TAYLOR, Wis. – There’s an alternative to milk-supply management for control of base prices, according to the National Farmers Organization. With cull prices, grain prices, milk prices and calf prices depressed, Brad Rach said he thinks it’s time for action.
“We need something that recognizes the family farm and puts them on a level playing field,” said Rach, dairy director of the organization.
Maine already has a successful program that has been working well for its dairy industry for the past 15 years, according to the organization. It was used as a model for the National Farmer’s proposed plan. Rather than a quota system the plan calls for structured management of the milk supply through cost of production payments.
The idea is to have a two-tier pricing system with all milk being pooled and managed by federal milk orders. It would take an act of Congress to implement the plan.
U.S. Department of Agriculture statistics show the cost of operating differential between 50-cow dairies and 1,000-cow dairies to be as much as $4 per hundredweight. Creating a tier-based price would eliminate that disparity. Rach said he thinks big dairies would be accepting of the action because the alternative is a quota system that would cost them more for expansions.
The whole-herd buyout that was part of the 1985 farm bill was meant as an exit strategy to eliminate dairies, he said. The National Farmers program is meant to help small farmers stay economically viable. That in turn keeps rural areas strong through schools, businesses and churches.
“American milk drinkers and dairy-product fans may not realize there has been a shocking decline in the number of smaller dairy farms the past five years, while very large dairies are growing,” said Dick Bylsma, National Farmers milk-sales director. “This loss goes beyond individual farms though. Studies indicate dairy farms deliver much-needed dollars to rural economies, enhance food security and better protect the environment than larger farms do.”
The threat of biosecurity and food safety can become an issue with larger herds, Rach said. As a case in point he referred to the euthanization earlier this year of 4,000 cows at the Highland Dairy in New Mexico due to water contamination.
The proposed plan doesn’t rely on quotas and doesn’t increase milk prices for consumers, he said. It’s considered a short-term policy to give immediate help. The plan is to eventually replace it with a long-term solution.
For the program to work properly one national milk-marketing order would be established, in which all dairy farmers would be required to participate. Currently the Federal Milk Marketing Order system doesn’t cover all areas of the United States, Bylsma said. The federal milk-marketing orders have been in place since the 1930s. They provide orderly milk marketing, equity in price bargaining and ensure an adequate supply of excellent-quality milk.
De-pooling would no longer be allowed, he said.
“These changes to the (Federal Milk Marketing Order) system will bring fairness and more orderly marketing in many ways,” Bylsma said. “The most important by far is the way leveling the production-cost playing field will preserve opportunities for one of our greatest national treasures – the smaller dairy farm.”
Tom Crosby of Shell Lake, Wisconsin, is a member of Wisconsin’s Dairy Task Force 2.0.
“I like it,” Crosby said. “It needs to be coupled with long-term change. We need more than just margin protection; it’s not enough to keep people on the farm.”
Crosby milks 110 cows, finishes steers and has a beef herd.
“The first year (of depressed prices) we had our bull calves and grain prices were good,” he said. “Cull cows were high, too. In 2015 culls were worth more than our herd is today.”
Farms like Crosby’s with less than 200 cows have disappeared at the rate of 65 percent since 2000, said Richard Levins, professor emeritus at the University of Minnesota. But the number of farms with more than 1,000 cows has doubled.
“If a house is on fire, call for help,” he said about the National Farmers Organization proposal. “And think prevention later.”
In the past five decades the United States has lost 94 percent of its smaller dairy farms, Bylsma said. In 1970 there were 670,000 dairy farms; in 2019 there are fewer than 40,000.
Rach said he believes structured management would prevent dairy farms from going to vertical integration like the chicken and pork industries – and it’s more palatable than a quota system.
“This may not be perfect but show me a better plan,” he said. “It won’t be easy but we need to do something.”
Visit www.nfo.org for more information.