On today’s show I talk for a bit about our recent family vacation to Cape Cod, the food, fun and family. Then I delve into a more serious topic, the collapsing dairy industry, both here at home and abroad….
Let me first say that I am a firm believer in free markets, capitalism and supply and demand economics, however the crippling situation our nation’s dairy farmer’s are in is un-acceptable. Seeing our dairy farmers go down is something that I can’t stand by and watch happen without trying to help. The recent suicide and mass cow execution in upstate NY is the final straw for me. We cannot sit back as a dairy consuming society and do nothing in regards to this issue.
Our American dairy men and women have a proud tradition of providing us with quality dairy products. Their hard work and dedication to farming not only produces healthful foods, it also keeps our farmland intact and safe from development. Unfortunately their reward for the hard work is low prices at the wholesale level which forces them to pay out of pocket to keep the milk flowing. This is a travesty. Our dairy farmers provide us with a critical food supply, we cannot stand by and let our farmers go under. These are our neighbors, our friends and our family-we need to help.
A little education will help you understand the problem. Dairies are paid by the hundred weight (100 lbs of fluid milk). Each gallon weighs approximately 8.3 lbs. The dairy truck comes to the farm and pumps the milk out a few times per week or month, then the farmer gets his or her milk check. The check includes bonuses for components which are butter fat and protein. The higher the components, the more cash the farmer gets. This is reward for producing quality milk, IE rich in fat and protein. The problem is these monthly milk checks have dropped to dangerous low levels. Read this article to learn more.
The government is trying to help but it’s us, the retail buying public that has the real power to support our farmers. We can use our dollars to help. Again, I am not a political activist but I feel we all need to pay “fair prices” for dairy. This includes the processors and retailers. This means setting a standard “fair price” for milk. There is a certain price that a dairy farmer MUST receive in order to run a economically feasible dairy.
I also believe the supermarket industry needs to help in this area as the retail cost for dairy products such as fluid milk, has NOT declined as fast as the wholesale prices. The supermarkets are using the principles of supply and demand to their advantage which is perfectly within their right in a free market economy. But I don’t think they are willing to admit or step in to help as thousands of farmers go out of business each month due to poor dairy economics. There is a point where playing the market so to speak, will ultimately bring us to the point of having no reliable dairy source. This is a serious food security issue and we all need to wake up and get busy.
Truth be told, one of the major problems contributing to the decline in dairy prices is the global recession which has caused dairy exports to sharply decline to do lower demand abroad. This results in a huge glut of fluid milk in the market which causes prices to drop. Out west, huge dairies called factory farms, have operations with thousands of cows all jammed into an unhealthy ecology in order to produce huge volumes of milk to sustain the export market. These huge farms are producing so much milk that they cannot sell it all to their local dairy processors so they rely on exports to sell extra production. Often times, this milk is low quality and produced in conditions that are miserable for cows, another issue to tackle.
When these huge dairies can’t export it they simply sell it in bulk at incredibly cheap prices to other processors here in the USA. For example, instead of SC processors buying and selling SC produced milk, they opt to buy over-flow milk from other dairies to increase their profits. This depresses local prices and hurst the dairies in their own states! Ridiculous. In my mind, farms should produce and sell their products ONLY in their local state or region and should not be allowed to artificially manipulate prices by dumping it on other states. If there were laws on the books restricting this price manipulation, the dairies would have to reduce herd size in order to produce the amount of milk their state or region consumes, therefore having a healthy dairy economy. This is a prime example of why I have been an ardent supporter of locally produced foods, local makes sense.
I was in Germany a few years back and it was so amazing to see how people in the Bavarian community I was staying in, Dinkelsbuhl, only bought and drank their local beer. There was not 200 beers to choose from that we’re imported from all over the globe or other parts of Germany, just the high quality beer brewed by the locally owned and operated brewery. People we’re quite happy with their local beer, I was too! This makes sense. Too much choice is not always a benefit.
The Dairy Economy works something like this.
In each state, dairy processors collect milk, bottle milk, and turn milk into other “value-added” products such as butter, sour cream, low-fat milk, cheeses etc. then sell it to retail stores and supermarkets. The farmers may get 70 cents to a dollar per gallon of liquid milk, the processor marks it up, then the supermarket markets it up again and we buy it at retail. This is the way a mass-marketed food system works. There is nothing inherently wrong with this except the farmer is usually the one whole makes the least and they are producing the raw materials, which is unfair in my opinion.
They take huge financial risks, work 24/7- 365, and wind-up getting screwed. Again, the supply and demand is not working here. In my opinion it’s globalization and the dumping of excess liquid milk inventory that is the real culprit.
In my situation I buy my milk direct from my dairy man every 2 weeks. This allows him to get a fair price $5 per gallon, for his milk and to stay in business. He sells roughly 20% of his milk direct, the rest is picked up by the processor. He has told me that without direct sales, he would be out of business. I realize that many busy families simply cannot visit a dairy farm to get milk, life is just too hectic. So the supermarket is the answer.
In order to get dairy products in the homes of all citizens of this country, we need a market driven system in which dairies, processors, supermarkets and consumers all play a critical, harmonious role. That is to say the first 3 parties have to make a profit in order to stay in business and we need to pay a fair price for dairy. Nobody can abuse the symbiotic relationship or “play the market” to an excessive level, without destroying the dairy economy. This is what is happening now, and it has reached a critical point. It makes no financial sense for most dairies to remain in business. This is serious and requires action, focused action.
The facts are clear and indisputable, dairy farming is becoming extinct. This sad fact has led many families to purchase a “back yard cow” to be sure dairy is available, something we are and have been considering for a long time.
So, what can be done to help? In any crisis situation there are many ideas and actions that can have a successful outcome. This is what I propose; lets all sign a petition to indicate our willingness to participate in The Harvest Eating Dairy Contract. There needs to be 4 parties to this contract, 1-dairies, 2-processors, 3-retailers, 4-consumers..us.
First order of business is to establish a regional “fair-pay” price that allows each dairy to operate with a profit that allows them to continue producing dairy while being able to support their families with dignity and respect. Secondly, processors need to commit a portion of their budgets to this “fair-price” price. Then retailers need to shave a little profit here and we the consumer need to pay a tad more. Would paying another .50 a gallon break your budget? Most likely not.
Let’s not go down the “big government” rat hole and think that uncle sam can fix this problem by taxing us, creating a bureaucracy, then handing out the remaining money to the dairies. That will never work. This needs to be solved by the market participants, numbers 1,2,3,4 as outlined above.
Of course I know most people do not want to pay more for dairy, especially in this economy and I also know that businesses with tight operating margins do not want to give up any profit, or be dictated to, but is there really another solution? If so, I’d love to hear about it because the system as it stands is not working. Think about the utter desperation and panic that farm families by the thousands must feel while trying to earn an honest living while the milk prices are so low they can’t stay in business.
I am going to start talking to my local farms, milk processors and retail stores in order to put some action to these words. I’d appreciate any and all thoughts, suggestions, comments and ideas you may have.