Organic prices sour for Californian dairy farmers

By Stephen Cooke

Dairy farmers running pasture-based systems on the coast of California have adapted their practice to produce organic milk.

However, the rise in farmers making the transition over the past few years has caused a fall in organic prices.

The Bordessa family – Gary and Sandra and sons Jarrid and Gino - utilise the grass-based system for their organic endeavour at Valley Ford, north of San Francisco. They hosted a group of New Zealand dairy farmers touring California with Alltech.

They milk 700 cows across two farms and carry an additional 110 dry cows. The average herd size in this Bay area is 500 head.

About 100 dairy farms operate in the Bay area. The neighbouring Central Valley is where larger farms utilise total mixed ration (TMR) systems.

The Bordessas have been organic since 2003 and supply the US national Organic Valley dairy co-operative. They were the third dairy in the area to make the transition to organic.

More farms have transitioned over the last few years to take advantage of higher prices.

However, this has caused organic prices to fall. About two years ago Jarrad said organic farms were particularly profitable while conventional farms were breaking even.

More farmers have transitioned and Gary believes there is probably about 15% too much organic milk being produced. This – and a reduction in demand from consumers - has led to a drop in prices at the farmgate. It has also limited their production as they aren’t able to sell any more than what their co-op dictates.

When they first started producing organic milk they received $19 per 100 pounds of milk, and prices rose to as high as $38. It is now $28, which is almost twice the price of conventional milk.

This is the base price and they receive premiums for lower somatic cell count and better components. When they look like meeting their milk limit, they sell heifers or feed cheaper alfalfa to reduce production.

“Organic has been really good for us. We’ve learned a lot going organic,” Gary said.

“We initially went organic because we thought the money is there. Our idea was to go organic and milk first lactation cows. We thought it wouldn’t work, because we were used to the old way, but it did.”

Under the organic system, cows must be on pasture for at least 120 days and receive 30% of DM year round from pasture. Farmers also can’t use anti-biotics and pesticides.

Cows at Bordessa Dairy are fed a mixed ration comprising silage made from their ryegrass pastures, almond hulls, roasted soy beans, soy hull pellets, dried distillers grain, corn, alfalfa, and minerals.

For five months of the year they receive half this ration while they are able to graze. They retain access to pasture all year round and rest in a barn at night.

The family farm across 1000 hectares and they grow silage on 160ha. They have paddocks of 10-12 hectares and a 23 day rotation.

They plant annual ryegrass every year and buy whatever seed is cheapest as it is effectively supplementing the mixed ration.

The Central Valley is underpinned by an extensive irrigation scheme but those in the Bay area rely on rainfall.

“Water is a limiting factor in this area,” Jarrid said. “We basically have enough to water our cows.”

The average rainfall is 720mm – although it can get as high as 1440mm or as low as 360mm – which falls within 3 months. Their last two years have been wet but before that it was dry for five years.

With the advent of sexed semen and genomics, they have started using beef semen in the bottom 25% of their herd. More dairy farmers now are breeding better animals to sexed semen and the bottom of their herd to beef semen.

“With the advent of sexed semen, replacement animals are not worth anything,” Jarrid said.

When the beef market was soaring, dairy calves at a day old were selling for $550 each. That’s now fallen to $30 each. Farmers are now receiving $100 for an Angus calf and up to $250 for a Wagyu calf.

Cows with mastitis receive Banamine (a liquid pain relief) to aid swelling and are left to recover. Gary said half get better and the other half are culled.

“With mastitis, in our experience, cows clean up or they’re not going to. If they don’t clean up there’re gone.”

They are also utilising an organic product from Alltech called Select GH A+, which reduces issues caused by mycotoxins and aids gut recovery. It solved a fall in milk production and loose manure caused by toxin in the silage. Bordessa also utilises Bio-Mos to reduce diarrhea problems in the calves. It has helped them reduce the mortality rate in their calves.

Gary said they have gained production in their pastures since turning organic, which he attributes to learning more about their soil and pasture seeds.

They apply manure from the barn to pastures as well as homemade compost. Their compost recipe includes wood chips, grape pumice, maize and chicken manure.

It currently costs more to produce organic milk as their organic feed costs have risen. Organic corn used to be $200/tonne but is now $600/tonne. Gary said their cost of production is about twice that of a conventional farm. However, their income is also twice that of a conventional farm.

“We’re still better off,” he said.

“Even if we went back to producing conventional milk, we still wouldn’t use dry treatment, mastitis treatment, or hormones.”

Alltech funded Stephen Cooke's attendance at the Alltech ONE Conference and tour to California.