to Rob Vandenheuvel, general manager of Milk Producers Council in Southern California.
"I believe the overriding consideration is the extreme financial stress put on California dairies by a statewide pricing program that has consistently failed to cover operating costs since 2009, with the obvious exception of 2014," he said.
"Even 2014 saw better margins for dairymen outside of California than those in our state who were still trying to recover from previous downturns. What we've seen in the past 15 months is a clear indication that inequitable milk pricing policy is a direct contributor to that change."
(c) Hoard's Dairyman Intel 2016
April 18, 2016
