Blood is flowing in the California dairy industry. The state’s No. 1 industry is struggling. In the last year alone, 109 dairies in California have gone out of business --- big, small, multi-generational, new and old.
“The biggest challenge I see ahead for the dairy industry is, do you allow things to move along as they have been or do you make changes?” A.G. Kawamura, secretary of the California Department of Food and Agriculture, asked Western United Dairymen attendees last week.
What has made the California dairy industry successful in the past might not be what makes it successful in the future. “You have to ask yourself whether the box you built for yourself is the right one to stand on or should you build onto that box or a different box,” noted Kawamura.
“You need to decide if you are in the supply-management business or demand-creation business,” challenged Kawamura.
Kawamura suggested for the dairy industry to take lessons from other commodity groups in California. He points to his experience with the strawberry industry. When he was a strawberry grower, he said for years they would grow strawberries and hope to get a good price for them, and were happy to just get rid of the strawberries. “It’s a lousy marketing strategy to just dump product on the market,” he noted. The strawberry industry invested a lot of money into creating and building demand for its product and now the strawberry industry is thriving.
A lot of opportunities are available to the dairy industry, but the industry has to decide what business it is in.
“I’m not here to market your products, but I am here to help you,” he explained.
Kawamura pointed to pending legislation in California that would ban sports drinks in school. “Why doesn’t the dairy industry step up and take advantage of this opportunity. The dairy industry could bolster the athletic departments and make agreements for milk to be made available to school athletes.”
Another potential opportunity is the food stamp system. California ranks 51st in food stamp redemption. There is a large opportunity for dairy products through better utilization of this program.
Look for other clusters of business or industry’s you can form partnerships with, he said.
If the industry does not move from supply management into demand creation there will always be a crisis, he noted.
And, he said if you think consumption is flat, “I don’t buy that,” he stated. “With the right kind of marketing you can grow consumption.”
“I don’t see enough new market development, new product development or development of new opportunities,” he says. “The dairy industry can’t afford not to be better marketers.”
It’s time to move dairy products into a better mind space with the consumer. The dairy industry can take lessons from other commodity groups such as almonds, peaches, avocados and strawberries that have turned themselves around.
Strive for new things and push forward. “I know it’s hard to push forward when you’re comfortable and particularly right now when you’re in a survival state, but the industry needs to change.”