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Editorial: Oversupply killing the nation’s dairy farms, leading to search for a sustainable model

  • This April 11, 2019 photo shows dairy Farmer Dwight Raber in Louisville, Ohio. Raber, of Raber Dairy Farms in northeast Ohio's Stark County says he can no longer make a living by milking cows and has lost money the last two years. State statistics show the number of dairy farms in Ohio dropped to fewer than 2,000. ( Julie Vennitti/The Canton Repository via AP)


Saturday, May 04, 2019

It has never been easy to make a living from dairy farming, but with milk prices depressed for the fifth year in a row, many farms across the nation now are struggling merely to survive.

Sadly, they often fail. Vermont has lost more than 400 dairy farms in the past 11 years, while nearly 700 farmers got out of the dairy business in Wisconsin last year alone. “I’ve been in this for over 40 years, and this is as bad as it’s ever been,” Jacques Parent, who runs a large dairy operation in northwestern Vermont, told The Associated Press last month.

Oversupply is the main reason milk prices have declined by nearly 40% over the past five years. Increased production has been driven in part by big corporate operations employing new technology that makes milking more efficient.

At the same time, Americans’ per capita consumption of fluid milk has dropped nearly 10% over five years, extending a trend that stretches back nearly three decades.

And in Wisconsin in 2012, then-Gov. Scott Walker implemented a program encouraging dairy farmers to ramp up production to meet a goal of producing 30 billion pounds of milk a year by 2020, overtaking California as the nation’s leading milk producer. That target was met by 2016, but the resulting glut devastated the industry, according to farm advocacy groups.

More recently, the situation has been made worse by the Trump administration’s imposition of tariffs on foreign steel and aluminum, which have drawn retaliatory tariffs from Mexico, Canada, Europe and China on American dairy products. And the administration’s immigration policies also are making it difficult for dairy farmers to get the labor they need.

The 2018 farm bill includes an expanded insurance program that may provide modest help when it is rolled out next month.

Under this “dairy margin coverage” program, farmers pay premiums and receive payments when the gap between milk prices and feed prices reaches a certain level. “It’s appreciated, but it’s only a little Band-Aid,” says Parent.

No wonder, then, that some American dairy farmers are looking north of the border for a sustainable model. At a two-day dairy summit held in Jay, Vt., last month, a petition was circulated calling for a national milk supply management program, something that Canada created back in the 1960s, at another time of low milk prices.

The idea is to limit the supply of certain commodities — dairy, poultry and eggs — to what Canadians are expected to consume, so that stable, predictable prices result. Farmers basically hold a license to produce up to a specified amount. This quota system prevents a market glut, and farmers receive a guaranteed minimum price, negotiated with processors, for their output.

Canada also puts high tariffs on imports that exceed fixed quotas, something that has infuriated Trump, who promises that a new North American trade agreement will eventually provide greater access to Canadian markets for American dairy products.

That remains to be seen, and time is running short for many farms.

The supply management system is disdained by free-market economists, who maintain that Canadians pay more than they otherwise would for dairy products and that the poorest families are hurt the most. But supporters of the system argue that consumers in New Zealand, which abandoned its supply management system in the 1980s, have not reaped the benefits.

A supply management system would be a departure for the United States, where many farmers, along with much of the public, generally fear government intervention in markets, but the circumstances are sufficiently dire that it just might have some appeal.

Kara O’Connor of the Wisconsin Farmers Union framed the issue this way at the Vermont summit: “We’re inviting people to consider whether consumers might pay a few cents more for a gallon of milk in exchange for saving hundreds of dairy farms per year and paying less in taxes for government dairy programs.”

Indeed, many communities value farms not only for what they produce but also for keeping land open and in use and for preserving a traditional — if challenging — way of life. The trade-off O’Connor lays out is well worth considering.