Dairy crisis pinches organic farmers
Jim Goodman converted to organic dairy farming about 20 years ago to get a fair price for milk, and to keep his herd small on a family farm. As a conventional farmer who farmed through the crisis of the 1980s, Goodman saw a lot of things happening then that are happening now.
"It's not the first time we've seen this crisis, it's certainly not the last I suppose, unless some action is taken," said Goodman who is the president of the National Family Farm Coalition (NFFC).
Goodman was one of four dairy experts who discussed the growing dairy crisis that has spread to the U. S. organic sector where many smaller farms are losing their markets to concentrated animal feeding operations (CAFO) in a call hosted by Family Farm Defenders and the National Farm Family Coalition on May 9.
Goodman, who has farmed his whole life, saw the model from the 80s where producers expanded their operations so they could stay in the dairy business, producing more milk at a somewhat lower cost. It was a solution that was good for processors, because they could get milk at a lower cost, but in the end, there is "too much milk produced at too low of a price for producers."
As farmers could no longer afford to farm, small farms disappeared, local, small town businesses that were supported by farmers, closed doors because the community could no longer support the businesses.
"We're seeing the same effects now," said Goodman.
Ed Maltby, executive director for the Northeast Organic Dairy Producers Association (NODPA), said as the organic dairy industry grew since 2002, "seeing growth rates of between 10 and 15 percent annually, which is not surprising when you are dealing with relatively small volumes," working relationships developed between processors, organic milk buyers and producers to ensure "they wouldn't take too much milk on" ahead of demand, suffered. Suffered to the point "where we are in a situation where there is a surplus of organic milk."
Where once organic farming once used to be the bright spot, the place of growth in dairy farming, organic farmers are now experiencing the same problems as conventional farmers — lower prices, milk surplus, loss of markets.
Organic milk buyers throughout the country are not taking on additional farms, Maltby said. Buyers are cancelling agreements made with conventional farmers going through the three-year transition to organic farming, forcing them to sell their milk on the conventional market, losing the expense of transitioning to organic.
"We are seeing a lot of hardship, especially among the younger farmers who are trying transition into organic and those farms with a high level of debt," said Maltby.
In 2012 -2014, Maltby said there was a shortage situation in the organic sector and the price of milk went up.
"This opportunity was seized on by some large dairies, mostly in Texas, Colorado and some in California, that transitioned conventional animals into an organic herd — there is a loophole in the organic regulations — and flooded the market with milk," Maltby explained.
Organic buyers jumped on the opportunity to have access to a good supply of milk at lower prices and the price dropped by 25 percent "in a matter of months," said Maltby.
Additionally, organic dairy is facing a surplus of skim milk, "not necessarily on cream and whole milk, despite the slowdown in the growth for consumer demand for the total volume of organic milk on the retail level," Maltby added. Sales of full cream organic milk have been increasing at 15 percent, where the market for non-fat or low-fat products has declined.
"That has caused a problem on the processing side and it's largely come down to lack of planning and lack of coordination between buyers and producers," said Maltby, "And producers, as is common in most conventional dairies, have been left to pay the price."
On the conventional side of dairy, Goodman points to several things that can be done to help alleviate the crisis - looking at the farm credit service loan policy, "to make sure that small farms have access to credit," the U.S. Department of Agriculture (USDA) purchasing excess commodities for distribution at food banks, hearings on the milk pricing formula and an immediate $20 floor price for milk, "this will keep farmers from going out of business," Goodman said.
On the organic side, Goodman said, "It's a very simple solution - enforce the rules."
Make sure organic dairy producers pasture their cattle, make sure those adding to their organic herd are buying organic cattle and make sure feed for organic cattle is certified organic see by USDA standards.
Once a farm is certified organic, replacement animals for the herd must be certified organic.
"You can no longer transition conventional animals in that weren't organic," Goodman explained.
Cheap grain imports have also affected the organic dairy sector.
"Organic grain from parts of the Middle East, the Baltic region, are very questionable organic integrity," said Goodman. "Recently, the USDA has begun clamping down on this, which is a good thing, because if the large dairy operations that have to depend on this cheap grain have to pay the full price of the grain as produced by U.S. producers, it would make it more difficult for them to produce as much mlk and undercut our production."
