Western United Dairymen
Western United Dairymen (WUD) is a trade association with voluntary membership. With 1,100 of the state’s dairies as members, they represent approximately 60 percent of the milk production in California. Membership benefits include resources in labor law, environmental regulations and pricing issues. Members decide the direction of state and federal legislative efforts affecting the dairy industry.
Their mission is to earnestly and conscientiously work to promote sound legislative and administrative policies and programs for the profitability of the industry and the welfare of the consumers. They accomplish this by striving always to develop concepts for the general welfare and longevity of dairy producers, while maintaining the strong, positive public image of the dairy farmers.
It is a big mission in a complicated and growing industry. The dairy industry has been particularly hard hit by the new environmental regulations. California just released a new waste water discharge requirement that will hold farmers to very stringent, strict monitoring, recording and reporting. In order to better meet the needs of their producers, they formed another organization, Western United Environmental Services. This will be a fee-for-service organization, while Western United Dairymen will remain a non-profit. The WUD CEO will serve as CEO for both organizations. The organizations will work closely together to get out information to their membership.
An additional arm is Western United Resource Development which administers their Value-Added grant and a water grant. The Value-Added grant was used to place methane digesters on California dairy farms. It provided a 50 percent cost share to the producer. Before the program began, there was only one active digester on a California dairy farm. They are expensive and WUD is working to make digesters a better option for the producers.
One of the services that is provided by the non-profit organization is pricing. California has its own state marketing order, while most of the rest of the U.S. is on a Federal program. There are a few unregulated states, such as Idaho. California has a pooling program where essentially all of the revenues go into a statewide pool and then are redistributed to all producers.
There are five classes of milk depending on what is done with it, so each of those classes has a different pricing formula. The formula is based on Chicago Mercantile Exchange prices for end products like cheese. WUD attends pricing meetings where industry participants support different changes to the pricing formulas. WUD represents dairy producers and their interests in these meetings and tries to keep the price fair for them. They also have lobbyists in Sacramento and Washington, D.C., and are involved in state and federal issues that affect dairy.
Board of Directors
They hold monthly board meetings with 19 directors, and the meetings are well attended. They also have a delegate body that represents the entire state. Policies are set by producers/members on the board of directors.
WUD communicates with their members through an update every Friday and by sending daily headline news through a free e-mail service. They maintain a widespread list serve, which is subscribed to by industry professional as well as members. It provides an overview of anything that has to do with dairy, regulations or pricing. The Friday update has stories written by staff, and then is mailed and faxed to members. The members read it loyally, especially the pricing estimates. A challenge is get the publication to all the generations on the farm.
They also have a dairy leaders program which focuses on the next generation of leaders. They are taken through several extensive training sessions, including state and federal legislation, pricing and environmental regulation. They also learn about marketing, have media training and visit the California Milk Advisory Board.
Three large state dairy co-ops produce about 60 percent of the milk in the state and they are very large players in California. WUD is outside of that, as they represent the producers individually, and their best interests as a whole.
Membership dues are assessed according to the producer’s income. The producers are under so much pressure with the environmental regulations that the association has seen a rise in memberships in the last few years. Membership falls when prices are low. The core of their membership are third and fourth generation dairy families.
The association employs five field staff and has hired five new staff for the environmental arm. The staff handles environmental regulation issues and labor issues. Immigration and labor issues are also a hot topic in dairy. The field staff will help producers with the paper work and reporting. When engineers are needed, they contract with private firms. The staff spends a lot of time working with dairies to meet regulations. There are both waste water and air discharge requirements. While there is a huge demand for dairy products, at the same time increased regulations are making it hard to expand production.
WUD sees organic milk production as a growing and increasingly prominent group. To stay in dairy, the producer has to get more for their milk and it is very difficult to expand, so other ways to get more income include organic. Some producers already have the pasture so it fits with their farm.
Another new market for their producers is generated by global demand. California dairies benefited in 2007 by selling powdered milk to meet global demand. Milk protein, like non-fat dried milk and dry whey demand is up. When several of the traditional exporting countries had drought, California had a chance to meet some of the growing demand from countries like China. For the first time, the U.S. stepped in and took some of that market. Now the challenge is to become a reliable supplier for that market. Exporting butter is another new market. California usually imports high-value cheese but recently they have been exporting small quantities.
Processing is becoming an issue, as well. Some processors are going outside the state. One of the processors put it this way: “Indiana rolled out the red carpet, and California rolled out the red tape.” From labor to energy to environment, California is not the easiest place to do business.
Costs of production keep going up. Sixteen milk used to sound really good, but it is not sufficient anymore. All the inputs are more expensive, and so it is unlikely that production costs will go down. If the prices come down, there will be more consolidation in the industry, continuing a long time trend. With $20 milk, producers can meet the new requirements, but if the price goes back down, they may get out of the business.
WUD works to advance producer’s concerns when regulations are being written. WUD works with the California Farm Bureau, not with pricing but some other issues. They are very active in the state, and have a large staff. Some of the WUD producer members are on their board. WUD has also formed some environmental coalitions and have developed an environmental stewardship program. Dairies can get certified in environmental practices. It is proactive way to show the dairies are trying to do the right thing. It is voluntary, as well, and producers choose to be certified.
The industry is trying to meet the environmental regulations. Average size of a dairy in California is 950 cows, with dairies ranging from less than 100 to over several thousand head. All are family owned. Land can sell for $30,000/acre, making it difficult to expand.
The idea to pursue the value-added grant came as a result of WUD’s aggressive thinking in how to help their producers with energy and environmental issues. The association has taken the role of a change agent, and sometimes it is difficult for the producers to understand why they get involved in so deeply in these issues. The on-farm digesters are a big capital outlay and the payoff is slow. WUD is researching carbon credits and is working on the policy issues in that area as well. The association works hard to ensure future profitability, and ultimately sustainability, for their producers.
About USDA VAPG
VAPG funding has been offered by the USDA periodically since the early 2000s. A new round of funding is anticipated to be announced in the coming months. To be considered value added, projects must show how products are differentiated in specific ways from commodity crops. Typically, projects must also show how they may deliver greater returns to producers.
Independent producers, farmer or rancher cooperatives, agricultural producer groups, and producer-owned business ventures, including non-profit organizations, may apply. In previous cycles, applicants were required to be producers of the raw commodity who will maintain ownership of that commodity through the process of creating a value-added product. Grants have been available for planning projects (such as marketing and business plans and feasibility studies) and working capital projects (which might include wages or packaging supplies). (http://www.rd.usda.gov/)