Got milk farmers?
Unless Congress acts to ensure that dairy farmers get a fair price, many of them will go out of business.
San Francisco — Before this spring, no one outside Promise City, Iowa, had heard of Jerry Harvey. He was just a dairy farmer, a man who took his first job milking cows at the age of 16. Then dairy farms around the country began collapsing – as if hit by a plague.
Until last year, his 70-cow dairy supported Harvey, his wife, two sons, one daughter-in-law and three grandkids.
Then in December, because of a soft export market and myriad other factors, the price they received for their milk crashed.
Recently they've been getting under $10 per hundred pounds of milk – $6 less than it costs them to produce it. To stay afloat, Harvey is borrowing at least $5,000 a month, a desperate move for a man whose annual income hovers around $20,000.
So, Mr. Harvey started speaking out.
At first he wrote to his congressman, then to the USDA. Before he knew it he was speaking at rallies. Reporters began to call him. So did dairy farmers from around the country. They asked him for help and told him how their own small farms were on the verge of financial ruin, how their neighbors' farms had been foreclosed, how their marriages were unraveling. They told him about suicides.
Then one morning the secretary of Agriculture called. Harvey thought it was a prank; he nearly choked on his cereal when he realized it was actually Tom Vilsack. It seemed that he had finally been heard.
But the voice on the other end of the phone promised no real solution. Secretary Vilsack's offering: deferred payments and low-interest loans. "Just more rope to hang ourselves with," Harvey told me. "I mean, if you're not making money for your milk, you can't solve it by borrowing more money. We're trying to get out of debt, not take on more."
Other strategies to stanch the national dairy crisis are no better.
On the demand side, the federal Dairy Export Incentive Program is paying farmers to export their milk for below-market prices – yet another farm subsidy that neither American taxpayers nor our trade partners will countenance for long.
On the supply side, the Cooperatives Working Together program is buying and slaughtering entire herds of dairy cows, but only on the condition that the farmers who own them leave the business. So far, this year, 101,000 cows and 367 farms have been "removed." Over the next month, those numbers will nearly double.
Harvey was notified about the next round of buyouts, but instead of applying he focused his efforts on trying to get an actual meeting with Mr. Vilsack. He wouldn't even need much time, he says, he'd just like to show Vilsack his milk check and his stack of bills, and tell him that the cure to the disparity between the two is simple: Pay farmers a fair price for their milk.
In fact, that was government policy until the Agriculture and Food Act of 1981, which released dairy pricing to the free market. Farm milk prices were thereafter determined by trading on the Chicago Mercantile Exchange, an approach that ultimately favored larger, more capital-intensive dairies. Partly for that reason the United States has lost 80 percent of its dairy farms, 253,000 in all, since 1981.
The beginnings of the fair-price solution that farmers such as Harvey seek may exist in current legislation. Most hopeful is The Federal Milk Marketing Improvement Act, which would start to tie the farm milk price to the cost of production. And yet since the bill was introduced in April, it hasn't moved. A similar bill introduced in 2007 never made it out of committee.
The greatest obstacle is resistance from dairy processors, who would have to pay a higher price for milk. They use consumers as a sort of human shield, insisting that higher farm milk prices would force them to raise the price that consumers pay. And yet the correlation proves to be circumstantial.
To wit: As the price that dairy farmers receive for their milk has dropped by 50 percent over the past year, the supermarket price has fallen just 15 percent. The missing link? The middleman's earnings. In the past year, Dean Foods, the nation's largest dairy processor, has doubled its profits. In order for farmers like Harvey to survive, bills such as the Federal Milk Marketing Improvement Act must be taken off pause.
In the meantime, the foreclosures persist – Harvey receives calls about them almost daily. While he continues to speak out, he has nearly given up hope that his voice will make a difference. "At that first rally one of the speakers said if you don't say nothing, nothing will happen," he remembers. "But months later I'm still saying something, and still nothing is happening. Honestly, the only way anyone's going to care is when there's no more milk at the store."
Of course, that probably won't happen. There was a similar purging of smaller farmers in the hog industry in the 1980s, and in the poultry industry in the 1950s, and yet Americans never ran out of pork or chicken. As in those markets, consolidation and increased efficiency will almost certainly preclude any gap in US dairy production. In truth, the only thing we risk running out of is farmers like Harvey – and the thousands of others who few have ever heard of.
Lisa M. Hamilton is the author of "Deeply Rooted: Unconventional Farmers in the Age of Agribusiness."