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Don’t blame Canada for dairy woes, look around

Pete Hardin
Ag is a global market

The shocking news that nearly 100 Wisconsin dairy farmers received termination notices from their buyers this spring is simply a sign that undisciplined milk production in the Great Lakes region is overwhelming our milk marketing system. Don’t blame Canada for Wisconsin’s dairy woes.

From February 2013 through February 2017, milk production has soared in Michigan (+21.8%), New York (+10.9%) and Wisconsin (+7.6%).  Michigan has not made commensurate investments in dairy processing plants to handle those big boosts in farm milk output.

Canada’s revised Class 7 milk pricing system has been in the works for over one year and represents that nation’s efforts to protect its dairy farmers. Canada has closed a “loophole” in the original North American Free Trade Agreement. That “loophole” (in the recent words of a Cornell University dairy economist) was allowing more than two million lbs. a day (farm milk equivalent) of U.S. “ultra-filtered milk” for manufacturing use. Canada closed that loophole, with more than a year’s advance notice.

Rather than play the “Blame Canada” game, let’s look at dairy realities here in the Wisconsin — and then propose some solutions.

  • Grassland Dairy Products reports Canadian buyers have terminated purchasing daily equivalent of about a million lbs. of concentrated, liquid product. That volume is about 1.25% of Wisconsin’s daily milk output.
  • Heavy volumes of cheap, out-of-state milk are invading Wisconsin — at prices several dollars under the Class III (cheese) milk price, delivered. Dozens of trailer loads of out-of-state milk have arrived in Wisconsin every day this spring. USDA’s Dairy Market News reports each week discounted prices at which out-of-state milk is delivered to Wisconsin dairy plants. Right now, depending upon the day of the week, out-of-state milk is priced at $2.00 to $5.00/cwt. below the monthly federal milk order value.
  • This problem will continue. Annual contracts for Michigan milk are being offered to Wisconsin cheese plants are prices of $2.00/cwt. BELOW the Class III (cheese) milk price.
  • Dairy warehouses are chockfull of cheese and dairy protein powders – a fact reflected in current, low Cheddar and nonfat dry milk powders.

What can Wisconsin’s dairy industry do???

  • To reduce milk production, Wisconsin dairy farmers ought to cull more aggressively, and perhaps drying off milk cows a couple weeks earlier than scheduled during seasons when milk is abundant. Late-lactation milk is low in components (butterfat, protein), and generally higher in Somatic Cell Count anyway.
  • Wisconsin Department of Agriculture Department and Consumer Protection should collect and publicly report the following information each week: Volume of out-of-state milk, defined by milkfat and solids content; the state(s) from which all that milk is coming and the price per cwt. paid by Wisconsin plants for out-of-state milk.
  • Short-term, the Department of Natural Resources should allow land-spreading of farm milk as a fertilizer.
  • Wisconsin’s agriculture department should investigate whether it’s really appropriate to use the “Wisconsin Cheese” logo on cheese made from out-of-state milk. Is that logo “good enough” for the cheese to be made in Wisconsin from out-of-state milk?  What do consumers expect? 
  • The State of Wisconsin should terminate investment tax credits for dairy farm expansions. Taxpayers should not fund more subsidies to expand Wisconsin’s farm milk output. We’ve got enough milk.
  • Dairy plants should be encouraged to forward-signal their producers about how much milk is needed on a monthly basis. (Example: If the buyer signals it needs 98% of the milk in June 2017 that the same producer made in June 2016.)
  • The federal government should be purchasing frozen hamburger for distribution to hunger relief programs, both at home and abroad. No discrimination: beef cattle and dairy cattle all make good hamburger.

Don’t blame Canada for our dairy problems. Undisciplined milk production in the Great Lakes states is THE problem. Michigan and New York State have made little investment in dairy processing facilities, relative to those states’ milk production growth in recent years. Result: Out-of-state milk is flooding into Wisconsin, denigrating our state’s dairy farm families’ spirits and asset values.

The dilemma of American agricultural system is that the blessing conferred to us for such an amazing capacity to produce food can too often turn into a curse that ruins this nation’s food producers.

Hardin lives near Brooklyn, WI, and for the past 38 years, has published The Milkweed, a monthly dairy marketing report.