Southern Nevada’s last milk producer could close

Nestled beneath the mountains on the horizon of the Amargosa Valley is a sight uncommon in the southwest: vast acres of green grass full of spotted cows.

The organic cows of Ponderosa Dairies roam the irrigated fields freely, munching on almond husks, discarded fruits and vegetables from Las Vegas casino buffets and triticale – a land-grown wheat-rye hybrid – all through of the day.

Nearby, conventional dairy cows roam their large pens and sit in the shade to hide from the desert sun.

Twice a day the cows are taken to one of three milking parlors where they each produce approximately 85 pounds of raw milk from the two sessions.. Their conventional, organic and A2 milk can fill a tank truck in an hour and a half. It is then shipped out of the 24-hour operation, where thousands of gallons per week are sent to northern Las Vegas and California processing plants.

About 10,000 dairy cows make up Ponderosa Dairies, the last remaining milk producer in southern Nevada. But the frequent Clark County School District dairy source fears inflation and industry consolidation could bankrupt it.

General manager Ed Goedhart said the problem became more serious in April, when his sales team informed him that Meadow Gold – the north Las Vegas milk processor brand owned by the national cooperative Dairy Farmers of America – had thrown a spanner into their next school. milk supply.

In a letter to state regulators, Goedhart said Ponderosa officials were told the farm’s milk would have to be priced in a different class “to be competitive.” This change in classification would lower the price paid to Ponderosa by almost 15%, he said.

This news comes at a difficult time for the dairy. Three years ago, the COVID-19 pandemic suddenly shut down the dairy operation and the 42 tank truck loads, or about 207,555 gallons, that went to schools each week. But since the cows must be milked regularly or they run the risk of drying up, Ponderosa dumped thousands of gallons of milk into a property lagoon.

More recently, fuel costs and inflation have made dairy operations more expensive.

“We’re already losing money,” said Goedhart, a former Republican congressman who represented the area between 2007 and 2012. “Now you’re going to go from a drip to a gushing artery. very long life.

The minimum milk price system

Milk pricing has been regulated since the 1930s by federal milk marketing ordinances. Market systems create a geographically defined area for fluid milk demand, setting a minimum price based on the end use of the milk.

The orders — set by the U.S. Department of Agriculture and administered locally by the Nevada Department of Agriculture — set prices based on future product type. For example, fluid milk is the highest price class due to its perishable nature, while lower classes such as cheese or powdered milk may be cheaper in part because of their longer the duration of the conversation.

Regulators then assess the total revenue from milk purchases by processors in a market to formulate a weighted average price. Prices change monthly due to the seasonality of milk supply and demand, Nevada Department of Agriculture Director JJ Goicoechea said.

The fluid milk market is volatile, Goicoechea said, “because input costs fluctuate wildly.” Without regulated pricing, he said, “you could see a lot of variation from market to market.”

In the Southern Nevada Marketing Area, milk must be sold at the USDA Minimum Price that month plus $1.40 per cwt (a unit of weight equal to 100 pounds). In May, for example, that meant processors in southern Nevada had to buy fluid milk from producers for $20.97 a hundredweight.

An important caveat to the system is the ability of dairy cooperatives to circumvent these price regulations.

Unlike other processors, cooperatives can pay their producer members as they choose and are not required to pay a minimum market price. Milk from cooperatives is still graded by type and pooled like milk from other sources, but cooperatives can establish private agreements on the price of raw milk and transport costs.

“One thing to remember is that the DFA is a cooperative. As such, they can purchase milk from their own members if desired,” Goicoechea said. “These members actually get a share of the profits in the end product – in the milk, in the ice cream, in whatever comes out the back. That’s when the prices get a little bit different. Then, if I own the factory, I don’t have to sell my milk to my own factory for the same dollar amount.

Dairy Farming in Southern Nevada

Several dairy processors have been established in the region for decades. Anderson Dairy operates in Las Vegas. Dean Foods, once America’s largest milk processor, ran its plant in North Las Vegas near the Las Vegas Motor Speedway from 2004 until May 2020, when the company sold 44 of its frozen and fluid facilities to subsidiaries of DFA in bankruptcy proceedings.

Last year, DFA members produced and processed 65.4 billion pounds of milk from co-op members and others involved in their consolidated operations, nearly 30% of total milk production. in the United States, according to its 2022 financial results.

The average price paid to producers of the DFA cooperative in 2022 was $25.53 per quintal. Meanwhile, the average minimum price for fluid milk in southern Nevada last year was around $25.07, according to information from the Nevada Department of Agriculture.

A DFA spokeswoman took issue with Goedhart’s characterization of the pricing, but said she does not comment on competing bids and declined to answer further questions.

Goedhart sees the increasing consolidation of the industry as an opportunity for processors to exercise more control over milk producers by putting them down or choosing a dairy farmer in the co-op even if they are further away.

“They almost dictate, at will, the complete abandonment of any sense of corporate or community responsibility in the way they conduct their business,” he said. “And forget the victims and who falls by the wayside.”

Yet Ponderosa Dairies is not a small business and is also in a cooperative. The 3,000-acre dairy opened in 1994 and is owned by California-based Rockview Family Farms. The majority of its production is shipped to a processing plant in California.

Goedhart said he was fighting for the CCSD contract because he wanted certain dairy operations in Nevada to be more sustainable and to reduce fuel costs associated with the 280-mile haul to the California processor. This contract represents between a third and 40% of the dairy’s production.

“You can’t just turn the switch back on”

Goedhart has run Ponderosa Dairies since about 1996 after leaving corporate marketing for Michigan automakers. He expressed concern about the impact these prices could have on the operation of the dairy, including a possible closure.

About 200 people work on the farm as farm hands, technicians, truck drivers and other roles. Many live in the Amargosa Valley, in furnished rentals or motorhomes parked next to the dairy, or in nearby Pahrump.

The subject also reflects the challenges of food production. The pace of consolidation in the dairy sector far exceeds the pace of consolidation seen in other agricultural industries, according to a July 2020 USDA study. Meanwhile, the Government Accountability Office has found that investments in processing facilities can benefit farms within a cooperative while reducing market access for farmers outside of it, according to a report. of 2019.

Goedhart hopes the issue can be resolved and wants to keep the stable local contract found in the school district. He took the matter to the state Department of Agriculture, but Goicoechea said he had not yet been “duly noted” to launch an audit investigation to find out if the marketing order was being followed. .

“There needs to be a fair way to treat others to bring this local, sustainable product to give consumers that opportunity and keep this part of the economy alive and thriving,” Goedhart said. “Because once a place like this is closed, you can’t just turn the switch back on.”

McKenna Ross is a corps member of Report for America, a national service program that places reporters in local newsrooms. Contact her at [email protected]. Follow @mckenna_ross_ on Twitter.