In this episode of The Milk Check, find out why some dairy producers may be eyeing the exit. Sarina Sharp, risk manager at Ag Business Solutions and the writer behind TC Jacoby’s Weekly Market Report joins the Jacoby team this week. Sarina brings invaluable insights as we dig into critical topics like:

Tune in to The Milk Check episode 75: Exit stage left: Why some producers are selling out while they can. If you like milk (and we know you do), then pour yourself a mug and tune in for insights on how to navigate this uncertain landscape and stay ahead in the coming months.

Intro (with music):

Welcome to The Milk Check, a podcast from T.C. Jacoby & Company, where we share market insights and analysis with dairy farmers in mind.

Ted Jacoby III:

Welcome everyone to the March 28th, 2025, edition of The Milk Check, a T.C. Jacoby & Company podcast. It is my pleasure to welcome a couple of special guests to the podcast this week, first, Sarina Sharp of Ag Business Solutions and the Daily Dairy report. Welcome to the podcast, Sarina. Most of you know that Sarina is also the writer of the T.C. Jacoby Weekly Market Report, which we publish every Friday. Sarina, we’re honored to have you join us today. More importantly, thank you for the partnership. I can’t tell you how often I get compliments on the weekly report that you write for us, so thank you very much.

Sarina Sharp:

Thanks for having me. Thrilled to hear it.

Ted Jacoby III:

In addition, we have a few of our usual suspects: my brother Gus, head of our fluid group; Josh White, head of our dairy ingredients team, and I am excited to announce that Mike Brown, formerly of IDFA and Kroger fame, is joining the Jacoby team as our new vice president of Dairy Market Intelligence. Mike, I am excited to have you on the team, and I look forward to having you on this podcast as a regular presence.

Mike Brown:

Well, thank you, Ted. I’m delighted to be here. It’s good to be back in markets and away from government regulation. I’m very excited about the opportunity. And Sarina, I am really looking forward to working with you. I’ve been a fan for decades now. Appreciate that opportunity to work with you as well.

Sarina Sharp:

Time flies.

Ted Jacoby III:

It sure does. So my first question is this. We’ve been talking for probably a couple of years now about the heifer replacements and the issue that’s been evolving because many dairy farmers are breeding to beef simply because it’s really hard to pass up $700 for a black cow rather than spending $3,000 to raise that calf into a heifer. But we’re getting to the point where right now, for example, our traders that sell into the retail space, they’re telling us demand’s not that great. Those who are selling into the food service space are saying demand’s not that great. Even our traders who export are telling us that Trump’s rhetoric about tariffs is having an effect and making it difficult for us to export. In other words, demand is not that great on the horizon. Milk prices have come down. Class III price is probably going to be in the low 17s, maybe even into the high 16s in April. Are we getting to the point that we’re starting to reach that line where dairy farmers are going to say, hey, beef prices are still high, we can sell our dairy cows, we can cull our herd, we can drop our cow numbers? And how does that play out given the heifer replacement issues that we’ve been talking about? Sarina, I’m going to ask you that question first.

Sarina Sharp:

Thought that one might be coming to me. I think there’s an assumption that cull rates go up when milk prices go down because dairy producers start to cull. So when dairy producers see low milk checks, the first thing that they do is actually try to increase milk production. So most dairy producers are not going to start culling in a way that shrinks their individual herd. However, there will be a group of dairy producers who decides, you know what? These are tough financial times. This is not for me anymore. I think especially right now after several years of very good prices and high beef prices, there is a group of dairy producers out there who’ve been looking for the right time to retire an exit ramp, and they were not going to make that exit when milk prices were high and revenues were good. But now that that’s here and beef prices are still high and heifer prices are very high, they have a really obvious out, sell my cows, cash it in, get a big check, either retire or move on to a different career.

That allows other producers, the ones that want to keep their barn full but have been culling at a very low rate for the past 18 months, to buy some of those cows that they’ve not been able to find for a while and then boost their cull rates. It’s kind of a two-step process to where we see the herd actually shrinking, but I think that’s the route that we’re going to take. And then, of course, the longer that these low milk prices are around, the more we’ll get a second category of sellouts, which is people who financially can’t make it in this environment. We’re already seeing an uptick in the number of dispersal auctions on the docket, particularly in the Pacific Northwest where some producers are getting steep discounts. Those cows are going to move out of those older, kind of retired, and economically unsustainable areas, and they’re going to move into some of these other dairies. And then that’s going to allow cull rates to go up.

