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Free Minds & Free Markets

Thanks to Decades of Government Meddling, U.S. Dairy Is Going Through a Crisis

It's time to let the free market dictate dairy production.

Richard B. Levine/NewscomRichard B. Levine/NewscomThis week Dean Foods, the nation's largest dairy, reported steep quarterly losses. The Wall Street Journal notes the company is trying to sell its "struggling business" even as its share price sinks and the company cancels contracts with dairy farmers thanks to poor demand and a glut of dairy products.

It's not just Dean Foods that's listing. Dairy farmers around the country are in the same leaky boat. Many people agree that dairy farming in America has reached a crisis stage. How'd it get there?

The downturn in milk prices began after record highs in 2014. They've spiraled since. Milk prices are now at their lowest point in 50 years.

As Civil Eats reported last year, dairy farmers are losing money on every sale. "Many of them have been forced to shutter their operations due to a milk glut and its attendant low prices—as of this writing, $16.33 per hundredweight (in layperson's terms, about 11.5 gallons), considerably less than the $22 it costs to produce."

The number of dairy herds in Wisconsin has fallen by half in just 15 years. A staggering 700 dairy farms in the state closed just last year. Similarly dire data has emerged in New York, California, Ohio, and Vermont.

Overall, dairy consumption (including fluid milk, cheese, and butter) has plummeted over the past four decades. Per capita, Americans are drinking nearly 100 lbs. less fluid milk than they did in 1975. That figure is offset only slightly by increases in cheese consumption.

At face value, the crisis is the result of shrinking demand for dairy products. We're simply seeing the market correcting itself. And market corrections are both natural and fine, if sometimes painful.

In December, retired dairy farmer Jim Goodman penned a piece in the Washington Post that described why he'd sold off his herd and left the business that had been in his family for more than 110 years. In the piece, Goodman described dairy farming as combining "hard work and possible economic suicide."

Goodman blamed "[i]neffective government subsidies," along with oversupply, falling prices, USDA organic regulations, and tariffs.

Goodman has a point. A closer look at the problem reveals that decades of meddling in the market by the U.S. Department of Agriculture (at the behest of Congress) is likely responsible for the scope of today's crisis. While the USDA works really hard to make the dairy industry thrive, the agency's actions ensure just the opposite.

Two of the USDA programs at the heart the problem are marketing orders (present in nearly every state) and checkoff programs. "USDA marketing orders set minimum dairy prices," I note in my recent book, Biting the Hands that Feed Us, "while the checkoff program takes money from dairy farmers to promote milk and other dairy products."

The USDA has known for decades about the problems that are created by price supports, including marketing orders. For example, a 1983 notice in the federal register discusses how USDA price supports for dairy "encourage oversupply." Oversupply, of course, drives down the price of dairy products (unless those prices are guaranteed, in which case the supply simply mushrooms). That leads to calls for more support.

Such support includes massive government purchases of dairy products. Indeed, the USDA regularly buys up surplus dairy products that are overproduced due to the agency's own policies. Just this month, for example, the USDA announced the agency was buying up surplus cheese "to encourage the continued domestic consumption of these products by diverting them from the normal channels of trade and commerce."

Last year, the USDA bought $50 million worth of surplus milk and gave it to food banks. In 2016, I wrote a column focusing on U.S. government purchases of surplus dairy products, which were intended to address the same "combination of overproduction and low commodity prices" that we see today. The agency was busy buying 11 million lbs. of surplus cheese that year. That sounds impressive (impressively wasteful?) until you consider that at the time, more than 1.2 billion lbs. of surplus cheese were sitting around in U.S. warehouses.

If you're a U.S. dairy producer today, the news is bad. But if the present is bleak for America's dairy farmers, the future may be even worse.

CNBC reported last week on a new synthetic milk that's "made in a lab using genetically engineered yeast programmed with DNA to produce the same proteins found in cow's milk." The lab-created, lactose- and cow-free milk, marketed by startup Perfect Day Foods, could be available to consumers within two years.

The one bright spot for U.S. dairy producers—cheese—could also soon sour. That's because the European Union may tighten naming rules for various regional named cheeses, such as feta and Parmesan. According to a report in Feedstuffs, such action could serve to prohibit foreign imports of such cheeses, which could result in losses of up to $20 billion for U.S. dairy producers.

Many dairy farmers are going out of business. That will probably continue as demand shrinks and competition from nut milks, lab-made milks, and other alternatives continues to grow.

Decades of central planning have harmed America's dairy farmers. But that needn't continue. Congress and the USDA should end the price supports and other programs that helped produce the current crisis. Ending taxpayer support may seem counterintuitive. But it only appears that way because the bizarre and ineffective alternative—to keep using taxpayer money to encourage overproduction and, then, to buy up the resulting surplus milk and cheese—has become normalized.

Photo Credit: Richard B. Levine/Newscom

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  • OpenBordersLiberal-tarian||

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  • MSimon||

    It could be worse.

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  • 0x1000||

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  • Don't look at me!||

    But the government should totally run health care.

  • 0x1000||

    Encourages oversupply and low prices! Doctors just sitting around waiting to treat us! Excited to do so in face! What's not to love?

  • SIV||

    CNBC reported last week on a new synthetic milk that's "made in a lab using genetically engineered yeast programmed with DNA to produce the same proteins found in cow's milk." The lab-created, lactose- and cow-free milk, marketed by startup Perfect Day Foods, could be available to consumers within two years.

    Forward!

  • Tu|pa||

    Forward, not backward! Upward, not forward! And always twirling, twirling, twirling, twirling towards freedom!

    Libertarian Party 2020 slogan.

  • 0x1000||

    She should drink more milk. If it can grow a tiny calf to an 800 lb monster in a matter of months, it can surely reverse her unfortunate weight loss.

