Farmers caught in trade flap scramble for answers
Suppose you get an unsigned letter, and it looks like junk mail, but the message is that in 30 days your livelihood, your home and your family’s legacy are in great peril.
That’s what happened to about 75 Wisconsin dairy farmers this month when they learned their milk buyer was dropping them, effective May 1, and they didn’t have another place to sell their highly perishable product.
These farms can’t just stop milking the cows. It’s three times a day, 365 days a year, regardless if there’s a buyer for what they produce.
What’s more, in many cases these farmers’ income, land, family history and future is tied to cows, decades of farm improvements, and having a reliable buyer for the milk.
So when that letter came in the mailbox informing farmers that Grassland Dairy Products would no longer buy their milk, a lot of folks were badly shaken.
The company, based in Greenwood, said it was dropping the farms because it lost millions of dollars in business in a trade dispute with Canada.
“This difficult but necessary announcement is very hard for us as a company, and we will do our best to work with you through this transition,” Grassland said in the letter to farmers.
Will federal officials intervene to help Wisconsin’s dairy farmers? Business reporter Rick Barrett explains.
“You ask yourself ‘why is this happening?’ They definitely put the fear into us,” said Jennifer Sauer, a dairy farmer from Waterloo who received the letter that had no salutation or signature, but definitely wasn’t junk mail.
Now, with two weeks until the end of the month, Sauer and the other farmers are desperately trying to find another milk processing plant.
“We are fighting the clock. I know some people are getting rid of their cows,” Sauer said.
She and her husband, Shane, have a third-generation family farm that milks about 120 cows. Like others dropped by Grassland, they’ve called everywhere to find another milk buyer, to no avail.
This could be the demise of some multigeneration family farms that are the lifeblood of rural Wisconsin’s culture and economy.
“It’s not just us. Everybody is fearful,” Sauer said.
Canada changes policies
Grassland blamed the loss in business on the Canadian dairy industry changing its pricing policies, to the detriment of milk imported from Wisconsin and New York.
State and federal lawmakers are urgently seeking a remedy for the U.S. farms – including a short-term fix and an investigation of trade agreements with Canada.
The farms range in size from about 80 to 3,000 cows. Some are between Whitewater and Madison, while others are near Fond du Lac, Sheboygan and Rosendale.
Friday, the farmers met to seek solutions. They decided to ask dairy processing plants across the state to each take the milk from five farms.
“We haven’t found a home for it yet. But we have some good ideas and things to work on. If every processor that can makes room for these farms, we are going to be OK,” said Carrie Mess, a Watertown dairy farmer who’s working closely with the 75 farms.
It will take a collective effort to get through this crisis, said Frank Behling, from Randolph, one of the 75 farmers.
“I think the processors are waiting for everything to calm down, so they can get an accurate number of how much milk there is and where it’s going to go,” Behling said.
Dairy farms in Minnesota and New York are also affected by the loss of Canadian business, and Grassland isn’t the only processor shut out of Canada.
This couldn’t have come at a worse time, as cows produce more milk in the spring and prices are low. In 2016, dairy operations in the Northeast and Michigan dumped millions of gallons because of their surplus.
The Grassland farms need an immediate short-term solution, Wisconsin Agriculture Secretary Ben Brancel said.
“I am very cognizant of the fact that we don’t have a lot of time to address this issue. May 1 is a drop-dead day, if you will, for some of these farms unless their lender gives them some latitude,” Brancel said.
“We are focused on getting it done before May 1.”
The amount of milk from these 75 dairy operations is about 1 million pounds, or roughly 100,000 gallons, a day.
The farmers' proposed solution would be for dairy processors to buy their milk, that had gone to Grassland, at least for now until this can be sorted out.
Many of the processors are running at full capacity and can’t handle more milk, but for those that could, it would give the farmers more time to find a long-term solution.
Brancel managed a dairy farm for more than 20 years, so he can relate to the anxiety these 75 farmers are experiencing.
“I am hoping against hope that we find a solution,” he said.
State agriculture officials have talked with Wisconsin processors, and they’ve also reached out to milk buyers in other states.
“We are following up on every lead that’s given to us. We have even tracked down rumors,” Brancel said.
A glut in Michigan
A glut of cheaper milk from Michigan has made matters worse, as much of that product has been trucked to Wisconsin plants — putting further pressure on the farms here.
Brancel said he doesn’t blame the plants for buying Michigan milk, and they could be obligated to it, but he hopes they will recognize what’s happening closer to home.
“I have a great deal of faith that our processors are taking this seriously,” he said.
Wisconsin’s congressional delegation has asked federal officials, including Acting Trade Rep. Stephen Vaughn, to investigate whether Canada has violated trade agreements with the U.S. by changing its policies regarding the ultra-filtered milk — used in making cheese — that had come from American farms.
Canada says it’s not to blame, and it faults the U.S. for producing too much milk in a global marketplace flooded with it.
“Simply blaming Canada doesn’t measure up,” Dairy Processors Association of Canada said last week.
Long-term solutions aren’t going to come easy, whether they’re with Canada or finding other markets for U.S. dairy products.
“Our worst nightmare, of the impact of Canada’s trade barriers, appears to be unfolding. We need to fight on behalf of our dairy industry,” U.S. Sen. Tammy Baldwin (D-Wis.) said.
Much of the United States now has too much milk, partly from dairy farms expanding their herds during high prices in 2014. Those prices have since plummeted to the point where some farms have lost hundreds of thousands of dollars a year.
In 2015 the number of Wisconsin dairy farms fell below 10,000 for the first time in decades, down about 33% from 2005. Yet milk production has increased over the years, largely from farms getting bigger and more efficient.
Flush with milk, some dairy plants have skimmed the cream off the top and flushed the rest down the drain.
It’s a horrible solution, Mess said.
Key Wisconsin industry
Even in tough times, dairy farming is one of Wisconsin’s top industries, with an additional 60 cents of economic activity for every dollar of net farm income, according to University of Wisconsin-Madison research.
That translates to millions of dollars spent in cities as well as the rural economy, since many things that farmers buy come from outside of their area.
Some of the 75 farmers are angry with Grassland for only giving them a 30-day cancellation notice. And some say that Grassland has plans for its own 5,000-cow dairy, in Dunn County, even as it drops smaller farms from its roster.
Grassland did not return Journal Sentinel calls asking about its farming plans.
Some people have asked whether the 75 farms could switch to producing organic milk, something that’s popular with consumers now, or another type of farming altogether.
But the organic market is flooded with milk, and it takes at least a few years for a farm to make that switch. Other types of farming, including crops, beef and pork, also have suffered from surpluses and low prices.
Farming is a lifestyle as much as it’s a business. There’s a deep personal loss when a family farm is forced out of business.
“If any of us were farming just for the money, we would have quit a long time ago,” Mess said.
This is one of the strangest times in Wisconsin’s dairy industry, said Pam Jahnke, a.k.a. the Fabulous Farm Babe, a broadcaster for farm radio programs across the state.
Jahnke was raised on a small dairy farm north of Green Bay. At 16, she was crowned the Oconto County Dairy Queen.
Jahnke says she’s never known a time, in more than 25 years, when Wisconsin dairy farms couldn’t find a milk buyer.
“We have always needed milk,” she said, as cheese plants absorb most of it.
It’s taken many farms generations to develop the animal genetics needed to produce top-quality milk, plus hundreds of thousands of dollars and their own family’s labor.
For farms forced out of business: “Without having walked in those shoes, you cannot understand the sheer pain … We better have a lot of counseling available,” Jahnke said.