Ted Jacoby III:

Generally speaking, right now though, are the balance sheets for most dairy farmers in pretty good shape after a couple of really good years?

Sarina Sharp:

Yes, they should be. We’ve had relatively low feed costs. It varies a lot region to region and which Class of milk do you get and what’s your basis, but generally speaking, dairy producers are in good shape. And, of course, that beef income that we’re talking about, that has really helped pad the bottom line in the past couple of years here.

Ted Jacoby III:

With those healthy balance sheets, how much runway do we have before some of these factors really come into play? Because I’m assuming the savings accounts are in good shape, and so they can probably go three to four months at least in many cases without having to start panicking, and they’ll just ride it out for a while. But I have no real feel for how long that may happen relative to some of the past times when we get lower prices.

Sarina Sharp:

So aside from that group of producers I mentioned in Washington that is getting steep discounts, I think that’s generally the case, that producers have healthy balance sheets, they’re on good terms with their lender, no one’s in a panic here, they haven’t seen a small milk check yet. We’re talking about lower prices in April. That’s a mid-May milk check. So we haven’t really started the clock on the financial distress-type sellouts, and that’s a several month process, but I’ve been looking to retire now seems like a pretty good time. When you’ve got this much uncertainty and you’re starting to see milk prices slip, but cow prices are still very high, that’s an opportunity that you don’t want to evaporate.

Ted Jacoby III:

Would you say it’s safe to say then that it’s mostly the guys who want to retire or thinking about retire and don’t have children who want to go into the business, those dairy farmers who exit the business in 2025 are primarily going to be of that category, even if we have an extended period of prices, let’s say in the $16 range, just because the balance sheets are healthy and outside of the Pacific Northwest? The financially distressed dairy farmers, we’re probably a year away from reaching a point like that. Is that a fair way to put it?

Sarina Sharp:

I don’t know if we’re a year away, but I wouldn’t expect any in the next few months. It’s a second half of the year problem.

Ted Jacoby III:

Got it. Gus, I’m going to throw it at you. You got any questions for Sarina or Mike?

Gus Jacoby:

Yes. We’re looking at a summer with some depressed prices relative to what dairymen have been used to for a while. We also have some modifications to our federal order that are going to be implemented. Is that a little bit of a double whammy to producers? Or has that been factored into the futures that I’m looking at from a standpoint of what adversity dairymen might see here over the next few months? How bad is it? And how long will it last? And what’s our best guess with respect to that?

Mike Brown:

Well, I’ll provide a little observation on that. A couple of things I would observe as far as the federal order change, the futures I believe already have those factored in, so people that are making those hedges of course are recognizing those higher manufacturing allowances. I also know just empirically talking with folks that there’s going to be some adjustment in premiums to make up at least some of that difference, if not all of it in a lot of markets. And then of course, Class I, if you’re in a market with fluid milk, your prices are going to go up, so your blend change won’t be as great. I do think the market fundamentals are a whole different story though when we’re looking at $1.60 cheese, and even though costs are lower, we’re looking at much weaker margin than we were a couple of months ago. Certainly outlook, and you look at the futures, there’s concern over margin.

The other thing I think that plays a role longer term too is replacement costs. If replacement heifers remain relatively competitive, and they always do go down when margins go down, is that an incentive for someone to sell cattle? Something that I looked at over the last few years was DHIA data, which isn’t the whole industry, but it’s about two and a half million cows. And we have seen a significant shift in herd retention. And when you look at herd retention, you’re looking not only at cows that stay in the herds, but cows that are sold for dairy. It’s gone from around 67%, 60 8% to almost 71% in 2024. We are seeing a little lower cull. We’re seeing more cows sold for dairy. Death loss is pretty consistent at roughly 5%, but when you look at those numbers, what you see is that we are seeing some structural changes. Is it genomics, our cows are lasting longer because we’re doing better herd selection for long-term productive life? Is it market influences? I do think that as long as we have these expensive beef calves or beef-dairy-cross calves, there’s a lot of incentive not to take the risk of getting a heifer to calving and selling a calf when it’s a week old for 700 bucks, to Ted’s point earlier.

So we have some pressures. Particularly if cattle price to stay fairly high, we may see some people decide to exit this summer when margins go negative again, which I think is very possible.

Ted Jacoby III:

Yeah. Sarina, do you think the age is continuing to go up? Is that the biggest reason for that increase in that percentages in those DHI numbers?

