Make tariffs work for Wisconsin farmers
Another dairy crisis has arrived, even if consumers haven’t noticed.
Earlier this year, milk prices were so low that the Agri-Mark Dairy cooperative in the northeastern United States sent a phone number for a suicide prevention hotline with farmers’ milk checks. In Pennsylvania, Dean Foods cancelled its contracts with dozens of farmers due to an apparent excess of milk on the market. Western Wisconsin, meanwhile, has seen more farm bankruptcies than any other region in the country.
What can be done about this? To start, place tariffs on dairy imports.
President Donald Trump’s tariffs on Chinese imports, from steel to televisions, sends the message that free trade can be challenged. Farmers have been particularly caught in the snares of this global experiment to “free” markets, from the elimination of price support programs in the 1980s to having country of origin labeling (otherwise known COOL) repealed during the Obama administration.
Trump changed course, legitimizing his tariffs by evoking the Trade Expansion Act of 1962 that allows for restricting trade in the interests of “national security.” If steel and aluminum count for national security, then why not dairy?
According to Wisconsin Milk Marketing Board, 15 percent of the United States’ total milk production is from Wisconsin, as is 26 percent of the nation’s cheese. Wisconsin’s dairy industry is responsible for over $43 billion of industrial sales. What these figures conceal is the steady decline in the number of family farms.
According to the Progressive Dairyman, every state has seen a decrease in the number of dairy farms over the last 10 years. In Wisconsin, the number of licensed dairy herds from 2007 to 2017 fell by over 5,000, from 14,640 to 9,520.
Have consumers noticed this destruction of family farming? Probably not, at least in terms of the prices they pay for dairy products. The U.S. Department of Agriculture reports that milk, cheese and butter consumption has remained constant, if not slightly increasing, over the last decade or so.
While consumers rest content, farmers are not. The price per hundred pounds, which farmers use for milk, has swung between $25 and $10, moving like a roller coaster every two or three years. Graphs that display milk prices show fluctuations similar to what one sees on a hospital EKG monitor.
This brings us to the topic of tariffs. The very same products that factor into the milk supply — and that therefore determine its price — are being imported. These items, in addition to fluid milk, include cheddar cheese, butter, and nonfat milk powder.
Over the last five years, the USDA has noted that the United States both exports and imports these products. In 2017 alone, the United States exported 339,000 metric tons of cheese, while at the same time importing 139,000 metric tons.
Nonfat milk powders are even more troubling. MPCs, also a powder, often replace nonfat milk powders to supplement powdered skim milk, cereals and nutritional bars, infant formula and yogurt. MPC imports, according to the USDA, vary between 4 million to 15 million tons yearly.
The effect of these dynamics is quite clear: imports increase supply and drive down the price of domestic milk. Why import products that cause milk prices to drop for domestic producers, forcing family farmers into bankruptcy?
Last April, President Trump tweeted: “Canada has made business for our dairy farmers very hard, watch!”
Well, it’s been a year, and farmers are watching as milk prices plummet and banks foreclose on their properties. This is not the first time farmers have experienced falling milk prices.
What is different now is that the White House is challenging free trade. So if Trump is to stay true to his words, then he needs to treat the dairy crisis as a national crisis.
What can be done immediately? Tax dairy imports.
Pahnke grew up near Fond du Lac and graduated from UW-Madison in 2004. He is vice president of the Family Farm Defenders and an assistant professor of international relations at San Francisco State University in San Francisco, California.