Cows are under severe pressure to keep up with the global demand for dairy products

(Bloomberg) — Heat and drought are putting serious stress on dairy cows around the world, drying up milk production and threatening the long-term global supply of everything from butter to infant formula.

Most Read From Bloomberg

Dairy volumes are expected to fall by about half a million metric tons this year in main source Australia as farmers exit the industry after years of stress from heat waves. In India, small farmers are considering investing in refrigeration equipment which they have to expand to afford it. Producers in France had to pause making one type of high-quality cheese when dry fields left grass-fed cows with nowhere to graze.

Some of the world’s largest milk-producing regions are becoming less welcoming to these animals due to the harsh weather brought about by climate change: Cows don’t produce much milk under the pressure of scorching temperatures, and arid conditions and storms compound the problem by withering or destroying the grass and other crops they eat.

In the United States alone, some scientists estimate that climate change will cost the dairy industry $2.2 billion annually by the end of the century — a financial blow that is not easily tolerated by a sector already struggling to make money. If greenhouse gas emissions remain high, one study estimates that the dairy and meat industries will lose $39.94 billion annually due to heat stress by the same date.

At the same time, a bloated middle class in many developing countries is adding to the demand for dairy products, while policies aimed at helping the environment are discouraging farmers in some areas from expanding their production. This collision portends price hikes and a possible shortage of staples on the grocery list such as cheese or yoghurt.

“Climate change is adding to fluctuations or variability in your supply, and the detrimental effect of that can increase food insecurity,” said Marie Lidman, global dairy strategy expert at Rabobank.

Cows under pressure

Despite costly efforts to keep their livestock cool, dairy farmers cannot escape the effect of heat on their herds.

Tom Barcellos, who has been raising and milking animals for 45 years in Tipton, California, has a complex cooling system on his farm. Complete with fans and sprinklers, it even plots around the direction of the wind. But he finds that warm nights can drain production.

“If your temperatures are higher in the evening and the pressure is a little more on the cows, there is a chance you could lose 15%, or maybe even 20%, in extreme cases,” said Barcelos, who owns 1,800 cows.

It’s a similar story on the other side of the world, where Sharad Bhai Harendra Bhai Pandya and his brother own more than 40 cows in the western Indian state of Gujarat.

Pandya shelters her livestock in a shed equipped with a sprinkler system that pumps water and turns it into mist. But he still sees milk production on his farm drop by more than 30% during the sweltering summer heat.

Rising temperatures are likely to make these conditions a reality for more farmers for longer periods of time. This makes investment decisions difficult.

Rano Bhai Bharvad, a dairy farmer in India, does not have a home for his flock of 35 animals. His livestock have only the shade of the neem tree to fend off heat stress.

“I can’t build a barn for my cattle,” said Bharvad, who supports his family of 15 from his farm earnings.

Bharvad is not unique: India is by far the largest producer of milk in the world, accounting for nearly a quarter of all supplies. Huge amounts of it are produced in large part by tens of millions of small farmers who keep modest numbers of animals.

Amol Deere, which buys milk from Bharvad and other farmers like him, is responding to difficult conditions by taking steps to protect supplies.

“During the winter when production is greater, we keep the extra milk [the form] RS Sodhi, Managing Director of Gujarat Cooperative Milk Marketing Federation Ltd, which owns the Amul brand, said:

australia drought

Australia, the driest inhabited continent on Earth, offers an overview of how the global dairy industry could crack under the pressure of climate change.

The country was once a heavyweight in business, but milk production has trended in sharp decline and its share of the global dairy trade has fallen from 16% in the 1990s to around 6% in 2018.

This decline has been caused by a succession of severe heat waves, including droughts that lasted from 1997 to 2010 and another from 2017 to 2020. The most recent of which was the worst ever in the country, and the pressure on water prices and livestock feed slashed farmers’ profits. These difficult working conditions added to the exodus from the sector: the number of dairy farms downstream shrank by about three-quarters from 1980 to 2020.

Now, dairy farmers are still at risk of punishing the weather, but new pressures have been placed on it which is driving more of them out of business. In 2022, milk volumes in Australia are expected to decline by more than 4% to 8.6 million metric tons, according to the USDA.

The USDA says this reflects dry conditions in key milk-producing regions, but it also reflects challenges associated with labor shortages, including some farmers choosing to switch to beef cattle production, which is less labour-intensive.

Government policies, too, could end up weighing on global dairy production. In neighboring New Zealand, the world’s largest exporter of dairy products, farmers will start paying a tax on agricultural emissions by 2025. While dairy farmers have done a lot to mitigate emissions, necessities such as natural manure and fertilizer and feed production still make them big emitters. Greenhouse gases. Farm groups are sounding the alarm that the tax could prompt dairy producers to reuse their land for forests or other uses.

French cheese

The challenges facing dairy farmers are already affecting the availability of some products. In France, a type of fine cheese called Salers was not produced this year. It must be made using the milk of grass-fed cows – a snag when pastures have been devastated by this year’s heat wave.

While the lack of fine cheese is not an emergency, similar production issues can cloud the broader market amid extreme temperatures.

“If you’re talking about a five- to 15-year time horizon, we will likely see production peaking and settling in water-stressed areas,” said Nate Dunay, director of dairy market insight at StoneX Group Inc.. On the 15-30 year horizon, we can see a downward trend in production in those areas.”

All this could mean higher prices or even shortages of some dairy products.

Melvin Medeiros, a farmer in the largest US dairy producer, California, says severe weather is likely to reshape farming operations in his state over the next decade. He expects to see fewer cows and shrinkage of arable land – a dynamic he attributes in part to lack of government intervention.

“We have failed to address the situation that has been going on for more than 50 years,” Medeiros said. “Now our backs are on the wall, and we have no other choice, but to reduce production or do something to address the current situation.”

– With assistance from Sybilla Gross, Diego Lasarte, Andrea Bossi, Vivian Iroanya and Megan Durisin.

(Updates with details in paragraph 15)

Bloomberg Businessweek’s Most Read

© Bloomberg LP 2022

Leave a Comment

Your email address will not be published. Required fields are marked *