Sarina Sharp:

I think so. When you look at cull rates, it’s just inevitable that the average milk cow is a little older than was previously before we had these very low cull rates. We’re pushing some cows to an additional lactation. We’re keeping some cows in the herd that are open, that might’ve been sent to beef. We’ll try and breed them a couple more times because we don’t have a heifer there. Whether it’s extending that length of time that cows are in the herd by just a couple of months, trying to breed her a few more times, or one full lactation, all of it is shifting that age upward. And we can see some of the impact on milk production data. It’s a little bit hard to parse this out because we also have the effects of the bird flu in 2024, but in about half of the months in 2024, national average milk yields were below what they were the same month two years before, which is unprecedented. Like I said, you have to try and figure out a way to strip out the influence of the bird flu, and maybe it would not be nearly as dramatic if we didn’t have avian influenza, but I do think that these older cows and keeping less productive cows in the herd regardless of age is lowering our milk yields relative to where they would be.

Mike Brown:

Another interesting part of that is when you have longer days in milk, your component tests generally go up. So that may at least partially explain some of this rise you’ve seen in fat tests over the last couple of years, if days in milk are going up.

Gus Jacoby:

And that leads to some interesting discussion as it relates to what we’re dealing with currently. It’s very long cream markets and whether butter is fully showing itself from a future standpoint as to how low it might go. My feeling is yes, butter production is up, but I kind of feel like butter production will be up indefinitely going forward for a while now. I’m going to throw it over at Josh to kind of let us know what he thinks might happen with this butter market because of how soft the cream market looks like it will be both now and going forward.

Josh White:

Yeah, so I mean, talking with Joe in the office and just getting a sense for what the day-to-day market is, it’s turbulent. And the reason I say that is because we’ve got a ton of mixed signals. I mean, the U.S. Is traditionally a closed market. Over the past decade I think we’ve been a leader in increasing fat consumption per capita. Fat products are no longer the enemy. It’s become popular, and the general fat value in our milk has been appreciating. We’ve clearly seen a production response to those signals. Are we at a situation where we actually saturated that market? One would assume that’s going to result in surplus fat values and the need to export more fat. Now, what’s interesting about that is on paper that sounds like that shouldn’t be a problem at all. If you look at the European price, it’s significantly higher than us. The entire world price is higher than us, and you have to wonder is the rest of the world’s consumer habits just lagging hours, and are they moving into an environment where fat is now appreciating in value? People want to consume more butterfat. Dairy fat’s no longer the enemy. And they’re experiencing exactly what the U.S. Has experienced over the past decade plus.

Now, that said, there’s obstacles to that trade, and some pretty big ones. And I mean, not only is it just not an existing trade lane we’re very familiar with. We haven’t been a noteworthy the exporter. We’ve been much more of an importer in a fat deficit market, but add to it that our fat is a little different than the commoditized fat of the rest of the world. For instance, our fat’s whiter in color, so that makes it difficult to interchange for [inaudible 00:12:43] fat or even European fat on the retail shelf, which, again, eliminates some of that higher value, that utilization that’s driving those prices in other parts of the world.

In addition to that, our commoditized products… So right now when you’re a manufacturer, when you’re a producer with a butter churn and you’re getting offered these severe discounts for cream and you’re deciding what products to put up in a weak demand market in creams coming at you, you’re going to put up the standard commodity, and that’s 80% salted. You know it’s storable. We were taught years and years ago to produce 80% salted when the CCC program existed, and that model prevails. And people want to continue to make the product that they know they can sell no matter what by bringing it to the CME spot cash call. As a result of that, we’re not putting up inventory, surplus inventory of the right product. The international market wants 82% unsalted. And I know most of our listeners may know this, but there’s a lot that probably simply don’t understand why Europe prices are so high, yet we’re so bearish. And over time, we will figure out a way to fill that gap, and it starts by shipping 82% unsalted, or AMF, into processing utilization in markets like the Middle East and North Africa.

