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 impacting conventional and organic producers alike, driving many farms out of business, while straining even the best-run operations.
The situation poses a major threat to rural communities and economies throughout the U.S., as all kinds of business from machine shops to grocery stores rely heavily on the presence of vibrant, healthy farms in their respective areas. Analysts discussed the situation during a nationwide conference call, “Real Solutions to the U.S. Dairy Crisis,” hosted by Family Farm Defenders and the National Family Farm Coalition.
“We need something that will really solve this problem,” said Sarah Lloyd, a dairy farmer and special projects coordinator with Wisconsin Farmers Union. “Wisconsin is losing one-and-a-half farms per day. People are choosing to get out because they can’t do it.”
Under the Canadian system, farms are subject to quotas that dictate the amount of milk they can produce, which keeps prices stable.
Willard Peck, co-owner of Welcome Stock Farm in Northumberland, said the debate over supply management versus the U.S. supply-and-demand system has raged for years. When times are good it quiets down. At times like this, when farms are hurting, it becomes a hot-button topic again.
The price farms get for milk always goes in cycles, but the current low has lasted for an unprecedented long time, heading into its fourth year, making it difficult for many farms to survive.
Peck said he understands the benefits of supply management, which he believes also has 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, so sons and daughters can join the business. “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.”
But dairy analysts say the status quo is no longer acceptable in America and that major policy changes are required. The Farm Bill, which Congress is now working on, does not adequately address the crisis dairies are faced with, they say.
“We are seeing a lot of hardship, especially among younger farmers trying to transition into organic and those with high levels of debt,” said Ed Maltby, Northeast Organic Dairy Producers Association executive director.
Organic milk fetches a higher price than conventionally-produced milk, which prompted many farms to change practices in recent years. But that generated more supply, which created the same situation traditional dairies are now faced with — too much milk, not enough demand.
Many factors outside the individual farm’s control affect their bottom line.
Until two years ago, European Union farms operated under a supply management system similar to Canada’s. When quotas were lifted, farms began making more milk, which contributed to excess on the world market. This in turn hurt U.S. exports, which America’s dairy industry relies heavily on.
Quite possibly, a radical policy change is unlikely during a mid-term congressional election year. So farms might be left to make do the best they can by cutting costs, and hoping global economic conditions take a turn for the better.
With approximately 9,000 farms, dairy is the largest sector of upstate New York’s agriculture industry. As it struggles, the entire region is impacted, Peck said.
“It’s a critical period,” he said. “Farms don’t sit on their money. They invest in their business. They buy machinery and improve technologies. When there’s no extra money it hurts the local equipment dealers, feed companies and veterinarians as well, and people who work for them.”
“Every dollar farms take in is multiplied seven times,” he said. “Vast areas across New York are comprised of farms. It drives the upstate economy. When that fails, the entire economy suffers.”
Source: Saratogian Business