  • Qsl||

    Strangely, the glut of dairy hasn't translated into lower milk or cheese prices (my guesstimate is that they have risen at least in the double digits in the past 5 years or so), and premium milk products are vastly more expensive and harder to find (artisanal cheeses still fetch a pretty penny).

    So what is going on here?

    Has cost of production gone up? Can't dairy farmers put the excess production towards cheeses (good ones are aged for a few years) while they recalibrate their production?

    If I am paying more and farmers are getting paid less, where does the money go?

  • JFree||

    Not in CO. Milk is dirt cheap here. There could have been a market for adding value on dairy farms a couple decades ago - but the main effect of the dairy subsidies (most of which are indirect like irrigation and capital/land distortions not direct) has been to eliminate the small dairy farm in favor of the massive volume industrial milk producer where there is no capability of producing any niche product.

    Changes in size of dairy farms

    # of dairy farms dropped from 648,000 in 1970 to 75,000 now.

    dairy production from smaller (less than 100) farms - 30-50% in states like NY/WI/PA -- 0-2% in CA/West
    dairy production from volume (more than 500) farms - 10-30% in states like NY/WI/PA -- 90% in CA/West

    Only the smaller farms could convert to specialty. But it's the large farms that are feedlot-based (so get support from grain producers, railroads, etc) and 'outside investor' oriented (so get support from banks/Wall St). Just more turning ag back into a plantation system.

  • TJJ2000||

    ^Think you nailed something here. The article is all about dairy count - not head count.

    Thus the small dairy outfit has been disappearing for 15-years and the super-dairy outfits are replacing them - of which a lot has to do with being more efficient which would also drive down pricing - Just a guess; but I think the article is misleading and probably because of what you just pegged.

  • a ab abc abcd abcde abcdef ahf||

    The article is all about dairy count - not head count.

    Would you say consumption correlates pretty well with consumption?

    Overall, dairy consumption (including fluid milk, cheese, and butter) has plummeted over the past four decades. Per capita, Americans are drinking nearly 100 lbs. less fluid milk than they did in 1975. That figure is offset only slightly by increases in cheese consumption.
  • JFree||

    The huge mega-milk factory (1000+) isn't actually more efficient. It takes better advantage of indirect ag subsidies - eg the subsidies that result in excess grain production - or the CO River diversion subsidies that allow CA dairies to grow their winter alfalfa in the Imperial Desert. They are also friendlier to outside investors (eg hedge funds) looking for an alternative asset class for their portfolio. But that is not efficiency in any real sense on the production side.

    There are scale efficiencies at the processing plants (pasteurization, drying into powder, etc). And I'd bet that those - eg the need for steady volume within a larger collection area - is what is actually driving the subsidy program now.

  • soldiermedic76||

    Bullshit they aren't more efficient. They are by leaps and bounds. Modern mega dairies produce about 150% more milk per cowthan smaller operations using pasture or other similar systems. Please argue this with me. This is what my degree is in and what I do for a living.

  • soldiermedic76||

    Also,larger dairies (and any agricultural producers) is better able to offset growing fixed costs and variable input costs. Which is also a type of efficiency. Smaller dairies also cannot afford to put in better systems such as robotic caurosel milking parlors which have been shown to improve efficiency and milk production. Nor can the afford modern mixing trucks which allow better ration formulation improving feed efficiency. Nor can they afford the best genetics, which improves all around efficiency. Etc. Etc. Etc.

  • JFree||

    Efficiency of top 5 producing states

    One of those is daily milk/cow:
    ID - 66; CA - 63 (both are almost entirely megacow)
    NY- 62.5; WI - 62; PA - 56 (all are mainly smaller - and PA has Amish production which shouldn't be included in any efficiency stats)

    I don't see much diff there. And both ID and CA are on the high end of feed costs cuz all megacow have to buy ALL their feed.

    I agree capital equipment is usually a scale thing. But like all fixed capital costs, the efficiency measure for the BUSINESS (v the machine) is how much is that equipment used/day. A small farm doesn't NEED a rotomilker merrygoround. Megacow does cuz all them cows tend to want to be milked at the same time. But that doesn't make it more efficient. It just makes it a necessary expenditure for megacow that is not necessary for smallcow.

  • soldiermedic76||

    Actually, Idaho also is one of the leading states in milk production per head and so is New Mexico (actually number rone and it also tends to have huge dairies). Carasouls actually increase production per milking.
    What is the u it for 66 vs 63. Is it pounds of milk per cow per day because those are extremely low numbers and I know Idaho is far higher. Is that pounds of milk solids? Lets go with the most common measurement pounds of milk per cow per day. The difference of ten pounds of milk per day per cow is a huge difference. And the difference between profitable and not profitable. You are arguing something you know nothing about. Also, we can argue quality. Pounds of milk solids per cow per day. You keep proving you don't understand agriculture. Ten pounds of milk on average per day per cow means a 1500 head dairy will produce an additional 2700+ tons of milk per year. At a sale price of $15/cwt that will mean an additional $2,250 per day or more than $821,000 per year. However you measure it this is more efficient (if we measure feed per pound of milk this also would work in the large dairy states with large dairies, favor).

  • soldiermedic76||

    We could also argue pounds of milk per acre per cow. Again the mega-dairies ad you call them, do much better.

  • JFree||

    I'm sure the megacows do better re milk/acre/cow. Because they are CONTAINED animal feeding operations. Those cows could be sitting on concrete. It doesn't matter. They don't get their food from the land they are on. They get it from food grown on land hundreds/thousands of miles away which magically won't appear in any stat re milk/acre/cow.

  • soldiermedic76||

    Production per cow per acre also takes I to account how much land it takes to feed them. It is part of the calculation. And not all are on concrete. In Idaho most are dry lots.

