Report Blames Monopoly for Decline in Small Dairy Farms

12/8/2012 7:00 AM
By Paul Post New York Correspondent

Not All Farmers Agree With Findings



A new report blames two parties for having a stranglehold on New York’s dairy industry, causing a dramatic reduction in small family farms.

The study, called “The Economic Cost of Food Monopolies,” says that New York lost 64.6 percent of its dairy farms in 24 counties from 1982 to 2007, undermining upstate rural economies in the process.

But not all dairy farmers agree with the report’s findings, issued by the nonprofit Washington, D.C.-based Food & Water Watch.

“We’d all like to go back 100 years when every small farm had 30 cows,” said Bill Peck, a partner in Welcome Stock Farm in Bacon Hill. N.Y. “There were a lot less headaches. But that’s impossible with the business environment we’re in now. The margins are so tight in the dairy industry that there’s very little money to be made.”

The only way farm families can keep younger generations involved is by increasing the size of their herds. Otherwise, there wouldn’t be enough money for younger people to make a living, and they would take better paying nonfarm jobs that require a lot less time and effort, he said.

Welcome Stock has more than quadrupled from 140 milk cows in 1991 to 650 now.

However, the report blames the trend toward fewer, bigger farms on an alleged arrangement between Dean Foods, the nation’s biggest milk processor, and Dairy Farmers of America, the largest milk handler.

The report found that the number of milk processing plants in New York fell almost in half, from 61 in 1992 to 37 in 2007 and that other large dairy product manufacturing plants closed over the past decade. The declining number of plants made dairy farmers more dependent on fewer milk processing companies and fewer, larger milk handlers.

A class-action suit brought by dairy farmers in New York and other Northeast states charged that the biggest milk processor and biggest milk handling cooperative worked in concert to effectively lower the prices farmers receive.

Dairy farmer Gretchen Maine of Waterville, N.Y., said, “Independent dairy farmers in New York cannot get fair prices for their milk when only a few firms buy, handle and process milk. The corporate style co-ops like DFA and the big processing companies like Dean have bought up the marketplace and now dairy farmers just have to accept whatever low prices they offer us for our milk while paying higher prices for our inputs.”

As dairy farms disappeared, the remaining farms became larger to survive and secure sales with the big handlers and processors, the report says.

However, David Wood, owner of Eildon Tweed Farm in Charlton, said that’s not necessarily the case. Wiped out by a January 1988 barn fire, he now has 1,050 milk cows (more than 2,000 total animals), one of Saratoga County’s largest herds.

Wood, a former Cornell Cooperative Extension agent, is president of the small seven-member Mohawk Valley Cooperative that sells milk to Elmhurst Dairy, in Queens. Virtually all production is sold as fluid milk in metropolitan New York.

“I don’t think that Dean Foods or Dairy Farmers of America are the reason for larger farms,” he said. “It’s more a natural outcome of economies of scale. The more cows you have, the more costs are spread out. So you can produce milk at a lower cost. The consumer is the one that benefits.”

New York State Agriculture Commissioner Darrell Aubertine, an active dairy farmer, declined comment on the report, spokesman Joseph Morrissey said.

However, Patrick Hooker, a former New York state agriculture commissioner who now serves as senior director of industry development-agribusiness for Empire State Development Corp., said he has no personal knowledge of an alleged agreement between Dean Foods and DFA.

“I don’t think the premise of the report is accurate,” Hooker said.

The trend toward fewer, bigger farms has taken place nationwide, outside the territory that Dean and DFA serve, he said.

With regard to bottling plants, some plants closed because they were simply too old and unable to keep up with modern efficiencies;

“In a capitalist society, manufacturing needs to be as efficient as possible,” he said.

Hooker cited Upstate Niagara, a full-service cooperative in western New York. They have their own botting plant(s) and their farms are fewer and larger, too. So it’s just a nationwide trend, he said.

“It’s just one of those economic realities, I think,” he said.

“Milk prices haven’t gone up because dairy farmers have found more ways to be efficient, so they make more milk (which increases supply and keeps prices flat),” Hooker said.

Food & Water Watch compared two New York dairy counties with different trends in their dairy farms. Historically New York’s dairy leader, St. Lawrence County lost 77 percent of its dairy farms between 1982 and 2007. Despite this drastic decline, it remained tied for the county with the most dairy farms in the state in 2007, which is indicative of the overall drop in dairy farms across New York.

On the other hand, Yates County started with very few dairy farms, but small-scale Mennonite dairy farmers migrated to the county over the past three decades. Yates was the only county to have an increase in the number of dairy farms and had stronger economic performance than St. Lawrence County, despite St. Lawrence’s status as a dairy leader.

“These two counties tell a typical story: more small- and medium-size farms contribute more to the economy than fewer larger farms,” said Wenonah Hauter, executive director of Food & Water Watch.

The study of New York dairy farms was part of a multisector examination of the cost of economic consolidation in the food and agriculture system.

Other sectors and regions included Iowa hog production; poultry production on Maryland’s Eastern Shore; organic soymilk production and organic soybean farming; and California’s processed fruit and vegetable industry.

“The consolidation of the food and farm sector is sucking the economic vitality out of rural America and shipping it off to Wall Street,” Hauter said. “These findings shine a much-needed light on the negative economic impact that farm and agribusiness monopolies have on farmers, consumers and rural communities.”

To view the report, visit www.foodandwaterwatch.org/reports/the-economic-cost-of-food-monopolies/.


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