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W. Coast dairies feeling squeeze

Rules, real estate double whammy by SUMMER LIN THE LOS ANGELES TIMES (TNS) | September 23, 2022 at 1:49 a.m.

Michael Oosten's grandparents were dairy farmers in the Netherlands and immigrated to California in the 1920s, starting their own dairy farm in Paramount in 1945 before relocating to bigger farms in Artesia and Bellflower.

In the early 1970s, they moved their farm to Chino but decided to sell it in 2001 to a trucking company next to an Amazon warehouse, which was built on land comprising two other dairy farms.

Oosten, who for 18 years has owned Marvo Holsteins -- a dairy farm in the unincorporated Riverside County area of Lakeview that supplies milk to Land O'Lakes -- said dairy farming has declined in California since the industry's peak in 2008.

The industry has been hurt by shrinking real estate in Southern California, more affordable land in other states, rigorous permitting processes and the shortage of water and other natural resources.

"Economics is the biggest driver of farmers leaving to go out of state," Oosten said. "Milk pricing tends to be very competitive in other states; the feed prices are lower and the regulatory environment is better."

Real estate, in particular, has played a significant role in more dairies choosing to leave California, he said.

"As urban expansion came in and got close to the farm, developers would come in and buy the land and convert it into housing or commercial buildings," Oosten said. "That's the progression of what's happened in the California dairy industry. More recently in the last 20 years, a lot of people have started to move out of state."

STEEP DECLINE

Marvo Holsteins is one of about 1,200 dairies left in California, a significant drop from the roughly 2,100 farms in 2001 and 20,000 farms in 1950, according to Michael Boccadoro, executive director of sustainability nonprofit Dairy Cares.

Although the number of dairies in the state has declined by 94% in the last 70 years, farmers have been able to make up for the difference through increased milk production and improved cow comfort and breeding, Boccadoro said.

"The idea that we're building new dairies or increasing production in California is a nonstarter," he said. "We haven't built a new dairy in six to seven years. It's just not a good place if you're getting into the milk production business."

The state went from housing about 1.88 million dairy cows in 2008 to about 1.72 million today -- a decrease of about 160,000 cows in 14 years, Boccadoro said. The number of cows in the state has reduced by about half a percent to 1% annually.

Instead of staying in California, dairy cows are being shipped to Texas, South Dakota, Arizona, New Mexico, Idaho and Kansas -- states not typically known for their dairy production. Boccadoro said a shrinking demand for fluid milk and increased demand for cheese, yogurt, butter, whey protein and other milk-related products have pushed milk production to the Midwestern states.

Demand for dairy, meanwhile, has increased by 200% since the coronavirus pandemic began in early 2020.

"Historically, cows needed to be close to the market because it was a fresh milk market and milk has a short shelf life of about two weeks, so there was a lot of milk production on the West Coast and East Coast," he said. "With the new products in demand, the dairy sector is seeing milk production move to the middle parts of the country because of the longer shelf life of the products."

Closer proximity to new manufacturing sites also has driven cows out of California. Hilmar Cheese Co. opened a facility in Texas, with another cheese and whey manufacturing plant in the works in Kansas. Last fall, Leprino Foods, another major dairy manufacturing company, announced it was building a new facility in Lubbock, Texas.

THE CLIMATE THREAT

Another big question plaguing dairy farmers is whether they'll see climate change regulations in the next few years and what effects such changes could have.

In 2016, California lawmakers passed the state's Short-Lived Climate Pollutant Reduction law, setting a 2030 goal to reduce methane emissions from the dairy and livestock industries by 40% below 2013 levels, which amounts to about 9 million metric tons of carbon dioxide.

If the California Air Resources Board determines in 2024 that the dairy industry isn't on track for hitting the target, the board can start implementing regulations to limit emissions.

Oosten said potential regulations could entail requiring dairies to install anaerobic digesters -- devices that control the decomposition of manure and convert methane into clean energy -- as well as using feed additives to help reduce methane produced by cows through belching.

"There's that fear in California in that if we start making mandates and regulations, then we start losing our incentive funding, we start losing our options and we start losing farms," he said. "Some of them might go out of business, which would be a travesty for that family. ... The other thing that's going to happen is they're going to pick up, leave and go out of state. The methane still gets produced; they don't have to deal with [mandates] over there and that's the 'leakage' that we talked about."

Staff members are in the initial stages of developing a regulation on methane emissions by speaking with community members and working groups, according to Clegern.

"We won't start until we have an actual regulation," he said. "It takes a couple years to get through the public processes and the legislative and other regulatory tests. We have to make sure it's not interfering with federal regulations and it scientifically makes sense and it can be done in a reasonable and not-too-expensive way."

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