  • soldiermedic76||

    And they don't import it from 100s or thousands of miles away because freight is costly and the further you have to freight it the more it costs you to produce it. You find most of those mega dairies own their own hay fields, corn fields and buy byproducts like culled potatoes and sugarbeet pulp from nearby sugar refineries and french fry factories. In Florida and California they feed a lot of citrus pulp from orange juice factories. They also feed a lot of almond and walnut waste in California. Texas and California and New Mexico feed cotton seed. You again are proving how little you actually know. The land necessary to support the cow is always part of the state.

  • soldiermedic76||

    Part of the stat not state.

  • JFree||

    And they don't import it from 100s or thousands of miles away because freight is costly and the further you have to freight it the more it costs you to produce it.

    Once again - I have stats, you have blather. Railroad transportation of grains

    In 2016, 1.5 million carloads on the Class1 railroads carrying 149 million tons of grain. Roughly half is corn. Rail costs maybe 2 cents per ton-mile for bulk commodity transport - and cheaper for the big regular volume customers. They ain't moving that around for the shits and giggles. Or for the export market which is by barge to New Orleans. That is very cheap and the corn IS being moved mostly for feed/fodder - not Doritos.

  • soldiermedic76||

    Your citation doesn't support your supposition. First the majority of origin states listed are not primarily corn states but wheat states, and they also happen to, in the case of Minnesota have their own dairy industry. Second all except Texas,of the major terminal states are not major dairy states, but all are port states. Texas is a net exporter of corn and grows a considerable amount of it in the panhandle. Almost all grains are shipped by rail. Elevators all are almost exclusively situated alongside railroads. Grains are rarely processed into finished products in the state they are produced in.

  • soldiermedic76||

    Did you bother to even read your citation before posting it? Because it states that corn consumption for feed and ethanol combined was only 36% of overall corn consumption, which was a decrease yet corn transportation remained the largest need for grain carts. Also nowhere does it support your statement that corn for export is mainly transported by barge. New Orleans is no longer a major export hub but Portland/Vancouver, Seattle and Houston are, as is Chicago via the Great Lakes and the St Lawrence seaway. And what were the three largest terminal states? Texas, Illinois (both of which are also a major corn producers) and Washington. So it appears most grains are transported to major export hubs. Most upper Midwest wheat for the Pacific rim and corn for the Pacific rim (some of our largest markets) are shipped through Washington state via BNSF railroads. Why do you think elevators are built next to rail lines?

  • JFree||

    New Orleans is no longer a major export hub

    Port of South Louisiana

    "Largest tonnage port in the Western Hemisphere".

    And from their wiki page - According to the North American Export Grain Association, as of August 2005, these three ports (POSL, Baton Rouge, New Orleans) serve as a gateway for nearly 55 to 70 percent of all U.S. exported corn, soy, and wheat. Barges carry these grains from the Mississippi River to the ports for storage and export. Imports to these ports include steel, rubber, coffee, fruits, and vegetables.

    But hey - I'm sure you know better

  • soldiermedic76||

    I was mistaken. I admit that I was basically g this in my own experience and almost all grains and pulses grown in Montana, Wyoming, Idaho, Washington, Oregon and s good portion of southwest Canada go through Seattle or Portland, Vancouver. However, as you pointed out about Illinois being a point of departure for barges (which is also true of Minnesota) much of the rail traffic from inland states is to either sites along the Mississippi or it's tributaries, i.e. Illinois as both a major origin and a major terminal state (and hub of most rail lines from the western and Midwestern states) or to coastal states.

  • JFree||

    First the majority of origin states listed are not primarily corn states but wheat states

    WTF? The four largest corn producing states are Iowa, Illinois, Minnesota, and Nebraska. Three of those four are the biggest origins. Iowa mostly has Class 2 and Class 3 grain loading so sends grain TO the Class 1 railroad hub in surrounding states for long distance delivery depending on where its going. Only NDakota is mostly wheat - but its also #8-10 for both corn and soy (with S Dakota #6).

    Second all except Texas,of the major terminal states are not major dairy states, but all are port states.

    The Port of South Louisiana exports MOST grain. 60-70% of the US total - which means prob close to 100% originating from the Midwest. And the grain gets there by barge.

    FFS - CA is #1 for dairy (#4 for cattle), #32 for corn;
    TX is #6 for dairy (#1 for cattle), #12 for corn;
    WA is #9 for dairy (#20 or so for cattle), #30 for corn.

    They do not grow that feed grain in state.

    And IL is a terminal because - that is where the main barge terminals load.

    Fundamentally - you are just dishonest. I'm done with this shit.

  • soldiermedic76||

    I already addressed California and Washington, California feeds a lot of byproducts from orange and nut production (and wine and cotton) as well as corn, wheat and barley. Washington feeds byproducts from wine, potatoes, apples and cherry production, as well as wheat, corn and barley. Texas feeds mainly corn, which is mostly locally produced, but sorghum and millet are also common feeds, as is cotton seed (again I stayed this). I will admit that I made a mistake when I stated most of the major origin states are not mainly corn producers, your right that North Dakota is the only one that meets this criteria. As for your statement about the terminal states not being major seaports how was I wrong? Most all grains shipped to Washington goes out of state. Also, where do you get the idea that feed corns are not grown in the states you list. They are, also, many grains that are rejected for human consumption in these states, culled grains, grain screenings etc are fed in these states. Almost all the corn grown in Washington is for feed. They are not growing sweet corn. It is usually grown on land owned by the dairies. I am not in the least dishonest. I may have made a mistake, wish I admit, but it wasn't intentional. However, you have made multiple mistakes and continue to make mistakes.

