Wednesday, June 10, 2009

US dairy crisis, message from Willie Nelson & Farm Aid

The drastic drop in milk prices paid to farmers over the past year has led to an unprecedented crisis for dairy farmers who, on average, are being paid less than half the cost of production. Low prices and high production costs threaten to push nearly one-third of dairy farmers off their land over the next couple of months, strengthening corporate control of the dairy industry and severely impacting the health of local and regional economies nationwide.

“Setting a fair price for milk won’t fix all the problems that led to the current crisis, but it may be the only way to keep thousands of dairy farmers on their farms this year,” said Farm Aid board member Willie Nelson. “Unless Secretary Vilsack takes immediate action, huge areas of the United States may be left without any local dairy farms at all.”

Dairy farmers have been hit with a catastrophic combination of factors beyond their control. Farmers are struggling to pay bills from record high feed and fuel costs; adequate credit is increasingly impossible to come by; and the price of milk paid to farmers by processors collapsed a record 30 percent in January alone, and is currently down 50 percent since July 2008. In the meantime, the top dairy processors have recently announced 2009 first quarter earnings that are up from the same period last year. The top processor, Dean Foods, reported their first quarter earnings are more than double that of last year thanks in part to the plunging price Dean pays to its milk producers.

Under Section 608c (18) of the Agricultural Marketing Agreement Act of 1937, the Secretary of Agriculture is required to adjust the price of milk paid to farmers to “reflect the price of feeds, the available supplies of feeds, and other economic conditions which affect market supply and demand for milk and its products.” Farm Aid urges Secretary Vilsack to use this power to immediately institute a set price for milk that reflects the cost of production, keeping dairy farmers on their land.

“The U.S. has a tradition of local and regional milk distribution, making dairy farmers a base for strong local and regional economies. The loss of these farms will reduce spending in small businesses, investments in banks and shrink the community tax base. If we lose a third of our dairy farms in the next few months alone, imagine the impact on these economies by year’s end.” said Carolyn Mugar, executive director of Farm Aid. “As our independent family dairy farmers go out of business, our milk supply gets more consolidated by giant confinement dairies that do not contribute to our local economies or act of stewards of the land like our family farmers do.”

The petition can be accessed by going to www.farmaid.org/dairyfarmers

Following Parke's lead, I would like to disclose that I am (proud to be) interning at Farm Aid. Cross posted from Epicurean Ideal.

6 comments:

Parke Wilde said...

Thanks for the great post, Ashley.

Some of the remedies currently being discussed include strengthening the dairy commodity price floor.

A challenge is that large industrial dairy operations really do have a lower price per unit of milk than smaller and sustainable farmers do. There isn't a single "cost of production" to cover.

This means that either this remedy fails to help the smaller farmers (if the price is set fairly low), or this remedy lets the smaller farmers survive just barely with their backs against the wall while allowing larger farmers to profit heavily at the taxpayer expense (if the price is set higher). Then, the large farms can invest some of the profits in yet more capital and technology.

Is there a risk that the good sustainable agriculture movement folks are being used as muscle for a policy proposal that doesn't really fit their goals? Is this policy proposal really just a stopgap measure, waiting for more daring policy proposals around the corner?

What a dilemma!

Farm Aid said...

What we know for sure is what we hear from the dairy farmers who are calling in our hotline--these are family farmers and they are hurting and unless the price of milk at least covers the cost it takes to produce milk, they're going to go out of business. Raising the floor price of milk for small- and mid-scale farmers also raises the price for mega-dairies--there's no getting around that. But if we don't raise the floor price, the only choice we're going to have is mega-dairies. That's not a chance we want to take. We acknowledge this is a stopgap measure; for meaningful change we need a comprehensive legislative solution that addresses inadequacies in pricing, not to mention DOJ investigation into price gouging, and antitrust enforcement. So we'll continue to work to counter and end the policies that favor industrial agriculture over family farms. But if we lose our family farms in the meantime, that work will be for naught.

Parke Wilde said...

I appreciate your response. You all are in a tragic bind, looking for policy proposals worthy of your devotion to America's family dairy farmers!

Anonymous said...

Smaller farms are not sustainable. That IS the problem. In the end, the crux of agriculture (farming) is the conversion of inedible energy, sunlight or fossilized sunlight, to an edible form. The "catalyst" is soil. Mechanization ("industrialization") increased the energy conversion rate per unit of catalyst. The "natural" economic of supply and demand and of scale effects are irrevocable. The social issues we increasingly attaching to food are much like the social issues we attach to reproduction; they vary across culture and with time. Our concerns follow sort of a Maslow's hierarchy (http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs); in plenty we are concerned about aspects toward the tip; in scarcity consumers shift down. The tragedy is that many small producers saw a fickle market as their economic salvation to overcome their scale problem.

Anonymous said...

We are 4th generation Dairy Farmers is Minnesota that milk 250 cow three times a day. Everyone says to me how can the price be so low when they haven't seen the drop in the grocery stores. I believe we have to hold the big processors responsible they want to buy our product for as cheap as they can get it and than in turn around and sell it for a profit. We deserve to at least have our cost of production covered in the milk price! Trying to hang on in Minnesota!

Anonymous said...

Willie Nelson is a big fat liar.
Willie Nelson's Farm Aid is a stinking scam. PERIOD. Willie Nelson and his crew are thieves and liars. The USDA insures all farmers against failure. Any farmer that fails is a complete idiot, or also a crook like Willie Nelson.