They bought it before. We’ll fill that demand first. And over the course of the next couple quarters, we’re going to win all of that demand. But there’s seasonality in their demand as well. For instance, we’re just on the back end… I don’t know if it’s complete yet… we’re on the back end of the Ramadan timeframe. We missed all of the buildup for that. This fat situation did not happen early enough for us to capture that large amount of business going into the Ramadan period of time. And so there’s a shutdown. People loaded up beforehand, we didn’t participate, and now that demand is missed. It takes time. All of this takes time. I think the real answer isn’t just with how much butter can we export, or how much AMF can we export, but it’s how much fat can we export? We’re a large exporter of skim milk powder that doesn’t have it. We’re not a big producer of whole milk powder. That only leaves one product, in my mind, and that’s cheese. Good news. We’ve established a whole lot more capacity to process milk into cheese. And I think, Gus, you guys are probably feeling it as much as anybody. The milk trade flows are shifting a bit because of this new capacity in middle America. And how are we going to respond? I assume we’re going to win a lot of export business.

Gus Jacoby:

Yeah. Yeah, I feel that’s a good segue now into the protein side, right? You can’t help when you talk about cheese to talk about a need with higher butterfats that much more today than just a year ago for cheesemakers to fortify, right, if in addition to the fact that we have all these other exterior issues going on in the marketplace that are valuing protein that much more. So Josh, tell us a little bit about what your thoughts are on the protein sector and how quickly that value might rise. And then I think my next question after that is going to be for maybe you, Sarina, about whether producers can tweak their rations to increase the protein accordingly as we go forward here. But Josh, why don’t you answer the first question?

Josh White:

Yeah, I think it’s the same issue that we experience all the time. We’re finding new ways to balance the market. And the reality is the world doesn’t seem to want skim milk powder or nonfat dry milk right now. Demand is extraordinarily weak. Demand for China has been down. That’s pushed the Oceania competitors to produce products that compete directly with our export interest, competing into markets that, generally speaking, the demand is lower for, I mean, how many years running now? Three plus. We’ve all been anticipating an improvement in global demand after so many suppressed years, but I don’t know if it’s coming anytime soon. So that leaves us looking at, well, how do we balance this internally ourselves? If we’ve got a weak fat situation and we’ve got a lot of cheese production, we’re going to need to figure out a way to use those nonfat solids that are being dried today.

And the biggest obstacle we have is the Rocky Mountains, I think. I mean, most of that nonfat produced in the western part of the country. It’s expensive to ship fluid across the country. So that the simple answer, and I don’t think it’s going to be nearly as simple as this, Gus, is do we go back to what we saw happening in the early 2000s to where cheesemakers that can are buying a lot of nonfat dry milk powder and using that to fortify the vat? I don’t think most are really set up for that, and I don’t think most of the new operations, that’s not front of mind.

Gus Jacoby:

No.

Josh White:

So it’s really going to take economic incentives to drive that, and most of the time what drives it is need, desperate time or desperate need to handle something. If we get the export visit, we get to a price where we’re going to export a lot of cheese and these guys can make money by keeping the fat in their own vat, they’ll probably figure out a way to buy those solids. It probably won’t be as simple as I said. I doubt everyone just goes out and buys a bunch of nonfat dry milk, but the market will figure out how to balance those nonfat solids.

Gus Jacoby:

Yeah. But do you think from the standpoint of protein, whether it be fortification for cheese, whether it be higher values in the health and wellness sector, there’d be just protein powders, MPCs, caseinates, casein, all these things, the demand for that seems like it’s pushing up and will continue to do so? We know about the need for more protein and diets for folks that are on various medications to lose weight. So anyway, I feel like protein could really take off pretty quickly. Do you agree with that?

Josh White:

Yeah, I do. I think that long-term undoubtedly. I think that we’ve had some nice debate internally and some really nice input on understanding this GLP-1 movement, what it does for the dietary habits of general markets. It’s not just a U.S. thing. I think that we’re starting to see more of a response in other markets. If Europe and China experience similar health and wellness trends that we do, the need for concentrating protein is going to continue to grow. And there’s no doubt in that, but I also think our ability to balance that supply chain isn’t really great yet, meaning that we can overprice it or overestimate demand. We can quickly back up on inventory, and the U.S. manufacturer process lowers price way faster than demand can respond to those price changes. So there remains a lot of volatility. So what I mean by that is WPC prices are very high right now, and historically high relative to the underlying whey powder component price. That doesn’t mean that we won’t see them weaken at some point in 2025. If we do, that doesn’t mean people don’t want the protein. I think it’s just us figuring out how to manage our supply chain.

