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COL Can dairy have a future?

Creative partnerships can reverse the decline

Dairy producers are in dire straits, faced with low prices and increased product imports. Dairy is in trouble, both in Minnesota and nationwide. Yet, there are reasons to hope.

It seems the Farm Service Agency has direct and guaranteed loan programs to help producers with cash flow problems. To quality, producers must be unable to obtain credit elsewhere. The program provides operating loans for payment of operating expenses, debt refinancing and the purchase of livestock and equipment.

The interest rate is just 3.75 percent, a historic low. Loan terms can be extended to seven years or longer based on repayment ability and security.

Although farmers in general and dairy producers in particular might well shrug and say that the last thing they need is a loan, it appears the FSA programs can help some producers survive these troubled times. The truth is, Minnesota and Iowa need milk producers now more than ever -- for the economic health of rural communities, for the environment and for the fragile social structure.

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Federal lawmakers have included new payments in the farm bill when market prices drop below a pre-set level. That'll help, too. Congress could do more by making alfalfa a program crop. Beyond helping producers, making alfalfa a program crop would help the environment.

Many industry watchers fear that if more Midwest dairy herds are lost, processing plants will join the exodus. For that reason, northeast Iowa counties are recruiting Dutch milk producers to relocate to the Midwest.

A Dairy Farm Project Steering committee in Butler County hopes to entice Dutch producers, not through financial incentives but by welcoming them to the area and showing them what northeast Iowa has to offer.

Butler County once had 140 dairy farmers, but the number has declined to about 30 in the past three decades. More dairy producers -- particularly of the family variety -- would benefit the region.

Canada has taken the approach for several years, welcoming many Dutch producers into the country. Canada, with quota production system, recognized dairy's importance early on.

It's obvious that Minnesota and Iowa government officials also understand its importance. The national dairy industry has changed dramatically since the 1960s, when small herds and smaller cooperatives dominated the scene.

Most new dairy farms depend on huge capital investments, technology and hired workers. There is nothing wrong with that, but it is obvious that in the Midwest, the family farm model is absolutely critical.

Partnerships among producers, processors and federal and state governments can reverse the decline in the industry. Producers must first survive the present crisis. FSA loans, tightening dairy import restrictions and tax incentives for small herd owners will and can ensure that dairy will remain a rural economic cornerstone.

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No one can afford to allow dairying to become a minor player in rural Minnesota, Iowa or Wisconsin.

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