  • soldiermedic76||

    The fact is, while corn is widely used as a food source, it is not the only food source, and in many non-traditional corn states other feed sources are utilized whenever possible. Idaho and Washington feed tons of potatoes. Also, rather than soybean meal as a protein source, like you see in the Midwest, they feed canola meal. Idaho and Washington dairies also feed a lot of barley, especially Pacific pearl barley, which has the added benefit of having higher crude protein then corn, but is considered "hotter" or more likely to cause acidosis than corn. But despite this, it's cheaper and more available. Yes some corn is delivered to these states, but farmers and ranchers try to limit how much they use because it is cheaper to purchase locally produced feed.

  • JFree||

    I'm sure they feed local scraps when possible. And local hay to produce local manure. But the fact is that dairy/meat account for a lot more food by volume than nuts, oranges and potato peelings. That means the waste from nuts/oranges/potatoes is purely marginal re the feed requirements that dairy/meat require. Esp if you gotta find seven tons of that waste - every - single - day.

    Iowa SELLS the corn it produces. Much is used in-state with ethanol production (#1 producer) and hogs (#1) and cattle (#6) and dairy (#12) and eggs (#1). But they still produce a lot more corn than they need locally. It is just silly to pretend that eg CA can also rank as top-10 in those same products (ex hogs, ethanol) - while producing less than 1% of the corn that IA does - cuz they have walnut/grape waste. CA cows aren't dumpster diving hippies. They import corn from IA - in huge amounts. IA (and other corn country) is a core part of milk/acre in CA (and out West generally).

    What the rail transport showed is that grains go WEST - not East at all. East is where the people are. Corn for people is turned into food in the Midwest and the food is then shipped. Transported corn is for animals. It doesn't go to ranch/grazing land (the top 17 cattle states are west of Miss River) but for CAFO/feedlot stuff out West. Dairy being mostly CAFO out West.

  • soldiermedic76||

    Wow, you completely misunderstood my point completely. The byproducts are actually a fairly large portion of a ration for beef and dairy cattle. It is fed to dairy and beef cattle which in turn makes milk and beef. God, just stop.

  • soldiermedic76||

    Which I made a mistake not wish, along with multiple other type errors.

  • soldiermedic76||

    The grain gets to the barges by train though. Unless you are really close to a river port delivering by truck is cost prohibitive and thus states like Colorado will ship their grains by train to a river port or coastal port. The grain shipped out of the POSL may have arrived by barge for the most part, but a good portion of it was shipped to the river by rail before being loaded on barges. Hell, a good amount of wheat is shipped to Vancouver Washington via the Snake and Columbia River, but it's shipped to Lewistown and Clarkston from the Camas Prairie and Palouse by rail except for the closest communities, who ship by semi-truck.

  • soldiermedic76||

    You do realize that making a mistake is not the same as being dishonest don't you? Especially as I admitted I made a mistake in my assumption about the decreased importance of Southern Louisiana and I also admitted I made a mistake in my assertion about origin states. But it doesn't change the fact that only 36% of corn grown in the US is got animal feed and that would not explain the large amount of corn shipped by rail (which as I pointed out often is to coastal ports or to river ports, as with other grains shipped by rail). For bulky items shipping is cheaper than rail, rail is cheaper than semi, which I am sure you know. So how would a southwestern Nebraska corn farmer or Western Kansas corn farmer get his grain to the export market? By rail to Texas or by rail to a river port.

  • JFree||

    it doesn't change the fact that only 36% of corn grown in the US is got animal feed and that would not explain the large amount of corn shipped by rail

    That amount of corn shipped by rail (149 million tons - half being corn) is not that large. Entire corn production was 366 million tons in 2018. 75 million tons is 20% or so. The corn for ethanol doesn't get shipped as corn but as ethanol. The corn for people gets shipped mostly as food products. Midwest is full of ethanol plants and food manufacturers close to inputs. Exports mostly go by barge. That leaves mainly bourbon grain and livestock feed - and only the portion of that not consumed in corn country.

    And the reason the terminal points are WA and CA is cuz that's the end of the line for the rail. Then they turn around and go in the other direction. If they are dropping off carloads here and there along the way, I have no idea whether that was counted or whether they just looked at final destination of the train. You're making way too much of those as ports. They are DIRECTIONS from the Midwest. Key point being - none of the main destinations are East. East is where the people are (if people corn was being shipped) - but not the feedlot type ops.

  • soldiermedic76||

    I am an animal scientist with a specialty in ruminant nutrition. My graduate research involved both range cattle and dairy cattle. I have taken both graduate and undergraduate upper level dairy management and beef cattle management classes. I have taught undergraduate classes and have taught production farmers and ranchers. You really fail when you try and lecture me about CAFOs and their pros and cons. Why do you think most beef finishing facilities are near corn producing states or pork and poultry production is primarily limited to states with high corn production? And dairies are located where they are at? Because it is cheaper to move cattle to closer to the feed than move the feed to the cattle. There are only a few smaller feedlots in Montana, one of the leading calf producing states, yet it's cheaper to buyers to ship our calves to Nebraska for finishing then it is to import enough corn to finish them in state.

  • soldiermedic76||

    Now let's deal with your supposed cheap freight. On average a mature cow can only consume 2.5% of their bodyweight on a dry matter basis. A high producing dairy cow 90+ lbs of milk per day cannot support this production level on forages alone. In fact concentrates, i.e. corn will make up anywhere from 25-50% of their ration (finishing beef steers are much higher towards the end). The average Holstein weighs around 1500 lbs empty body weight. That means they have to take in 37.5 lbs of dry matter per day. Figure 90% dry matter on average for number 10 dent corn or similar feed corn variety. That equates to 9.4 lbs on dry matter basis and 10.4 on as fed. Freight is charged on a as fed basis. So for a 1500 head dairy that is a little over 7 tons per day, figure average freight distance from corn states to a dairy state like Idaho (Idaho grows a lot of corn, almost every bushel is feed corn) is 1000 miles, and figure 10% wastage. So we figure 8 tons per day at 2cents per ton per mile and 365 days per year comes to a feed bill of $58,400 per year. So hardly cheap.

