Minnesota and Iowa have lost nearly half of their dairy herds in the past decade. Dairy operations are failing at an alarming rate as the number of farm bankruptcies continues to increase.
The loss of dairy operations has taken an economic toll on Main Street businesses, threatens a way of life and raises long-term concerns about the future of Midwest processors.
It is relatively easy to point fingers of blame. The head-long rush to embrace the “get big or get out’’ philosophy, which was recently spoken of by U.S. Department of Agriculture Secretary Sonny Perdue, continues. The attitude, which came to light back in the 1980s in a speech given by more than one agricultural futurist, continues to hold sway.
It was said in the 1980s that future major metropolitan centers would be provided fluid milk by mega-farms located close by. For example, a several thousand cow operation near Chicago would provide enough milk to meet the city’s needs. Repeated across the country, the system would be an example of hyper-efficiency.
There are other reasons for the ongoing disaster.
It’s estimated – although a concrete amount is hard to determine because individual dairy farms have differing production expenses – that it costs $22 per hundredweight to produce milk. It has been awhile since farmers earned that from the marketplace.
Some farm activists blame the cooperatives that have grown much larger and more powerful in recent decades. They complain that cooperatives long ago abandoned the principles on which they were founded and now operate about the same as private businesses. Volume premiums and other incentives have encouraged "bigness" in dairy, which has helped to cause overproduction at a time when the retail marketplace is awash in alternative and competing products.
The decline in overseas demand for U.S. dairy products has been alarming. Canada and the nations of the European Union have also seen their dairy industries decline.
The failure of the U.S. government to support dairy products via the school lunch program is another causation.
To a great extent, the hopelessly inadequate Margin Protection Program, which aims to help farmers make up the difference between price received and the cost of feed, has failed. The MPP could be improved in many ways – not the least of which is a better targeted approach that rewards smaller herd owners.
The dairy crisis has been a long time coming. Back in the 1970s, dairy economists and Extension Service specialists cautioned that unless Midwest producers were willing to update their facilities, the milk supply would be so short that Midwest processors would close for want of raw product. The problem then was that dairy owners weren’t making enough money to afford modernization.
The milk produced in today’s dairy is higher in quality than years ago, but still, the industry is in a deep crisis.
They way out of it isn’t easily seen. That’s not a problem for mega-dairy dreamers convinced that massive operations located near metropolitan areas is the way to go.
It is a nightmare for family farmers and the small-town Main Street businesses, the rural society and way of life.
We are convinced that no one program will fix what ails the dairy industry. It will take several programs touching everything from herd management to marketing to make dairy farms, and the communities that surround them, thrive again.