Dairy farmers are hurting right now. Hurting bad. My first hint was jgoodman's diary Hard Times in Rural America. Then Tom Laskawy wrote a wonderfully titled piece called Stop Making Milk or the Cow Gets It:
For those who need a handy case study on the insanity of our agricultural subsidy system, I give you the dairy industry's solution to falling prices caused by a "milk glut": kill the cows.
No joke. A dairy cow "retirement" program almost went through in the House stimulus bill - but the beef industry freaked out at the thought of what that might do to beef prices. Laskawy further explains the dairy oversupply problem as follows:
Cows aren't assembly line robots who can be switched off when their output isn't selling. They need to be milked every day. So when you have a subsidy regime that tends to encourage over-expansion when times are good (to cash in on high prices) and over-production when times are bad (through payments that offset losses and provide an incentive for farmers to attempt to recoup as much as possible), you apparently discover that the only exit runs through the slaughterhouse.
I'd add that it's not ONLY an issue of too much milk - it's also an issue of the use of cheap milk substitutes, namely MPC (milk protein concentrate), which lower demand for the real thing.
More below... |
| At the same time as the debate over the dairy provision in the stimulus bill, thirty five Senators (mostly Dems with a few Republicans) have written Tom Vilsack a letter asking for help to the dairy industry. Specifically, they want the USDA to buy more dairy for food banks and nutrition programs (good) and for the Dairy Export Incentive Program (not so good).
In my opinion, it's just fine for the government to buy up food (particularly healthy food) and provide it to those who need assistance in our country. But when we've got an oversupply of food, dumping it in other countries and making it difficult for those countries' farmers to make a living is not acceptable.
The National Family Farm Coalition is also weighing in with a letter posted on their site. NFFC points to collapsing dairy prices, calling this the "worst crisis [for dairy farmers] since the Great Depression." The ins and outs of dairy pricing are a bit over my head, but I do understand one of the NFFC's requests - an emergency $17.50 cwt floor price (cwt stands for "hundredweight").
Just for some context, according to the USDA ERS report "The Transformation of U.S. Livestock Agriculture: Scale, Efficiency, and Risks" a dairy farm with over 1000 cows has an average cost equal to $13.59 per cwt in 2005, which is 15% less than the average cost to a farm with 500-999 cows, and 30% less than the average cost to a farm with 100-199 cows. The average cost to a farm with 100-199 cows is $20.82 per cwt - which means that a floor price of $17.50 still may mean losing money to that smaller dairy farm. The result of these low dairy prices is that more small, sustainable farms will go broke, leaving us with no option but to buy milk from the enormous factory farms... or go vegan.
Also from the NFFC letter:
In the long-run, NFFC believes the milk pricing system must be reformed and decoupled from the Chicago Mercantile Exchange and begin to address rampant anti-competitive behavior on the part of the few cooperatives and processors who control most of the industry.
The NFFC has been talking about anti-competitive behavior influencing dairy pricing for a long time. They worked with a few Senators to get an investigation started a while back, but when it got too close to one of Bush's friends, it mysteriously stopped. Now that Obama's in power, we need that investigation to get going once again - and then we need some action to remedy the problem.
Continued from the NFFC site:
Arden Tewksbury, a Pennsylvania dairy farmer and head of Progressive Agriculture, said, "The recent $12 million fine by the Commodities Future Trading Commission (CFTC) against Dairy Farmers of America (DFA), the nation's largest dairy cooperative, for price fixing shows how easily manipulated the CME is by our dairy cooperatives, processors and food companies. Dairy farmers need to be asking why prices are crashing and who is behind this since supply and demand have long ceased to function properly in our industry."
If supply and demand have "long ceased to function properly" in the dairy industry, I find it hard to imagine that buying up excess supply by the government - as the 35 Senators have requested - is really the fix we need. NFFC does have a few ideas for what needs to change, detailed on their site:
In 2007, Senators Bob Casey (D-PA) and Arlen Specter (R-PA) introduced S. 1722, which would have priced milk based on a national average cost of production with an inventory management program to deal with overproduction if necessary. NFFC believes a new pricing system, along with action by the Department of Justice on their ongoing anti-trust case against a few of the nation's leading dairy cooperatives and processors, are the long-term solutions needed to ensure America has a thriving dairy industry.
Loren Lopes, a California dairy farmer, said, "This catastrophe is hitting all farmers, regardless of region. In California, we are already hearing of farmer suicides. We need real solutions that address our broken pricing system. We do not need morally dubious herd retirement programs that other farm groups have pushed that do nothing to address stable prices for farmers." |
