Industry experts say a supply management system similar to Canada’s might be the only way to solve a deepening U.S. dairy crisis.
An oversupply of milk, declining prices and rising production costs are affecting conventional and organic producers alike, driving many farms out of business while straining even the best-run operations.
“There’s just too much milk being produced at too low a price,” said Jim Goodman, dairyman and president of the Washington, D.C.-based National Family Farm Coalition, speaking as part of a recent nationwide conference call.
The event, co-presented by Madison, Wisconsin-based Family Farm Defenders, also featured Sarah Lloyd, a dairy farmer and Wisconsin Farmers Union special projects coordinator; Patty Lovera, policy director for Washington, D.C.-based Food & Water Watch; Ed Maltby, Northeast Organic Dairy Producers Association executive director; and Ralph Dietrich, a Canadian dairy farmer and Dairy Farmers of Ontario board chairman.
Speakers say major policy changes are required. Under the Canadian system, farms are subject to quotas that dictate the amount of milk they can produce, which keeps prices stable.
U.S. milk prices are cyclical, but the current low has lasted for an unprecedented fourth year, making it difficult for many farms to survive.
“Wisconsin is losing 1 1/2 farms per day,” Lloyd said. “People are choosing to get out because they can’t do it. We need something that will really solve this problem.”
“The status quo is not working,” Lovera said.
The next Farm Bill, which Congress is currently working on, does not adequately address the crisis dairies are facing, according to the speakers.
But a radical policy change might be unlikely during a midterm congressional election, leaving farmers to make do by cutting costs and hoping global economic conditions take a turn for the better.
Many factors outside an individual farmer’s control affect their bottom line.
Two years ago, European Union farmers had their quotas lifted &tstr; they operated under a supply management system similar to Canada’s &tstr; and as a result began making more milk, which contributed to excess product on the world market. This, in turn, hurt U.S. exports.
Goodman said there’s little financial incentive for young people to take up dairy farming, organic or conventional.
“It just doesn’t pay to the point where anyone would want to get into it,” he said.
Goodman called for immediate establishment of a $20-per-hundredweight price floor, congressional milk price hearings, and for the USDA to purchase excess milk for distribution to food banks.
Cooperatives could ask their members to voluntarily cut production in an attempt to reduce oversupply.
“But if everyone doesn’t agree it won’t work,” Goodman said. “Everybody has to be in and the program has to be designed in that manner.”
Organic milk fetches a higher price than conventionally produced milk, which prompted many farms to change practices in recent years. But that also generated more supply, which has created the same situation traditional dairies are now faced with: too much milk, not enough demand.
Goodman also called for stricter enforcement of organic production rules regarding pasture, replacement animals and feed. Some farmers are taking short cuts and selling milk that’s not truly organic, which contributes to oversupply and hurts those who play by the rules, he said.
“We are seeing a lot of hardship, especially among younger farmers trying to transition into organic and those with high levels of debt,” Maltby said. “The costs of production and inputs on the organic side are much higher. It’s reached a crisis point for what farmers can sustain with these low prices.”
Canada’s supply management system has been in place for 50 years. It’s in stark contrast to the U.S. dairy market where farmers strive to increase efficiency for greater production, and grow herd sizes as younger family members join the business.
In Canada, bigger isn’t better.
“It just makes your problem worse if you keep milking more and more cows,” Dietrich said. “You have to be satisfied with a certain level. More is not always more. Some farmers don’t like it, but that’s the way it has to be. Farmers work hard and everybody deserves a fair wage. The supply management system has proven to be a better system for everyone.
“Yes, I think it’s possible (in the U.S.),” he said. “No, it would not be easy.”
Willard Peck, co-owner of Welcome Stock Farm, a prominent Saratoga County, New York, dairy farm, said the debate over supply management has raged for years. When times are good, it quiets down. When times are bad, it becomes a hot-button topic again.
Peck said he understands the benefits of supply management, but there are also major drawbacks. “It’s a real detriment to the next generation to enter farming because you can’t grow,” he said. “That’s kind of anti-American.”
Some of Saratoga County’s most successful family run farms have increased herd sizes over the years in order to generate more revenue.
“That’s been a downfall in Canada,” Peck said. “You’re limited on the amount of milk you can make. It’s a roadblock to entry into the business.”