Dairy losses hurting Okeechobee County economy

OKEECHOBEE — In December the U.S. Bureau of Economic Analysis (BEA) released information on the size of every county’s economy in the United States with industry detail for the first time. The BEA had previously estimated the GDP (gross domestic product), which is the value of goods and services produced each year, of states and metropolitan areas, but never individual counties. The data allow citizens to take a peek at not only how the economy is doing in their county, but how individual industries are performing within their county as well.

The data released by the BEA show that Okeechobee’s GDP shrunk by 8% from 2017 to 2018.

The retail and construction industries both rose by 6% in 2018, while real estate also saw a bump, rising 3%. However, the industry that took the biggest fall in 2018 in Okeechobee was agriculture. From 2017 to 2018, the agriculture industry in Okeechobee fell by 56 percent. Almost all of that can be attributed to the dairy industry, which has struggled in recent years not only in Okeechobee, but all over the country.

Oversupply has become one of the major problems facing the industry. Each year the average dairy cow is able to produce a little more milk thanks to advances in feed and other efficiencies. That increase usually outstrips consumption. According to the United States Department of Agriculture, milk consumption has steadily decreased in the country year after year. Consumers are increasingly turning to milk alternatives, such as almond milk or soy milk, or simply not drinking milk at all. According to the USDA, Americans drink 40 percent less milk than they did in 1975.

This increase in production and decrease in consumption has driven milk prices down and put financial strain on dairy farms around the country.

Dean Foods, the largest dairy producer in the U.S., filed for Chapter 11 bankruptcy in November 2019. Dean Foods bought the McArthur Dairy brand back in 1980 and still purchased milk from about a dozen independent dairy farms around Lake Okeechobee, including McArthur Farms.

In August 2018 the industry received some relief from the federal government when the USDA announced it was planning to buy $50 million worth of U.S. milk and give that milk to food banks through The Emergency Food Assistance Program (TEFAP). The USDA stated it would buy the milk with the purpose of encouraging “the continued domestic consumption of these products by diverting them from the normal channels of trade and commerce.”

Ongoing trade disputes between the Trump administration and other nations involving agriculture products have also kept prices stagnant over the past two years.

However, on Jan. 15 the United States and China signed what is being called the

“Phase One trade agreement.” In the agreement China has agreed to improve the regulatory pathway for the U.S. dairy industry to export things like milk and infant formula. China also made promises of increased purchases of U.S. agricultural goods, including dairy.

If China fulfills its commitment to purchase those large quantities of agriculture products, the exports will still be subject to a round of retaliatory tariffs that were placed on dairy products by China during the trade dispute. The removal of those tariffs was not included in the Phase One trade agreement.

“America’s dairy farmers have been disproportionately harmed by China’s retaliatory tariffs, and we cannot ask our farmers to continue operating under this financial uncertainty,” said Randy Mooney, chairman of the National Milk Producers Federation, who joined President Trump and administration officials at the White House signing ceremony on Jan 15. “We appreciate the hard work invested by both the U.S. and Chinese governments, but we urge China to swiftly lift all retaliatory tariffs against U.S. dairy products and work with U.S. suppliers to fulfill their purchasing commitment.”

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