In addition to that though, the longer we sustain these massive premiums for products like whey protein isolate… Anybody who can trade down. For instance, our family, I guess it makes my kids feel good to eat protein chips because they can have chips, and it says protein, and it just costs dad a lot of money. But in the end, if you look at the ingredient label, it’s a flexible ingredient deck. They can toggle between different proteins, and that undoubtedly is going to benefit milk proteins at a certain point in time if they remain discounted to whey protein so much. So that’s just another way the market’s going to figure out how to balance this. If milk protein remains very cheap relative to everything else for a period of time, anybody that can upscale to making MPCs versus skim milk powder will figure out how to do so.

But I think those are longer term trends. The good news for this year, to answer your question, is there are people who have expanded that capacity now. And so in 2025, you’re going to see more MPCs than you did in prior years. So people have anticipated that demand growth or made those right decisions on investing the capital, and so we’re going to get some of that attrition this year. So a little bit less of a need to dry powder, a little bit more value in the proteins. And there’s other examples, UHT products, other things like that, that are going to continue to consume [inaudible 00:20:21] solids that previously went to power.

Gus Jacoby:

All right. I’m going to throw it back at Sarina. And I guess my first question is, as fat starts to lose value and protein starts to gain value, what do you think the average producer will do considering that? And how able are they to convert to a ration that promotes kind of a different ratio of components, so to speak?

Sarina Sharp:

So the market’s been signaling to producers for several years to produce more butterfat. We’ve also had spikes in the protein price, but they just haven’t been as consistent. So I think producers absolutely have been focused on producing butterfat. They like producing more protein as well, but they’ve put more effort into producing more butterfat. But I think that in their breeding decisions, so what genetics are we focusing on, and in their ration decisions, those do tend to move up together. The ways that dairy producers have changed their rations over the past years to improve butterfat has improved milk production as well. I don’t think they’re going to just back away from that, except for where it’s very expensive to maintain that kind of ration. I get the sense from dairy nutritionists that it is a little easier to feed for butterfat than it is to feed for protein. So I’m not sure how much of a shift we’ll see. I think that producers are just going to continue to focus on making the most milk and the most nutrients. We might see a little pullback in how much butterfat components gain on proteins, but I don’t think it’s going to be dramatic.

Ted Jacoby III:

Sarina, I had a dairy farmer make a comment to me the other day that stood out to me. And they said basically even at $2 a pound, butterfat is still one of the most valuable components in milk. And so the decisions they were making at $3.50 don’t change at $2 a pound. Is that a fair statement?

Sarina Sharp:

I think that’s true. That dollar amount might move around if feed were extremely expensive and the specific ingredients that you keep in the ration in order to maintain butterfat, but that’s just not the world that we live in right now. So I don’t see producers just trying to cut costs and being willing to kill their butterfat. I think that they’ll want to continue to see that butterfat number be very high and just kind of boost their milk checks. It’s less of a boost than in the past, but higher is higher, and they’re going to strive for that.

Ted Jacoby III:

Makes sense. All right. We ready to switch topics? Everybody, we will be right back after these messages.

If you’re a dairy producer or a cooperative looking for a better market for your milk, or you’re a food manufacturer hoping to strengthen your dairy procurement or risk management strategy, please reach out to T.C. Jacoby & Company. We’ve been building worldwide relationships with all sides of the dairy supply chain for over 75 years. Tap into our expertise for unlimited free consultive support, and we’ll develop a sales or procurement strategy that hits all of your targets. Please visit us online at www.jacoby.com to get started. Thanks for listening to The Milk Check. Back to the show.

Okay. Mike, I got a question for you. You shared with me a news article that came out recently regarding studies at Cornell about avian flu and how it’s showing up in cheese that was not from pasteurized milk. Tell us a little bit more about that study and what you’ve been hearing.

Mike Brown:

Well, it’s been interesting. That study was actually commissioned by FDA, but it was done through Cornell, and they looked at raw milk cheeses from different places across the country. From what I’m learning from folks like the cheesemakers, a lot of that production actually is concentrated outside of the upper Midwest, a fair amount in the Northeast. Small specialty makers are making those kinds of cheeses. But what the study really found was that there are indications that you do have some virus in some of those products that would withstand the normal 100-day or so curing that they require for raw milk cheese to sell it. So there is concerns. When they do these studies, of course, the universities, they’re always peer reviewed. They’re very careful before they make final conclusions, but the studies indicate that there may be issues with raw milk cheese, which means that we will see whether it’s heat-treated, and there’s still some questions on how that may be impacted.

