Hollandtown Dairy cuts 11 farms as of July 1
KAUKAUNA - It's the meeting no dairy farmer wants to have when a representative of his cooperative tells him they can no longer take his milk, but that's what happened to 11 producers in the Kaukauna area on April 30.
Arla Foods told those farmers the cooperative would stop buying their milk on July 1, providing 60 days notice, double what most companies do, said Don Stohrer Jr., general manager for Arla Foods, Inc.
"We had too much milk. There's plenty of milk coming into the dairy to meet our needs," Stohrer explained. "It's been that way for probably seven to eight months and we were really trying to wait and see if the tide turned."
Like any dairy company, Arla, which has U.S. headquarters in New Jersey and operates the Hollandtown Dairy near Kaukauna, is not immune to the oversupply of milk not only in Wisconsin, but in America.
Hollandtown Dairy is the number one producer of Havarti in the U.S., according to the company website.
This glut of milk pushed Arla to make a decision to "part with 11 farmers." Aware of the "human element" and trying to break the news to producers "as empathetically as possible," Stohrer said they delivered the news to each farm individually.
"We know it’s a tough decision and has a lot of impact on people," Stohrer added.
Arla will continue to collect from 24 farmers they work with, but in the meantime, Stohrer said they have contacted the Wisconsin Department of Agriculture, Trade and Consumer Protection to see if there is something that can be done to help the 11 farmers find homes for their milk.
How did Arla determine which farms would be cut? Proximity to the processing facility and transportation costs factored into the decision, but it wasn't about size, time or relationship when it came to decide what milk would not be picked up after July 1.
"It just happened to shake out that way," Stohrer said. "It just got to a point where we had to make a really difficult business decision."
The oversupply of milk is something "we're all dealing with, Stohrer said. "We are a dairy cooperative owned by 12,700 farmers in Europe, so we do understand the ramifications of these decisions and we don’t take it lightly."
Wisconsin Farmers Union is particularly troubled that Arla, which internationally is a cooperative, sent termination notices to Wisconsin farmers this week. It appears that U.S. farmers who ship to Arla are not full members of the cooperative like their European counterparts, according to WFU.
“Cooperatives exist to work in the best interests of their members, and a core cooperative principle is equal treatment of all members. It seems that these farmers were not co-op members and therefore did not benefit from those principles,” said Darin Von Ruden, president of Wisconsin Farmers Union.
“As part of a three-generation dairy farm myself, I know what the cows, the land, and the way of life mean to my family. I sincerely hope that all affected farmers will be able to find a new buyer for their milk,” said Von Ruden.
Von Ruden went on to express frustration that dairy farmers have been placed in this circumstance.
“This situation is not normal, and it is not necessary. This is the result of a failed government policy that incentivizes overproduction, and then leaves farmers to weather the fallout alone — being picked off one by one," Von Ruden said in a press release. "Congress had the opportunity in the 2014 Farm Bill to prevent this train wreck, by passing the Margin Protection Program with the Market Stabilization feature left intact. Instead, members of Congress deliberately voted for the Goodlatte-Scott Amendment that removed Market Stabilization at the 11th hour, at the urging of organizations like the International Dairy Foods Association and the Dairy Business Association.”
WFU took the opportunity to urge Congress not to pass any Farm Bill that does not include a system of oversupply management.
“We owe it to dairy farmers and to taxpayers to make this common-sense change,” said Von Ruden.
Von Ruden’s comments come on the heels of a series of meetings held throughout Wisconsin about the Canadian supply management system that garnered intense interest among dairy farmers.
Von Ruden recalled a comment by Canadian dairy farmer Murray Sherk at one of those meetings. Sherk said, “A situation where farmers just get dropped from their milk processor would never happen in Canada. Every dairy farmer would take a half percent or one percent cut to account for the loss of a market. No group of farmers would be singled out to shoulder the burden for everyone else."
Von Ruden urged all dairy cooperative members to bring forward resolutions demanding that any adjustments in co-op milk supply be borne by all members equally, rather than just a few — or worse, actually allow some members to expand, while others are cut off.
WFU also urges all co-op members to bring forward resolutions at their cooperatives in favor of a nationwide supply management program. A resolution template can be found at the newly launched www.DairyTogether.com.
Cooperatives finding themselves with an oversupply of milk should consider implementing a “base-excess” program to discourage overproduction that drives down profits for all members. Cooperatives such as Land O’Lakes, Prairie Farms, Family Dairies USA, Scenic Central, and several regional boards of Dairy Farmers of America have already implemented such programs.
“If we want to see incomes for farmers increase, we will still need a nationwide program that applies to everyone,” said Von Ruden. “But in the meantime, cooperatives should at least be doing what they can to prevent the price to their patrons from decreasing —or worse, directly putting a handful of their patrons out of business.”