Factions debate how to aid farmers, reduce surplus

Jan Shepel, Correspondent

MADISON - Wisconsin Secretary of Agriculture, Trade and Consumer Protection Ben Brancel and his agency is planning to do all it can to help dairy farmers left in the lurch last week when their processors told them they could no longer take their milk.

Most of the 20 or so farmers who shipped their milk to Nasonville Dairy and were told that cheesemaker no longer needed their milk, he said, have found markets, but some are being forced to pay for transportation costs.

Also last week, a letter from Grassland Dairy Products, the nation’s largest butter maker, went out to a group of farmers who were told their milk was no longer needed by the processor. Brancel said Grassland officials told his agency the number of producers, but not their names.

“When those producers call us that’s when we find out who they are,” Brancel said. He has staff keeping a spreadsheet of farmers who still need help finding a market for their milk. Information includes the number of cows and the pounds of milk. For help from the department, farmers should call 800-942-2474, which is the Farm Center’s helpline.

“We won’t interfere unless farmers call us,” Brancel added.

Farm Center Director Kathy Schmitt, said her staff is expecting to hear from those dairy producers seeking assistance in finding processors willing to take on more milk. In recent years, the center has handled approximately 1,200 calls per year.

Stainless steel tanks tower over a tank truck at Grassland Dairy Products near Greenwood. The processor's loss of a big contract in Canada contributed to the company’s purge of about 75 milk producers

Brancel said that Grassland’s loss of a big contract in Canada contributed to the company’s purge of about 75 milk producers. “New York is in the same pickle with Canada. We need a change in trade policy on marketing these dairy products. We’re very nervous.”

On Friday, April 7, Brancel and New York Department of Agriculture and Markets Commissioner Richard Ball sent a letter to U.S. Department of Agriculture officials urgently asking for action to help their state’s dairy industries which have been “victimized,” they said, by Canada’s actions to shut down the ultra-filtered milk trade from U.S. producers.

Canada told major Wisconsin and New York processors that they will no longer have a market for ultra-filtered milk. Grassland was one of those producers and lost its contract to ship about a million pounds of it per day across the northern border. That was the reason the company had to reduce its milk intake. Grassland said it will no longer take the milk from that group of farmers as of May 1.

 “DATCP’s Farm Center staff is contacting all milk processors across Wisconsin and in other parts of the country to assist Wisconsin dairy farmers impacted by Canada’s actions,” Brancel said in the letter to Acting USDA Deputy Secretary Michael Young.

The two state agriculture secretaries urged the USDA to help milk producers by exercising its authority to purchase cheese and butter that is in storage and distribute it through USDA’s nutrition programs, including food banks and the national school lunch program.

The USDA is authorized under Section 32 of the Agriculture Act of 1935 to support agricultural producers by purchasing surplus commodities for food banks and nutrition assistance programs, such as the national school lunch program.

Warnings come true

 “For nearly a year,” Brancel said, “Gov. Walker, Gov. Cuomo, myself, Commissioner Ball, and other state and U.S. dairy officials, warned our federal partners — and Canadian industry and government representatives at all levels — that Canada’s protectionist regulations would harm our dairy producers. Unfortunately, these warnings have now come true.”

Brancel, a former dairy farmer himself who now raises beef on his family farm, feels for the farmers who have lost their milk market. “If these multi-generational farm families cannot find another market for their milk, they will be forced to sell their cows and go out of business,” Brancel said.

He told Wisconsin State Farmer that he doesn’t believe farmers or anyone else want the North American Free Trade Agreement (NAFTA) to go away. “We’ve all heard that trade is valuable and its worth X dollars but when people start getting hurt and we’ve lost our international market, we need to do something.”

Brancel said he understands the dilemma that the processor is in. The facts of the marketplace are that “distressed” milk overflowing from Michigan, can be purchased for much less than milk produced locally — sometimes it can be bought by a processor for the cost of the trucking.

“I know you can buy distressed, cheap milk, but let’s look at our internal family. If we lose those farms and then if the environment changes, you won’t have those farms to buy milk from in the future,” he said in an interview.

Wisconsin now has 9,236 dairy farms with 1.28 million cows. Ninety-six percent of Wisconsin farms are family-owned, with an average number of 138 cows per farm.  Dairy is the largest segment of Wisconsin agriculture generating $43.4 billion in economic activity.

Brancel often notes that dairy means more to Wisconsin than citrus to Florida or potatoes to Idaho. “Wisconsin dairy’s $43.4 billion economic impact compares to $9 billion of Florida citrus or $6.7 billion of Idaho potatoes.”

Steve Lichty and his wife Dori have been milking cows since 2005, when they rented various farms -- moving their herd and household as conditions changed. They purchased this farm three years ago, with dairy dreams for themselves and their young daughter and son. Here Steve is leading a fresh heifer up their driveway. Now they are faced with the loss of their milk market -- they were one of 75 farm families who got a termination notice last week from Grassland Dairy Products.

Dairy farm family

The Professional Dairy Producers of Wisconsin (PDPW) board of directors and Executive Director Shelly Mayer, sent an open letter to dairy farmers noting that “fellow dairy farmers are family.”

Each farm affected by the Grassland notification “should know that they are not working alone and that leaders throughout the Wisconsin dairy sector are working around the clock to find resources and ways to de-bottleneck the situation.”

Many of the farmers who got the cutoff notice from Grassland are also PDPW members. The letter from Mayer and the board said that the PDPW has contacted resources in Washington D.C. and has been in communications with leaders at the state level.

“We encourage farmers affected by the Grassland announcement to call the Farm Center at DATCP at 800-942-2474. Ask the farm center to add your farm's name and location to their list. They have individuals working to locate possible processors and truckers to relieve your situation,” PDPW told farmers.