We do have a fair amount of commercially-produced heat-treated cheese strictly for aging, but as far as for a lot of your specialty small craft cheeses that are raw milk, there could be some consequence. So far no action has been taken, but certainly concern that that could be the case. I know historically we see folks like DA err on the side of caution. With all the changes going on right now, it’s much more difficult to predict what the indications may be from what they’re discovering from these studies, but I think it’s pretty clear that there’s enough indication that there could be some live virus in some of these raw milk cheeses, that it’s going to create some further research and I think maybe some regulation. It’s a little hard to know yet. As we all know right now, FDA is in a lot of upheaval, and a lot of quick decisions simply just aren’t happening. Good or bad, they’re not happening.

Ted Jacoby III:

Mike, drawing on your Kroger days, what do you think the market reaction to that news will be? Do you think it has a significant effect on demand for cheeses, and especially raw milk cheeses? Do you think that it’s likely that the market’s going to not really change much?

Mike Brown:

Well, the market for raw milk cheeses is different than for raw milk because people view raw milk cheeses as safe because of the aging. And they haven’t had a concern and said, well, this takes care of it. I’m going to buy year old cheddar that’s from raw milk. I’ll be fine. And there’s certainly been products marketed successfully that way. Kroger, they want to keep their consumers happy. They also like to get litigated, so they’re going to look at both sides of that issue. At this point, from what I’m understanding talking to my friends there, it’s too early for them to make any kind of decision what they’re going to do. They tend to follow FDA guidance, and if FDA makes some changes, then I think you could see some changes at the store. Until that happens, probably not going to happen.

Ted Jacoby III:

And the worst of it it feels to me like would be maybe some of those raw milk cheeses in the deli case get pulled out of the deli case, but it’s not going to affect the dairy case where almost all the cheeses in the dairy case are made from pasteurized milk, and that’s where the big volume is in the cheese business. Is that a fair statement?

Mike Brown:

Yeah, absolutely. Yeah, it’s a tiny part of the market. In fact, a lot of those products have trouble keeping shelf space because they just don’t turn over fast enough to warrant the space in the store. A lot of those specialty products, they have to work really hard. You have great successes in some that grow over time. Certainly, some of the Sartori products are a perfect example of that, but a lot of other ones, that’s a market that changes constantly because that demand can move quickly up and down, depending on those products that tend to be a bit trendy. Certainly, social media has made more of that the case. Some of them stick, and some of them don’t. That’s just kind of the way it’s always been in that market. It’s finicky.

Ted Jacoby III:

Cool. Thank you. Sarina, since we’re on the subject of avian flu, what’s the latest on avian flu? It sounds like California’s kind of recovering from it now. Their milk production’s coming back. Are there any hot spots right now when it comes to avian flu?

Sarina Sharp:

This is probably not what you expected to hear. They found avian flu in a sheep in Northern England, so that is a new watch spot. It’s in one. It’s not in the cattle there, but that’s news for sure. Closer to home, we are doing more routine testing in places where the virus had really slowed down and we weren’t regularly testing, and they did find a positive test in Stearns County, Minnesota, which is the heart of the dairy industry there. This is a herd that had had the flu last summer, and so now it’s unknown if this means the flu is back in that area or if it’s been circulating in that herd. And so now we’ve got a positive test, but this is sort of leftover from before. As is always the case with new diseases of these types, just let’s not jump to conclusions, but that’s the latest.

And then in California, yeah, most herds have already had it. Their milk production was still down in February compared to the year before after adjusting for leap day. Cows there continue to feel very stressed after six months of going through a lot. So we are seeing those milk production deficits get smaller, but there’s still an impact to milk production in the largest dairy states. Bird flu is not in the rearview mirror. There are a lot of places that haven’t had it. Hopefully, they don’t get it, but that’s something that we should just be watching for as well. About half of dairy cows in the United States live in a state or an area… There’s a couple states where we had it on this side of the state, but not on this side. About half of dairy cows live in areas that have not had the bird flu yet.

Ted Jacoby III:

Oh, wow. Do we have clarification as to what the reinfection risk is at the moment? I’m still a bit confused on whether or not we think after a period of time. Or does it require some type of mutation? Are cows vulnerable to reinfection?

Sarina Sharp:

I am out of my zone of expertise here. I do not want to misspeak. I do know that herds have gotten it that have had it before, but I don’t want to say authoritatively that it’s the same cows.

Ted Jacoby III:

Got it. It started in Texas, oh, gosh, how long ago? Maybe about nine months ago?

