Written by The Business Journal Staff
Peter Belezzuoli has seen the good times and bad times for the Tulare and Kings County dairy industry. His family bought Hanford’s Overland Stockyard in 1959, and he has been there through all of it. The auction yard, one the world’s largest, hosts cattle sales that offer a glimpse inside the region’s No. 1 business.
Right now there is “some serious concern” over what he sees out there.
In the past month the yard has hosted four large dairy dispersals — long time family-owned dairies throwing in the towel. That includes the Simoes Dairy west of Tulare, which will sell 1,200 Jersey cows June 22.
“Recently I have noticed that about 50 percent of the cows sold at these auctions are bought and shipped out of state,” Belezzuoli said.
That’s a far cry for when the local dairy business was healthy and a neighbor would more often than not buy the surplus cows to help restock their own herd. The cows stayed local even if the operators changed.
In another sign all is not well, “about 30 percent of those cows sold will likely go to slaughter, sold for meat instead of a typical 10 percent ratio,” Belezzuoli said.
Between the loss of cows that “get a new address” and those that go to slaughter, there is no doubt about it, “our local industry is shrinking,” he added.
This is also happening with young replacement animal sales since “there is no expansion going on here.” Tougher regulations are another factor, he adds — one more reason not to add cows.
Driving the trend is rising land values. In the past five years land has gone from $5,000 an acre to $20,000 an acre, too valuable to grow feed that traditionally supports the area’s dairy industry. Instead everyone is planting nut trees. The economics have hit smaller, older dairies with less land equity hardest, Belezzuoli said.
And here is the bottom line. “Milk prices right now are around $12 per hundredweight and it takes $15 to 16 to break even,” he said. Another sign of the times — cows are going for about $500 less than a year ago.
So where are all these cows going? Belezzuoli said Texas and New Mexico have had some tough weather in recent months and they lost a lot of cows.
Industry sources say since 2006, more than 600 dairies have gone out of business throughout California, leaving less than 1,438 dairies across the state.
The California Department of Food and Agriculture reported Kings County had 114 dairies and 180,000 milk cows in 2015. That is down from 140 dairies and 188,000 cows in 2011.
In 2008 those numbers were 156 dairies and 183,000 cows.