“We’re killing ourselves” the dairy dilemma
It’s Monday, May 1, or Mayday, the celebration of spring by many cultures for many decades. This year it is also the day when some 70 (or so) dairy farmers in Wisconsin and Minnesota had to find new homes for their milk after being notified by Grassland Dairy that they would no longer pick up the milk after that date.
The past month has been a hectic and possible life-changing period for the dairy farmers involved as they saw their dairy business and family life facing possible total disruption if they did not find a new home for their milk.
Most every form of news media - national, state and local - carried running accounts of the number of farms successful in finding processors and last Friday it was announced that all but one or two farms (who would probably sign on with someone) had found new processors.
“Great,” the media and the dairy industry said. Dairying had come together and saved itself! Wisconsin Ag Secretary Ben Brancel issued a news release summarizing the situation:
“Thank you to the dairy processors and milk handlers who have stepped up to help our Wisconsin dairy farm families. I appreciate you making arrangements, if only for the short-term, to give these farms the opportunity to continue farming and make plans for the future. We understand the huge amount of work that had to be done to locate capacity, arrange transportation and complete contracts quickly.”
"President Trump and Governor Walker have stood up for Wisconsin’s dairy industry and are working to create a level playing field so our dairy farmers and processors can thrive for many generations. We are focused on free, fair and transparent trade policies, and on reopening the Canadian market for all of U.S. dairy products, including ultra-filtered milk.”
At the show
Great - the dilemma of the 70 farmers has been solved. But, what about the “too much milk” challenge that the dairy industry still faces. I talked with many dairy producers at the Midwest National Holstein show last Saturday at the Alliant Energy Center in Madison.
This was the final event of the the Wisconsin Dairy Showcase (Milking Shorthorn, Ayrshire, Jersey and Red and Whites were shown on Friday). It was a super event, great crowd and superb array of dairy cattle with a Minnesota cow, Lovhill Braxton Funky-ET exhibited by the Stransky Family, Owatonna, MN, named Senior and Grand Champion of Open Holstein Show.
I had no difficulty getting opinions from the dairy producers I talked with over the course of several hours and maybe not so surprising, all suggested that dairying was in the throes of major change and they were worried.
A new challenge
Never before had they even considered not having a dairy processor wanting their milk, several producers admitted. Yes, they all knew about the much discussed oversupply of milk but never really thought it might affect them. After all, the national and state check off of 15 cents on every 100 pounds of milk they sell, new dairy products like yogurt and exports were supposed to take care of all the milk produced, weren’t they?
“Dairying is going the way of chickens and pigs,” one farmer said. “We don’t want that.”
Everyone admitted that producing more milk, cheaper, faster and better have been their goals since their growing up on a farm days, through school and at every dairy event they ever attended.
“We’re so good at producing milk that we’re going to kill ourselves,” one well known dairyman suggested. Several others in the group nodded their heads in agreement.
And, that is what has been happening, consider: since 2000 when there were 20,715 dairies in Wisconsin to the 2016 figure of 9520, there was a loss of 11,195 individual farms or about 55 percent. But, the cows are mostly still there, all 1.28 million of them — a few less than the 1.75 million cows on Wisconsin dairy farms in 1990 — and the milk production is more than just there, what with the 30.2 billion pounds last year as compared to the 24.4 million pounds in 1990.
In the past 10 years, dairy farm numbers dropped from 14,640 to 9,520 for a loss of 5,120 dairies or about 35 percent.
That’s getting serious! How low can we go? Down to 5,000 herds? 3,000 herds?, 2,000 herds? Why not?
Just think of the number of former farmers not farming any more and their sons and daughters not taking over the farm as perhaps planned.
Different in Canada
Canada has taken a beating as it purportedly changed its import laws and left Grassland Dairy and its ultrafiltered milk high and dry.
The dilemma is not all black and white — one must understand that Canada has tightly controlled milk supply with its supply management program introduced in the 1970s that gives their dairy farmers near-exclusive control of the domestic milk market — and greater stability for their businesses. The government establishes high tariffs and import quotas, while farmers set processing prices and limit how much milk can be produced.
Many producers feel they have benefited from the system because of the steady income that allows them to plan improvements to the business over coming years. Doing away with the quota system would lead to rapid expansion and overproduction and much lower milk prices, they say.
Not every farmer likes the system and we have seen a number of Canadian farmers relocate to Wisconsin in order to bring family members into the operation by expanding (without having to buy expensive quota in Canada) and are now among our top dairy producers.
The unpopular and largely ineffective Margin Protection Program for Dairy Producers (MPP-Dairy) replaced MILC in the last Farm Bill and runs through December 31, 2018. The program was intended to offer dairy producers: (1) catastrophic coverage, at no cost to the producer, other than an annual $100 administrative fee; and (2) various levels of buy-up coverage. Catastrophic coverage provides payments to participating producers when the national dairy production margin (the difference between the all-milk price and average feed costs) is less than $4 per hundred.
A well known dairyman told me that he felt some sort of production control was needed and reminded me that the MPP-Dairy program originally had a production limit clause which might have prevented the current milk oversupply but it was removed. “We had a chance, but we blew it,” he says.
That’s what we do
“We (farmers) are trained to produce ever more milk cheaper, easier and better,” another dairyman says. “That’s what we do and we’re not going backwards."
That’s the dilemma. Too much milk and no acceptable solution to stem the flow or consume it here or abroad. Quotas have little backing so far. Free production, as it is, means a continuing loss of family farms. It is indeed the time for any good suggestions and some action or as my farmer friend say “we’ll kill ourselves.”
John Oncken is owner of Oncken Communications. He can be reached at 608-222-0624, or email him at firstname.lastname@example.org.