Sarina Sharp:

Exactly a year ago was when we figured out that it was the bird flu. There had been sick cows since about late February last year, and then it took us about a month to track down exactly what virus we were dealing with.

Ted Jacoby III:

For those farms that have had a year of data, how are those cows faring today? Have most of them come all the way back? Are those farms pretty stable, pretty back to normal now? What was the recovery?

Sarina Sharp:

So it seems to me that there are different strains of the bird flu. California was hit so much harder than other places. So a lot of dairies that I work with more closely in the Midwest, they would say, “I would see my milk production down by a third. Maybe a whole herd average over a couple month period is only down 10%, because not every cow gets it, and there’s just been a variety of responses at the individual cow level.” In California, some herds lost half their milk production for a sustained period of time. We’re talking about two different strains of the virus. There are officially two strains of the virus that can jump from birds specifically to cows. So the strain that we first discovered in Texas is the one that we have seen in most places, but then they found a new strain in Nevada over the past few months. That’s a different identified flu virus, still from birds.

So I just don’t want to say too much categorically. I’m not a veterinarian. It seems like the impact has been different in different regions, which suggests that it’s different strains, but then also in California, those cows got it at the tail end of a hot summer. They had a lot of accumulated stress already, so maybe their immune response just wasn’t as robust as getting it in March in Texas when you’ve come through the kind of easy winter condition period. So there’s just a lot of factors. It’s hard to say. In terms of long-term impact for the cows that have had it, there’s a number of cows that were cold or failed to conceive, so we don’t get a milk production impact from the cows that suffered the worst from this virus. So the ones that were able to withstand it the most, they do come most of the way back, some of them all the way back, in milk production, but there are some lingering drags on milk production. It looks like a bell curve, like a huge impact on milk production as they’re fighting the virus, as they’re feverish, but it has a long tail.

Ted Jacoby III:

Okay. Left field question. I know in Texas a lot of the cows are hybrids, Jersey-Holstein cross. Is that the same in California? Or are they just Holsteins in California? Do you know? Was there a difference in the way different breeds of cows were affected?

Sarina Sharp:

So there’s plenty of Jerseys, crossbreeds, and Holsteins in California as well. I think the herd mix would look very similar. I have heard anecdotally that Jerseys suffer a little less badly than Holsteins, but I can’t say with any confidence that that’s the case.

Ted Jacoby III:

Generally speaking, don’t Jerseys have a reputation for being a little bit of a heartier breed than a Holstein and tend to withstand things like that better?

Sarina Sharp:

I think the way that most people end up judging that is the most vulnerable time from a health standpoint for a cow is just after she freshens, right after she’s had a calf. And we just have fewer health issues for Jerseys than for Holsteins typically. Labor and delivery is stressful for everyone involved, but a Jersey is making a much smaller calf than a Holstein relative to her body frame. So that’s a less stressful [inaudible 00:32:51].

Ted Jacoby III:

Oh, okay. Makes sense. Makes sense. And then a last question on avian flu. The avian flu that’s been causing egg prices to go through the roof, is that the same strain that is being found in dairy cows?

Sarina Sharp:

Generally no. At times in the past, yes, but right now we have avian flu circulating in a lot of areas that have both poultry and dairy, and it so far has not seemed to impact the cows in that area.

Ted Jacoby III:

Makes sense.

Sarina Sharp:

But in those same areas, we’ve had sick poultry and sick dairy cows at the same time in the past. So it seems like the answer is no for right now, yes in the past, who knows going forward.

Ted Jacoby III:

Cool. Thank you. Well, I think we covered quite a bit today. Sarina, thank you so much for joining us. Mike, thank you for joining us. Josh.

Sarina Sharp:

Thanks for having me.

Mike Brown:

Appreciate it. Thanks everybody.

Ted Jacoby III:

Thanks everybody for joining us today. I hope you enjoyed this podcast. I look forward to talking to you again on our next podcast, and I look forward to seeing everybody at CheeseCon in April as well as the ADPI show in Chicago. Look forward to seeing you guys. Goodbye everybody.

Outro (with music):

We welcome your participation in The Milk Check. If you have comments to share or questions you want answered, send an email to [email protected]. Our theme music is composed and performed by Phil Keaggy. The Milk Check is a production of T.C. Jacoby & Company.

Gus Jacoby:

All right. See you.

Ted Jacoby III:

All right. Thanks everybody. Great job, guys.