Today’s the day – February 1st – the day of reckoning, so to speak. Across the East coast and the Midwest, many dairy producers today made their final decision to sign or not sign a pledge saying they do not use rBST on their cows. But, in the long-term, how will affect the price consumers pay for milk, and the price producers receive? Several Purdue University dairy specialists, offer a few insights in this article.
Announcements by retailers, such as Kroger and Deans Foods, began the domino-fall that first hit mid-East dairy co-ops and then individual dairy producers. Starting in February, Kroger stores in Indiana and 12 other Midwestern and Southern states will sell their store brand milk as not coming from cows treated with recombinant bovine somatotropin or rbST. Many other retailers have followed suit.
“The sad thing is, consumers will likely pay more for milk that is no different than the milk they purchased last month,” said Michael Schutz, Purdue Extension dairy specialist. How much more consumers might pay depends on local competition and retailer marketing strategies.
“Even though the milk is more expensive to produce, retailers may sell the rbST-free milk at a lower profit initially in order to get customers used to the product,” said Corinne Alexander, a Purdue agricultural economist. “Longer term, whether the retailer can charge a higher price depends on their customers’ preferences and what the local competition charges for milk.”
“There are no tests that we can run to scientifically determine the presence or absence of rbST in a cow’s milk,” Schutz said. “That is why the affidavits are used, there is no distinguishable difference in the milk itself.”
Kroger has been selling rbST-free milk in other parts of the country, and company officials said the decision is based on “customers’ increasing interest in their health and wellness,” according to a company press release issued last August when the decision was announced. Their milk, as well as many others, also will carry the government approved statement: “The Food and Drug Administration has determined there is no significant difference between milk from rbST-treated cows and non-rbST treated cows.”
Without the use of rbST, dairy producers expect to lose money, and for some it may cause them to go out of business, Schutz said. “rbST was kind of an equalizer for farmers with smaller herds. It helped their operations be profitable,” he said.
“One Indiana dairy producer milking 200 cows expects to lose $70,000 per year in net milk revenues, and this is just a small family farm.”
For example, Mike Yoder, a dairy farmer in Elkhart County, used rbST on about 40 percent of his 400-cow herd. The company who picks up Yoder’s milk said they would no longer take his milk if he didn’t sign the affidavit by Jan. 1. As a result, Yoder said he was forced to sign.
“I’m being paid about $30,000 to $40,000 because I signed the affidavit, but that is just for this year,” he said. In the meantime, Yoder said weaning his herd off of rbST will cost him about $120,000 in lost milk production. Dairy farmers now must figure out how to offset the losses from not using rbST.
“Farmers will see decreased profits, and smaller farms will be at greater risk,” Schutz said. “It will also mean that farmers will have to increase the size of their herds in order to replace lost milk production.” Schutz said larger herds mean larger farms, higher feed costs and more manure to clear out.