California looks to milk China’s growing dairy demand

 

A growing demand for milk and cheese in China has the potential to bring California’s beleaguered dairy industry back to life – and with it, renewed concern about its damaging effects on the environment.

As China’s middle class grows, so does its penchant for dairy products such as milk, cheese and yogurt. U.S. government data show that Chinese demand for dairy products is growing rapidly. For instance, between 2011 and 2012, imports of skimmed milk powder grew by 49 percent and are expected to increase an additional 18 percent this year.

And although China is trying to build its nascent dairy industry to meet this demand, it relies heavily on imports of high-protein feed. That includes one of California’s most water-intensive crops, alfalfa.

“Exports (of alfalfa) to China are definitely increasing,” said Daniel Putnam, an agronomist at the University of California, Davis. “We’ve seen a pretty dramatic rise since 2006, and I think all expectations are that it will probably increase again this year.”

But this news, and the already-documented toll California’s large dairy farms are having on air and water quality in the Central Valley, is making many environmentalists nervous.

China is quickly building its own dairy industry, which experts say is in every way as modern and high-tech as California's.

Credit: Serene Fang/Center for Investigative Reporting

“Definitely, there’s a carrying capacity for dairy, and it’s air quality,” said Brent Newell, legal director for the Center on Race, Poverty & the Environment, an environmental justice organization that focuses mostly on the San Joaquin Valley. “You can’t keep sticking more dairies in the San Joaquin Valley in order to export cheese to China.”

California is the nation’s largest dairy-producing state with nearly 42 billion pounds of milk produced in 2011, or 21 percent of the nation’s total milk output, according to the Dairy Institute of California’s most recent economic report in 2012.

That success has been attributed largely to the state’s model for dairy farming, which maximizes the number of cattle per farm while minimizing the need for on-site food production.

“The traditional dairy farm model in the rest of the country is one where dairy farmers grow a considerable amount of their own feed,” said Bill Schiek, an economist with the Dairy Institute, a dairy processors trade group. In California, he said, dairy operators don’t grow grain or hay on-site but bring it in. “It’s a very specialized operation.”

But it’s a model that environmental scientists say has wreaked havoc on air and water quality. Critics and scientists point to studies showing the dairy industry, with roughly 1.8 million cows, is the single largest contributor of smog-forming volatile organic compounds in the valley’s already-polluted air.

Government and academic research indicates that gases emitted from fermented feed, cows and cow waste combine with other free-floating particles in the atmosphere to form smog.

The dairies also have been implicated in the pollution of groundwater. Research has shown that nitrogen produced by cow waste can seep through soil into groundwater, contaminating water sources and, in some cases, making the water undrinkable.

For instance, dairy manure, which is the largest source of animal manure in California, accounts for more than 200,000 tons of nitrogen every year, much of which ends up in groundwater, according to research by Thomas Harter, a hydrologist at UC Davis.

Nearly 10 percent of public water wells in California have more nitrogen than the government deems acceptable, while in some areas, more than one-third of private wells exceed that level, according to the UC Davis study.

But over the past five years, the once-booming dairy industry has begun to slow. According to the California Department of Food and Agriculture, more than 300 dairies have gone out of business in that time period.

That trend, said UC Davis agricultural economist Leslie Butler, is the result of high feed costs and a vulnerable industry model, which relies heavily on cheap imported grain.

In the past few years, feed prices have skyrocketed, the result of competition with the biofuels industry, a severe drought in the Midwest and increased shipping and transportation costs.

But not all hope is lost for the battered industry, said Ross Christieson, a consultant for the California Milk Advisory Board, a trade group for the state’s roughly 1,600 dairy farmers.

The California dairy industry is poised to provide its products to China, whose own nascent industry can't yet meet the growing demand.

Credit: Serene Fang/Center for Investigative Reporting

“China has been going through a major economic growth boom over the last 20 years, and that has fueled consumption of dairy products,” he said. “We know a lot of these markets will grow ten- or twentyfold over the next few decades. By being there now, we can be at the start of the growth.”

And it’s this potential for growth that has Newell and other environmental activists concerned.

“We’re bearing the burden of all this pollution for a product that is being exported,” he said. “It is fundamentally unfair and unjust to burden low-income communities in the San Joaquin Valley with all of this pollution.”

And shipping the state’s limited water supply, in the form of alfalfa, is a concern to many as well.

Robert Glennon, a professor at the University of Arizona with expertise in water law, argues that it doesn’t make sense to be “using so much water to send such a low-value product to China.”

But while Chinese demand for dairy is increasing by double-digit percentages every year, according to the U.S. Department of Agriculture, Newell and others say it’s also likely temporary. That’s because Chinese entrepreneurs are trying to meet the growing demand by starting their own dairy farms.

That could reduce demand for California dairy products, and because China has a limited amount of arable land and water, Chinese farmers would need to import more feed, including water-hungry alfalfa.

And that could bring California’s dairies to the same place they are today – struggling to pay the high cost of feed.

This story was edited by Richard C. Paddock and copy edited by Nikki Frick and Christine Lee.

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