As Goodman and his wife look to retirement, "this is kind of difficult now," Goodman said. "What young farmer would want to get into dairy production be it conventional or organic?"
"You can’t find a market for organic milk. Most organic processors have put quotas on, some have even dropped farms from their production. It doesn’t pay," added Goodman. "This has lowered value of cattle, lowered the potential for farm sales, to move your cattle to another farm."
While Patty Lovera, policy director for Food and Water Watch, isn't a dairy farmer, she learned a lot as someone "on the outside looking in." One of the most shocking things she's found is "the amount of volatility in these markets and what dairy farmers kind of put up with, in terms of lack of predictability."
"How you do business around that still boggles my mind," Lovera said.
In the past five to seven years, Lovera has witnessed "a steady downward feeling," which has reached a crisis point, with prices reaching a crisis point "a long time ago."
It's a crisis point for farmers in regards to "what they can sustain after years and years of these low prices and there is really not a safety net coming from our federal farm policy," said Lovera.
While the crisis is evident, "what we are not seeing are the policy responses that actually address the root causes," added Lovera.
As the organic sector has grown, Lovera said "some really explicit failures by the federal government" to enforce "the rules about what it means to be an organic dairy farm and what you're supposed to do," have allowed a "tremendous disruption to that market," which has allowed "undercutting of folks who follow the rules."
"And there is a lot of milk coming from places that don't follow the rules," Lovera added.
When it comes to food policy issues, Lovera said people often "throw their hands up in the air," because it's "too hard to get the government to do the right thing."
Counting on consumers to "shop better" is "tough to do on any food, but it feels impossible for an average consumer in dairy," not knowing where the milk came from that made the cheese they bought or what producers got paid for that product. The crisis can't be fixed "entirely on the backs of consumers in the marketplace," Lovera pointed out.
"There are broken policies that have gotten us to this point," said Lovera. "That's why we need policy solutions to fix that. And a policy solution is not attacking another country for its successful policy, which is what Canada's supply management system is."
Using the trade agreement and driving Canadian farmers "into the same mess we are in is not a policy solution," Lovera added. "That is a political cop out. We need to fix our dairy system and allow Canada to have their dairy system that works for them."
In Ontario, commodities have a government assisted program that "tides them through," helping provide a steady income, Canadian dairy farmer and board member of Dairy Farmers of Ontario (DFO) Ralph Dietrich explained.
"The U.S. believes that we are your salvation. That's not the case," said Dietrich. "We are such a small percentage."
Dietrich believes that the American mentality of adding more cows to provide more milk as soon as an outlet is available, is not a solution, but "will just make your problem worse."
Rather than produce more, Dietrich said quota cuts are a better solution — not cutting certain farmers when a processor has too much milk, but "everybody takes a hit."
"It's a system that we know works for us," said Dietrich. "Some farmers don't like it, but that's the way it has to be."
Goodman has been a proponent of supply management since since the early 1980s when he realized "something needed to change."
"Yes, it could work. It would be difficult, because a lot of these really large farms see that the only way they can produce is to produce more and more, but serious times call for serious measures," said Goodman. "I think if people were informed on how the system works ... they would understand that in the long term, it is in their best interest."
With the Federal Milk Marketing orders, Maltby said the U.S. is "well geared to adopt some sort of supply management," providing the infrastructure to form some sort of quota system.
In 2010, the organic sector proposed a system similar to Canada's supply management system, but "we weren't successful in convincing buyers that this could happen," Maltby explained. Maltby said the "timing is right," but the challenge is "more of a political one."
Lovera believes a supply management system is necessary.
"There will be pushback on it. There is a lot of hostility to these concepts of supply and management coming from a lot of directions, but what is happening now isn't acceptable," Lovera said. "It's time to have these conversations because the status quo is not working except for the largest players in the industry."
From a Canadian perspective, Dietrich pointed to President Trump.
"Do you think he thinks anything is impossible? No, he doesn't," said Dietrich.
The largest farmers may not like the idea of supply management, but "those are the producers who have worked through more than any of us — what people thought was impossible — to get where they are today," Dietrich added. "Supply and management has proven, I think, to be a benefit for everybody."