A recent decision by Grassland Dairy Products to stop accepting milk from a group of its milk producers has some local farmers worried.
Lake Country farmers are keeping an eye on the industry in general, and in particular a decision by central-Wisconsin producer Grassland to stop buying milk from an estimated group of 75 producers, effective May 1. The company is cutting back because of new Canadian dairy regulations. It estimated it would lose sales of about 1 million pounds of milk per day. The company exports about $100 million worth of ultrafiltered milk to Canada each year. Grassland was forced to decrease its milk intake volumes on short notice because it is not being able to process milk on lines dedicated to Canadian customers.
Southwest WI impact
Tom Oberhaus, who owns Cozy Nook Farms in Delafield, said decision doesn't affect his farm directly since the farm isn't a Grassland producer, However, Oberhaus noted that dairy farmers throughout the state are interconnected, and said the decision has a ripple effect on the industry.
"Milk price went down 19 cents on the futures (Wednesday, April 5,) so there's a ripple effect throughout the industry," Oberhaus said in a phone interview on Thursday. "April's down 16 cents, May's down 20 cents, June's down 34 cents, soy's down 29 cents. There's definitely a ripple effect with that."
Oberhaus isn't buying into the company's explanation as to why it is cutting back. He said that Grassland's claim that Canadian trade policies led to its decision is mostly a smokescreen. He said the company was also receiving milk from Michigan and Indiana, and that it was a joint partner in one or more large dairies close to its home site and had also bought several dairy farms close to their facilities, which he called "vertically integrating."
"In other words, they ... they haven't said this, and they're putting up this smokescreen blaming the Canadian trade policies ... there's nothing that's changed in the Canadian trade policies. They were exporting a whole lot of MPCs — milk protein concentrates — into Canada. Basically, it was kind of a hole in the trade agreement. These trade agreements always have these little holes of them. They found it, and were making high use of it and upsetting the Canadian people. This has been going on for a couple years. I'm not very positive towards Grassland. If you do some research, they've done this type of maneuver before."
But in Oconomowoc, Koepke Farms co-owner John Koepke said Canadian trade policies might well be behind Grassland's decision, and it's important to recognize that all agriculture, not just dairy, depends on free trade with other nations.
"Free trade is very important," Koepke said. "I think this is a lesson in why we need open borders and that sort of thing because, obviously, right now that's not what we have."
Koepke added that production is high across the United States, with a large surplus of milk available. The problem, according to Koepke, is that no one wants to take the cut off dairy producers' milk, or might be a matter of not being able to handle it all.
"Supply and demand with dairy is pretty complicated," Koepke said. "Cows need to get milked every day. They produce a perishable product, and there can either be too little, like what we saw in 2014, where we had record prices worldwide, or there can be too much, which we have right now."
Dairy farming today in Waukesha County
Waukesha County has seen its share of development over the years, but that hasn't stopped Koepke and Oberhaus from doing what they do.
Koepke said that Waukesha County is still a great place to have a dairy farm, and that he has connections with neighbors that can help them solve problems. Plus, five generations of the family have tended to the farm, with firmly established roots in the area.
"We have family, and we employ people, and Waukesha County also has got a good workforce to draw from," Koepke said. "There's a lot of people here to draw from, etc. When you want to hire people, you've got ample people."
But there are challenges. Oberhaus said its unrealistic to grow the herd due to high land prices, as well as the loss of infrastructure. Parts and supplies, and even cow veterinarians, have to come from further away, meaning higher production costs. But for Oberhaus, farming is more than just dollars and cents.
"The family traditions and pride of what we're doing," Oberhaus said about what keeps his family involved with their farm. "Obviously, if this was simply a dollars and cents question, we would have sold out in the '90's or so when land prices were really skyrocketing. We're just getting back to where they were then, actually.
"Family tradition and desire to carry on doing what we love to do. From a financial standpoint, we've diversified. We run a pretty active fall market here with pumpkins and whatnot, and then we also run a pretty good market of Christmas trees at Christmastime. Obviously, from a financial sense, that's what allows us to stay in business."
Colleen Kottke contributed to this report.