  • soldiermedic76||

    The price doubles if we figure closer to 50% of the ration. This was for 25%.

  • soldiermedic76||

    I am an animal scientist with a specialty in ruminant nutrition. My graduate research involved both range cattle and dairy cattle. I have taken both graduate and undergraduate upper level dairy management and beef cattle management classes. I have taught undergraduate classes and have taught production farmers and ranchers. You really fail when you try and lecture me about CAFOs and their pros and cons. Why do you think most beef finishing facilities are near corn producing states or pork and poultry production is primarily limited to states with high corn production? And dairies are located where they are at? Because it is cheaper to move cattle to closer to the feed than move the feed to the cattle. There are only a few smaller feedlots in Montana, one of the leading calf producing states, yet it's cheaper to buyers to ship our calves to Nebraska for finishing then it is to import enough corn to finish them in state.

  • soldiermedic76||

    I am an animal scientist with a specialty in ruminant nutrition. My graduate research involved both range cattle and dairy cattle. I have taken both graduate and undergraduate upper level dairy management and beef cattle management classes. I have taught undergraduate classes and have taught production farmers and ranchers. You really fail when you try and lecture me about CAFOs and their pros and cons. Why do you think most beef finishing facilities are near corn producing states or pork and poultry production is primarily limited to states with high corn production? And dairies are located where they are at? Because it is cheaper to move cattle to closer to the feed than move the feed to the cattle. There are only a few smaller feedlots in Montana, one of the leading calf producing states, yet it's cheaper to buyers to ship our calves to Nebraska for finishing then it is to import enough corn to finish them in state.

  • soldiermedic76||

    On average I believe that the increase is like 4 lbs per cow per milking using a carasoul. If you factor a standard three times a day milking, this is an increase of twelve pounds per cow per day on average. Some of this is because of decreased milking time, thus more time for feeding. I've been on big dairies and small dairies. I've consulted on them both. And the small dairies tend to have much longer milking times and thus are incapable of doing three milkings per day (which the literature supports as being the most efficient milking schedule for non-fresh cows, fresh cows should be milked four times a day then decreased to three times once past peak lactation). Heifers also will have better lifelong production if milked more frequently. During their first lactation. And will probably have greater longevity in production, another mark of efficiency. Try running a 200 head cow operation through a 16 stall all in all out herring bone parlour at the same rate that a mega dairy as you call them run 1500 head through a 50 head stall robotic carasoul.

  • soldiermedic76||

    And make sure that you have enough workers to do good pre and post that cleaning and dipping as well as hook them up and unhook them when finished.

  • JFree||

    Interestingly, it looks like the Amish are leaving the dairy industry

    But they aren't blaming the low prices on declining consumer demand OR a screwed up govt. They blame what they see as lack of representation and empire-building by large, officially nonprofit milk cooperatives that now are assuming control of dairies and milk processors, and have broad powers. Among the powers cooperatives wield are the right to deduct the costs of marketing and milk transportation from dairy farmers' checks without having to itemize those deductions to the farmer.

    Which is what I was getting at too. It's the PROCESSORS that need constant volume to offset high fixed costs and deliver a constant return. And respond to lower consumer demand by jacking up their charges to the farmers.

  • soldiermedic76||

    Farmers also need to offset high fixed costs. I am in the process of starting my own ranch and work with farmers daily. Fixed costs are the highest portion of our costs. Land prices especially continue to go up (and do leases). Equipment costs, mortgages and operational loans, labor etc. Please stop, you don't know what you are talking about.

  • soldiermedic76||

    I could explain how processors tend to have very low profit margins, how the only way they can make a profit is high volume and that without processors farmers and ranchers would be dead in the water, but trying to explain the complexity of commodities driven markets to you seems rather futile. I actually have real world and advanced education in this subject, yet you continue to try and argue something that it is obvious you don't understand. The Amish can't compete and their product is questionable quality. But they blame the processors. They are often rejected because of contaminants (fecal) or high somatic cell counts but it is the processors fault not theirs?

  • soldiermedic76||

    Also processors don't charge farmers, they buy from farmers. So no they aren't jacking up their prices. They maybe lowering them, but farmers sell their milk to processors (and ranchers sell their calves to feedlots which sell them to processors, wheat farmers sell their grain to elevators which sell to processors). You don't understand the industry at all.

  • JFree||

    So no they aren't jacking up their prices.

    I do understand what I am posting and you are deliberately either misunderstanding it or misstating it or not even fucking reading it (I said jacking up their charges to farmers - which would be DEDUCTED from the price they pay farmers for their milk - which is exactly what the quote in the article says).

    You are off on 1000 different tangents that don't have a damn thing to do with either my original comment or anything I have linked to.

    And yes - my cousin is a farmer (grain). I even worked there one summer. Doesn't mean I am a farmer. Doesn't mean I could even step in if he got injured.

    But I damn well DO know how to understand how businesses and industries and supply chains work (and don't when they don't) - and in particular to know where govt subsidies to those end up going - and why they end up going there rather than somewhere else - to see who actually benefits from them.

  • soldiermedic76||

    "Which is what I was getting at too. It's the PROCESSORS that need constant volume to offset high fixed costs and deliver a constant return. And respond to lower consumer demand by jacking up their charges to the farmers." This is a direct quote from you. Did you or did you not state that the processors charge the producers? Yes or no?

