Woman buying milk.
February 22, 2018

What To Do About Shrinking Quality Premiums

 |  By: Dairy Talk

With a glut of milk production just about everywhere, premiums of all types are coming under pressure.

Volume premiums and milk hauling subsidies are pretty much a thing of the past. Even milk quality premiums, which incentivize lower somatic cell counts (SCCs) and improve shelf life and manufacturing efficiencies, are under scrutiny.

In Arizona, processors simply expect high quality milk and are refusing to pay any quality premiums whatsoever. “Our handlers are wanting quality milk, and won’t take anything with SCCs greater than 250,000 cells/mL,” says Bruce Tonkin,  United Dairymen of Arizona’s (UDA) quality assurance field supervisor.

To meet that demand, UDA took matters into its own farmer-led board room.  UDA developed a program a few years ago that first deducts 20¢/cwt from every producer to fund its milk quality program. Dairy farmers can then earn that back, and additional premiums, by meeting increasingly better quality standards.

To get the first 25¢ back, a farmer’s milk must meet these minimum standards:

• Standard plate count below 15,000.

• Lab pasteurized count below 250.

• Pre-incubation count below 30,000.

• SCC below 300,000.

“Ninety-five percent of our 75 producers meet the 25¢ premium requirements,” says Tonkin.

To earn an additional 8¢/cwt, SCCs must be less than 200,000 cells/mL, and to receive another 7¢, SCCs must be below 150,000 cells/mL. About three quarters of UDA members meet the 200,000 cell level in the drier, winter months.  It’s a bit tougher to reach in late summer, when temperatures and humidity levels soar in the Arizona desert climate, says Tonkin.

The program was ratcheted in. Before it was started two years ago, UDA’s SCC limit was 400,000 cells/mL. With the quality premium program, SCCs were first reduced to 350,000 cells/ml, and a year ago to 300,000 cells/ml.

When the program was first instituted, farmers understood the need for the program but being farmers, still grumbled. “Once they understood they could make a little by getting under 200,000 SCC, there was better acceptance of the program,” says Tonkin.

Most producers worked to ensure they achieved the minimum quality levels to earn back their 20¢/cwt deduction. But the 8¢/cwt premium to get below 200,000 cells/mL also proved to be a strong incentive to pay attention to milk quality. UDA’s current co-op average SCC is now running about 175,000 cells/mL.

One thing farmers tend to forget is that the cows themselves will reward farmers with more milk at lower SCC levels. Heifers seem especially sensitive to higher somatic cell counts as are higher producing old cows. Note: If you haven’t read Ron Erskine’s Milk Quality Column in the February issue of Dairy Herd Management, it’s worth taking a look at.

For example, cows with a first test day linear score of 4 or higher (200,000 cells/mL) produce nearly 1,600 lb of milk less per lactation. That’s about 5 pounds of milk per day. Even if milk is priced at $13/cwt, that’s a loss of 65¢/cow/day, and over a full lactation, roughly $200/cow/year. These high cell count cows also have much higher risk of clinical mastitis.

As Arizona dairy farmers and your cows will tell you, there’s more than one way to skin the cat when it comes to milk quality.  Talk to your co-op board members. Maybe you can do both.