“The Wisconsin dairy industry is one of strength and resilience. We will get through this challenge like we have all the others before – together,” the letter continued. “Remain strong, milk the cows and take care of your neighbors and families.”  Farmers who have questions were invited to contact Shelly Mayer on her direct line at 262-224-5441.

“The Wisconsin dairy industry is one of strength and resilience. We will get through this challenge like we have all the others before – together. Remain strong, milk the cows and take care of your neighbors and families.” 

PDPW message to farmers

Dairy farmer Darin Von Ruden, who is president of Wisconsin Farmers Union, said he can understand how devastating it would be to receive the kind of letter those dairy producers got from Grassland Dairy Products and Nasonville Dairy.

“With nearly every processor in the state already at capacity, farmers have almost no other options for selling their milk,” Von Ruden added. “It is nearly certain that these actions by processors will result in dairy farm closures. A cow is a mammal, not a machine – you can’t just turn her milk production off with a switch and wait for better market conditions.”

Little notice to farmers

He said he was disappointed that farmers were given so little notice of the terminations. Nasonville Dairy gave farmers just two weeks while Grassland gave four weeks.

Grassland, a multi-million dollar corporation, would be in a better place to absorb a shock in the supply chain than family dairy farms, he said. Von Ruden also disputed Grassland’s assertion that the terminations were necessary because of a “sudden” change in Canadian dairy policy. In fact, Grassland has known at least since last November, and probably as early as two years ago, that potential changes in Canada’s ultra-filtered milk regulations were likely.

In light of that scenario, Von Ruden thinks farmers would be in a much better position today if Grassland had given them signals to reduce their production. “We encourage other dairy processors to be more forward-thinking in their communications with their farmers.”

Von Ruden also noted that at the same time Grassland is dropping family dairy farms in Wisconsin from its rolls, it is also seeking to build a corporate-owned 5,000-cow dairy in Dunn County. “In light of this new development, we hope that Grassland will reconsider its Dunn County CAFO project,” he said. “Having many independently-owned dairy farms is better for the economy and better for our rural communities than one vertically-integrated supply chain.”

Supply management, he said, should be across the board, not just done by dropping a given number of dairy farmers.  The two processor decisions should be a wake-up call to all dairy farmers, he said.

Von Ruden said the National Milk Producers Federation and it member cooperatives should advocate for market stabilization as a feature of any dairy policy as it did with its dairy proposal in 2014. That market stabilization part of the proposed program was dropped by Congress when legislators heard from operators of larger farms that they didn’t want to have limits placed on their production.

He sounded a note of caution on placing the blame on Canada’s policies. “Some are saying that Canada has given unfair support to its own dairy industry through these new rules. The other point of view is that Canada is simply trying to stabilize its domestic dairy industry by setting laws within its own borders. Shouldn’t governments have the right to do that?”

Von Ruden believes the U.S. dairy industry is at a critical point – it can continue with an increasingly volatile roller-coaster ride, brought on by changing international trade policies and fluctuating currency values, or it can decrease this over-reliance on international markets and harmonize domestic supply with demand. The week’s unfortunate events make him think it’s time to pursue a new strategy to achieve more stable markets for America's dairy farmers.

Emotions run high

For Dori and Steve Lichty, the form letter from Grassland Dairy Products seemed like a cruel joke, dated as it was, on April 1. “I work full-time in communications for East Central Select Sires so I was as work and my husband saw something posted on Facebook about Grassland,” she told Wisconsin State Farmer. “So he made the quarter-mile hike to our mailbox and there was our termination letter from Grassland.

“It was automatically emotional as he read me the letter over the phone. He then quickly saw more postings on Facebook.”

From the networking she has done, Lichty said it appeared that the termination notices were not limited to any certain sized farms. “It looked to us like it was size neutral – from ten cows to thousands of cows.”

From what she could tell, Grassland tried to cut farmers who were in areas on certain hauling routes and where those farmers might have a chance to find other markets. “The group of farmers I know are all fairly close together in a pocket in Dodge, Columbia, northern Jefferson and Dane counties,” she said.

Vivian Lichty, 7, loves her family's Registered Holsteins and is just starting to get involved in dairy showmanship. She was heartbroken and in tears to hear that her parents, Dori and Steve, might have to sell the cattle and exit the dairy business. The family is one of 75 who received termination notices from Grassland Dairy Products last week. The company will no longer buy milk from their Beaver Dam-area farm as of May 1

“No matter what your farm size is, this is a very emotional business. News like this is very difficult to hear. It’s hard in so many ways – you may have to give up a source of income; we and others could potentially have to sell our animals for pennies on the dollar compared to what they’re worth and then try to pay off loans. It’s scary on many fronts,” she said, by telephone.

Their seven-year-old daughter Vivian was in tears crying that she didn’t want to sell the cows. The Lichtys also have a young son, Winston. “They love working with the show cattle and Vivian is just starting to get into it. It’s a great way to raise kids.”

Lichty and others on the list immediately started to call their lawmakers, join conference calls and do interviews to get the word out about what was happening to them. “We are trying to make sure the situation we are in with these other farmers is top of mind to a lot of people involved in the dairy industry.”

Though all of the 75 Grassland farmers on the list have been trying, she didn’t think any one of them had found a new market for their milk. “When we got the letter we knew exactly what we were facing. There is a lot of milk out there.”

The young couple began dairy farming in 2005 at a rented farm and moved their herd of registered Holstein cows – some Red and White -- and their household several times before landing at their current home – a small family-run dairy farm between Beaver Dam and Fox Lake. The former owner was interested in helping a young couple get started and they bought this farm three years ago.

Now they’re hoping the oversupply of milk and the cancellation of their market doesn’t put an end to their dairy dreams.