  • soldiermedic76||

    If you answered yes (which you have to to remain honest) then you are dead wrong. Processors may dock payments for low quality, but they are still buying the product from farmers. They are just offering a lower price. Elevators can charge storage fees, but once they own the grain these fees stop. You don't understand agriculture is the problem. Your business experience had not suited you for this because as much as you argue otherwise you haven't proven your point that it is processors driving subsidies. As for me going off on a 1000 tangents, point to one non-sequitor or one non-salient point I made. I explained to you why your supposition are mistaken and how your knowledge is inadequate to argue this. Yet you continue to argue despite your obvious lack of basic understanding of how the industry works. Yes subsidies may hurt farmers in the long run, but those subsidies were originally put into place by farmers unions and such to support family farms.

  • soldiermedic76||

    I can't find a single tangent I went off on that wasn't directly in response to something incorrect that you stated. Also, you want to know one of the biggest reasons farmers end up going bankrupt? It's because processing plants are closing left and right and without processors farmers have no markets. Alaska's dairy industry is completely dead because it's creamery closed it's doors. Washington and Idaho's beef industry has shrunk because of fewer packing houses.

  • soldiermedic76||

    Dockage is normal for both quality and for transportation. This farmer would understand that. Also, I have seen the accusations made that cooperatives are taking over dairies but the evidence doesn't support this. They contract with farmers, most of which also belong to the cooperative voluntarily (as this story alludes to). These cooperatives were founded by the farmers to help them market their products more efficiently, which is common in agriculture bulk gets better pricing and had lower shipping costs. This farmer is stating that normal business practices such as charging for shipping is to blame and not lower demand. Name me one industry were shipping isn't charged?

  • JFree||

    It's because processing plants are closing left and right and without processors farmers have no markets.

    And yet you somehow think those dairy subsidies have absolutely NOTHING to do with processors.

  • soldiermedic76||

    I didn't ever say that they had nothing to do with processors, I stated processors are not the sole reason or even the primary reason for subsidies.

  • JFree||

    Did you or did you not state that the processors charge the producers? Yes or no?

    Yes they charge the producers by DEDUCTING those charges from the price they pay for the milk. According to the Amish article, they charge for 'marketing', for 'transportation', etc. Neither of which has a damn thing to do with the quality of the milk - which yes I'm assuming they would also deduct a charge for inferior milk.

    The difference is that the dairy farmer has absolutely zero control over the price they end up having to pay for 'marketing' or 'transportation' or any financial shortfalls/requirements of the processor. It is just something that is passed TO THEM. They have 100% control over the quality of the milk.

    Now - if you're the saying the Amish are a bunch of lying little shits who are trying to avoid responsibility for themselves and freeload off others and planting stories in the media blaming others. Well what could I possibly say to that sort of assertion?

  • soldiermedic76||

    It is normal, as I stated above to charge for transportation and for marketing. Actually, marketing is the very reason farmers formed co-ops.

  • soldiermedic76||

    They do have a certain reputation, however, whining about being charged for marketing, from a co-op the voluntarily belong to, and marketing is the very reason farmers join co-ops, seems a bit ridiculous don't you think?

  • soldiermedic76||

    JFree serious question, have you actually ever been on a farm or talked to a famer or have any agriculturally related education? Do you live in a rural area or an urban one? And how long have you lived in that place? The fact that I have shown multiple times how wrong your assumptions are in this thread and how you have little to no understanding of how production agriculture works,yet you continue to try prove me wrong is simply mind boggling.

  • soldiermedic76||

    You have obviously don't understand what you are talking about. What subsidies do large farms get from grain producers and railroads? They can better utilize these things because they can offset the cost with volume of production but that isn't a subsidy. At some point they grew from a small farm (most corporate farms, yes even the major super dairy farms, are family owned but Incorporated for liability and tax reasons. Have you any experience with agriculture? Any classes? Do you know the difference (without Google) between Holstein, Jersey, milking Shorthorns or Guernsey's? How about an easier one, Holsteins and Hereford?

  • soldiermedic76||

    Maybe you can talk about the pros and cons of leasing vs owning land? Bring vs growing your own hay? Purchasing a newer, larger swather vs fixing your older lesser swather. Alfalfa vs clover. Corn vs barley. Silage vs hay?

  • subpatre||

    Get off your high horse. You're being expert all right; an expert donkeyhole. I stripped my first teat before you were born and my cousin holds most of the patents to dairy RFID. I did have to look up "swather", meaning :"never been near the East Coast". My kin have the same degrees you have and —after some real farming— say much is worthless. OTOH, a friend with no education sells (beef) straws for $5-20k each.

    If you can't put your argument in non-technical terms then your position is unsupportable; dairy profit or loss doesn't hinge on technical details.

    Overall you are arguing for giant mega-farms tied to mega-dairies centered in mega-cropland. Many other industries —poultry, hogs, and to some extent beef— have been down that road before with bad results. All it takes is a whiff of disease, sabotage, recall, or miscalculation.

    Mega industries are vulnerable to a single point failures that cannot happen in the diversified and distributed model we live with now. Especially important with food commodities that can't be rebuilt like a factory. We still have a viable, fault resistant dairy system. We don't need to screw that up, and if it means being slightly less efficient, then so be it.

  • soldiermedic76||

    Bullshit. First, you are making a huge assumption as to how old I am compared to you. Second, poultry and pork remain centralized in a fairly small really adjacent to major croplands. And third centralization is not evil. Also, I am neither arguing for or against mega farms I am pointing out the reality. As for swather, that's what we called them on the Palouse, hardly the fucking east coast dipshit. Good for your friend, though $20,000 a pop for beef semen seems a bit unrealistic. The highest prices I've ever seen in a catalog, for Kobe beef semen which and other speciality breeds, tends to $75 a straw. And of course education doesn't equate to practical experience but fucking JFree doesn't even have education much less experience. I, however, do have both.

  • subpatre||

    First, you are making a huge assumption as to how old I am compared to you.
    Could be, but I started in '59 or '60 and there wasn't such a thing as "ruminant nutrition science" when I graduated. It may be I'm wrong, but odds are I'm not.

