So - what next?
That’s the overriding question on the minds of most of Wisconsin’s 9,167 licensed dairy producers after the month long dilemma that received national attention.
A recap - Grassland Dairy Products notified some 70 of their Wisconsin and Minnesota dairy producers that effective May 1, the company would no longer be able to pick up and process their milk, thus leaving the farmers with no home for their milk.
The notification came by letter on about April 1, thus giving a month’s notice - a month in which these dairy farmer’s lives would be turned upside. Just imagine the emotional confusion in these families minds as they sought and couldn’t find a new dairy plant to take their milk. In most cases it would probably mean the loss of a life’s work and the total family income. It turned out that happily all the producers ultimately found new processors for their milk.
But life on a dairy farm has now changed, Never before (in my memory) has a dairy producer ever worried or even thought about having to find a home for the milk produced on the farm. There has always been a demand from processors for milk. The result of the event and the following month of conversations, political discussion and serious thinking has resulted in serious thinking among dairy farmers and the industry who went through several weeks of emotional stress.
I recently visited with dairy farmers Tony and Fawn Senn and their family who milk about 145 cows near Beaver Dam and were one of the former Grassland producers.
“Yes, we were shocked to get the letter,” Tony says. “And, didn’t know what we were going to do if we didn’t have a home for our milk. You can’t just sell a herd of cows at the last minute if you didn’t find a processor. I had hopes that something would happen as pressure was put on the processors."
The Senns and their Swiss Miss Dairy did find a home with Dairy Farmers of America (DFA), the Kansas City - based dairy cooperative along with about 40 other of the remaining dairies.
“We signed six month contracts with DFA which can then be converted to regular cooperative membership contracts and we will then get full milk premiums, several which aren’t available to new members,” Senn says. "But, we’ll be OK.”
Senn says he is going to remain active and vocal in seeking some changes in the current milk production system in Wisconsin and all of dairyland.
“We can’t just continue ‘going big’," he says. "There has to be some sort of a supply management system. I know most farmers have never considered it but we have to start somewhere. Just look at all the milk coming into Wisconsin from other states, at cheap prices, and all the milk that has been dumped from New York to California in recent months.”
The viable milk producers cut by Grassland have now found new homes but the subject of too much milk is far from answered. Among the unanswered questions are these:
** What is Wisconsin going to do about the oversupply of milk? It appears all the processors are “full” and there is no ready market for the seemingly endless milk supply.
** Are other dairy producers in danger of losing their milk processor as happened at Nasonville Dairy and Grassland Dairy Products, both who blamed a loss of buyer contracts for cutting producers. Note - The loss of an unfiltered milk market in Canada was the product at Grassland, a cheese contract loss was the factor at Nasonville. Every dairy processor has supply contracts with end users and distributors. Are they secure and forever?
** What about the remaining 600 - 700 producer patrons at Grassland Dairy, is their milk future secure?
** What about the new dairies planned in Wisconsin: The Tuls family built the 4,600 cow Rock Prairie Dairy east of Janesville several years ago. They also own Emerald Sky dairy, previously owned by John Vrieze. In March 2016, Emerald Dairy was purchased by Todd Tuls and now operates under the name of Emerald Sky Dairy. A year ago Emerald Sky submitted a preliminary application requesting the DNR modify its WPDES permit to accommodate an expansion from 2,460 animal units to 8,804 animal units; and recently received reluctant approval from Green county to build a 5,000 cow dairy in Green county. That's nearly 19,000 additional cows coming online in about four years from one family and I’m sure there are other expansions in the works around the state. That’s a lot of milk hitting the market - on the other hand I’m sure there is a processor willing to process the milk.
** Is it possible to instigate some sort of supply management program in Wisconsin considering the opposition when the word was even mentioned over the years? Who knows? It’s possible with milk going through dairy cooperatives - Land O’Lakes and Organic Valley already have instituted forms of production limits - but cooperatives do not handle all the milk, maybe 60 - 70 percent, the rest goes through privately owned plants.
Wisconsin’s Ag Secretary says there cannot be unlimited milk production unless there is an unlimited demand and marketplace for milk. “I think what happened should be a wake-up notice to all of us in the dairy industry.”
Brancel does not advocate a national supply management system like Canada’s, but he says processors should be communicating with their producers about how much milk they need. “If that means the processor sets up a supply management system with the farmers they do business with, and that’s what works, that’s very, very beneficial to all of us.”
Brancel also says lenders need to be more engaged and know what processors are looking for before advising farmers to borrow and invest in projects. He says doing so without fully knowing about the markets first can lead to bad financial decisions.
Former banker, now dairy development director at Vita Plus, Gary Sipiorski, suggested to me about the same thing.
“Ag lenders will want more information about the milk market where a potential borrower is sending milk before granting loan,” he says.
He also says most milk goes to processors without a contract. The owner of a mid-size cheese factory agrees: it’s always been a verbal agreement.
Of course, dairies can continue to get bigger and fewer, but is that what the dairy industry wants? We’ll see. Then comes the question: Who will milk the cows if the Hispanic milkers aren't there - an issue for another day.
John Oncken is owner of Oncken Communications. He can be reached at 608-222-0624, or email him at email@example.com.