    So have your laugh with your best buds, and then come back and explain how some of the folks make a retirement living on mixed-breed beef for 1-2 hour per day avg. Or a fulltime two-man fodder and dairy keeps two families going plus a new car for cash every other year; they work hard but they have better income than most of the area lawyers or doctors for the same hours.

    Details matter, but if that's all you got you don't have an argument. And it sure doesn't help when you crap on some of the folks whose votes might help.

  • soldiermedic76||

    Mixed breed beef ranchers only work 1-2 hours on average every day? Really? Where) and a fodder based dairy is a niche market who is probably making a huge markup on his overpriced woo. Oh look all natural, hormone free, gras fed milk Buffy let's pay twice as much as it's worth because science is hard. However, this business model is not suited for major growth (yes organic has grown fast though it appears to be levelling off) but it remains a very small portion of the market. Mixed breed beef is extremely common and takes advantage of something called heteroris which is a technical detail. As is niche marketing. Your examples just proved my point. But keep trying. Also, ruminant nutrition as a specialty within Animal Science dates back at least to the 1930s.

  • soldiermedic76||

    And where do you get the idea that dairy profits don't hinge on technical details? Really, any dairy Farmer I've ever worked with (and wheat farmers, beef rancher etc) understands technical details and realizes the importance of paying attention to technical details? Are you really telling me that parlor size and type have no impact on profitability? That breed type, feed type etc has no impact on profitability? Really? Explain then why Hoslteins are by far the most numerous dairy breed in the US, if technical details don't matter? In fact you referred to your cousin developing RFID, which is the very definition of using technical details to become more profitable. Your want is laughable.

  • soldiermedic76||

    Your entire rant not want.

    Good God man, there is nothing logical or sane about your rant. It is completely contradictory. Farmers don't rely on technical details to make a profit. Wow, I need to tell my friend Dana that tomorrow, a wheat farmers and beef rancher, he's going to laugh his ass off. Maybe my friend Tom, he'll get a kick out of that as well. Fuck, you made my day. Fuck, technical details don't matter. You're killing me.

  • soldiermedic76||

    Gee, I wonder if the fact that profits don't hinge on technical details is the reason every farmer around has asked me for a copy of the universities research report on wheat variety trials? Or why if you want to start a fight ask a Hereford rancher about Angus cows. Or a Jersey farmer why he choose a less productive cow than a Holstein. Could it be because he is marketing to a niche market where the higher milk solids have an advantage over higher volume.

  • soldiermedic76||

    And where did I argue for or against mega industries? I was pointing out the reality. However, if creameries continue to go under dairy will consolidate into more centralized locations, which I agree is problematic. Cow calf operations, on the beef side also are not very concentrated but feedlots tend to be more so because it is cheaper to feed steers near the source of feed then it is to ship feed to where the steers are. I also would hate to see small dairies die off, as many of my friends work on small dairies. Farm consolidation is not necessarily desirable but it is reality because under current conditions large farms are better equipped to ride out low commodity prices. However, farmer owned co-ops and farmer owned elevators help smaller farmers market better. I work with the Montana Wool Pool which is a producer driven organization that allows smaller sheep operations to pool their wool and thus market it better. It has allowed sheep producers to improve pricing by an average of 26% per cwt. Pooling equipment and other resources also is a way for smaller producers to compete. A number if my friends ship their steer calves together to make a full trailer load, thus reducing shipping costs.

  • Flinch||

    I might suggest the bottled water craze combined with fast food places serving up almost exclusively soda that milk... has just been displaced for a good part of the masses. Combine that with federal policies that generally crush small farmers and it looks like we're going out of business as a nation: screw up the food supply, and we'll be like many African nations - importing food at higher costs on an IMF treadmill.

  • Robert||

    They can't let the glut reach the consumer, for that would reduce the quantity demanded thru the usual channels. Then they'd have to buy or destroy even more of it. Price supports chase their tail.

  • Qsl||

    Don't know that I see that here.

    Periodically, I'd see fire-sale of cheeses years back, which lead to folks buying out the supply and trying their hand at cold smoking. That doesn't happen anymore (better to donate it to charity it seems), and would suggest to me that it is price dependent. Likewise, there were folks who would raid the local stores for discounted meat to use in side BBQ projects. Those have mostly died off too.

    There is a particular customer you get from the usual channels that isn't applicable to people looking to exploit inefficiencies. If it makes more economic sense to destroy product, so be it. I am unaware of the particulars.

    But otherwise it is like stating the person who buys an eco-shitbox is the same as the person who buys an SUV. They are not. Some people are price sensitive, and would buy more if it were cheaper.

  • sharmota4zeb||

    The linked to article about failing dairy farms in New York describes farms in Sullivan County, which is less than 2 hours drive from Manhattan. In this case, it makes economic sense for the dairy farms to shut down and become new housing units.

  • Bubba Jones||

    I don't get it. If there are price floors that are high enough to drive production, what is the deal?

    There are some very important details that were left out.

  • leninsmummy||

    I'm sure nationalization of the dairy farms will both reduce supply and increase price, which would solve all the problems mentioned in the article.

  • Heresy Hunter||

    Milk price is low, but (with inflation) it is not much lower than it was 30 years ago when it was about $2.19/gallon. Milk has historically been a fairly cheap commodity. The current market price is not the source of the problem.

    As someone who works on a dairy farm myself, I can tell you that the current situation is not good. Not good at all. One thing to rememer, though, is that the government does more than just buy milk to keep up prices. It also controls the way in which milk is priced for the farmer. For some reason, class 3 prices (hard cheese prices) have been determined as a limit price for class one (fluid milk). Of course, this may not reflect real market demand, but it is what the government has decreed in order to keep prices from falling below a certain level.

    When prices are kept artificially high, even if they still seem low, by such regulations as well as marketing orders and also various subsidy programs, farmers, especially huge multi-thousand cow dairy farmers, will never be driven out of business. This market distortion causes the milk supply to stay too high. Over time, the milk market will inevitably be glutted with over-production, and prices will continue plunging downward for farmers even while processors and stores maintain a relatively even price.

  • soldiermedic76||

    And I see no mention of how input and fixed costs (especially land and equipment) continues to increase while commodity prices have decreased. And this is across the board. Yes, farmers and ranchers have borrowed heavily, but that is because it is either grow or purchase new equipment to try and improve efficiency and offset growing fixed costs, or die. Unfortunately, borrowing has only increased debt load. And commodity prices do not appear to be headed up.

  • soldiermedic76||

    Plus speculation had replaced to a degree supply based pricing of commodities. Forward pricing can be a possible solution but it sounds great until you get your first margin call and can't make the difference. Or like a number of wheat farmers I deal with, who forwarded priced wheat (or pulse crops) in the spring of 17 only to have a historic drought wipe out their crops and they either had to purchase wheat (or peas and lentils) to cover their contracts or face being in default. No one predicted that drought. But a lot of farmers are now in terrible trouble because they did what they were advised to do.

  • Untermensch den 2||

    Out of curiosity, where are you based? Currently, milk retails for $1.29/gallon where I am in Indiana.

  • block30||

    As far as government meddling goes, let's talk about the crack down on obtaining raw milk from the farm. Not only can you not buy raw milk at the store, some states-even Wisconsin-prohibit you from going to the farm with your own containers and purchase raw milk for yourself. Let us take our own risks!

  • sgreffenius||

    No clear explanation for why policies described in the last sentence result in dairy farmers going out of business.

  • soldiermedic76||

    He is trying desperately to attribute this to a single cause (but this is actually a problem throughout agriculture, at least at the producer level and has been a brewing storm for quite awhile). His explanation dismisses the fact that checkoff dollars have helped in multiple ways. And that checkoff dollars were first created by producers as a means to help offset decreasing market shares and fund research to improve efficiency. And to provide education and market research.

  • soldiermedic76||

    Programs such as beef quality assurance and other such programs, increased research into value added cuts etc, all funded by checkoff dollars helped save the beef industry in the 1980s.

  • soldiermedic76||

    You can argue the validity of involuntary paying of these funds, but to state they have not been beneficial is incorrect. Currently our state, one of the leading hemp producing states, is debating the formation of an advisory panel. This will be funded by checkoff dollars. Who is calling for it, the producers, many of who produced hemp last year under contract, and now they can't collect on those contracts nor can they dispose of the commodity they grew because the company reneged and the product is now basically useless because it has molded. It is in court. But these farmers are still out huge amounts of money and there appears to end in sight for them.

  • Longtobefree||

    This will go away as a problem when Whats-her-name passes the wealth tax, and all the farmers have to sell their farms to pay the first year of the tax. Then the efficient factory farms will buy each other, and all will be well in a federal government controlled kind of way.

  • soldiermedic76||

    What is a factory farm? This is a term created by Luddites who don't understand how modern agriculture works. It is meant demonize farmers and ranchers. I remember a story an acquaintance of mine, a PhD ruminant nutritionist, told. He and a group of industry professionals were conducting a tour of beef production for chefs from Seattle and Portland. It was called from Ranch to Plate and took them through every level of production from the cow calf to the processor. They were driving off a medium sized feedlot near Wenatchee Washington when one of the chefs asked "so when are we going to see one of these factory farms I hear so much about?". My acquaintance looked at him and said "we just left one" nad the chef said "but it's outside and the animals looked well cared for".

  • Robert||

    And it's not even a USAn problem per se. It was ~20 yrs. ago that a writer at Reason (maybe Jim Bovard, maybe another) put it as, approximately, "The world is awash in surplus butter & cheese." For some reason dairy long ago caught the fancy of gov't market meddlers all over the world. There's no place left to give away the surplus to. Maybe the butter can be converted to biodiesel & given to the Arabs.

  • soldiermedic76||

    At least the US subsidizes to keep prices down. In Norway they restrict how much milk each producer can produce and the surplus is destroyed. This is an attempt to keep prices up. Not that either system is good.

  • soldiermedic76||

    And the Norwegian government doesn't pay for what they destroy.

  • Sanjuro Tsubaki||

    Decades of bad policy? Try almost a century of stupid policy.

  • Flinch||

    Setting prices. Marketing product. Buying cheese. All done by government. Discovering market forces under such a scheme is about impossible.
    Price controls have historically been disastrous with unintended dislocations. Government ads [usually PSA's] go through I don't know what kind of brother in law deal to arrive at paying 10x or worse what an ad ought to cost to produce so that cash can get skimmed for campaign contributions. Buying cheese... could be a problem, in that where does it go? I certainly saw none of it in the military.
    We're so close to communism, it's scary. No wonder we are suffering a grinning/bug eyed Occasional Cortex as a media presence.

  • No Longer Amused||

    If it comes from a nut it isn't "milk" except in appearance. Milk comes from mammals.

  • Trainer||

    Except that "butter" and "milk" have been used for other things for centuries. I grew up eating apple butter and pear butter that my mom made and, of course, she grew up eating them and her mother grew up eating them and they got the recipes from people who came from The Old Country. Same for nut milks such as coconut milk. People have been making those for as long as people can remember. The only issue now is that the dairy industry wants to rewrite history and the dictionary out of fear of losing money.

  • tlapp||

    Absolutely, supporting prices encouraged excess production. The pricing signals were not in place to adjust for lower demand and the change has a more severe impact than a free market would have experienced.

  • ||

    heard s/b herd

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