Efforts to address farm milk prices and the imbalance between milk supply and demand continued in the Midwest last week with a teleconference coordinated by the Wisconsin Farmers Union (WFU).

Natzke dave
Editor / Progressive Dairy

WFU had chartered a bus to a dairy summit, held Aug. 13, in Albany, New York. The meeting was coordinated by Bob Wellington, senior vice president of economics, communication and legislative affairs for Agri-Mark Dairy Cooperative. It brought together about 350 participants, about half of who were dairy farmers, and many in search of a national solution to the ongoing dairy economic dilemma. (Read: Time short for supply management action, but could tariff payout provide ‘diversion’?)

As a follow-up to the New York meeting, several organizations are holding discussions to examine policy proposals. During the WFU teleconference, Karyn Schauf, a western Wisconsin member who road the bus from Wisconsin to New York for the Albany meeting, said she remained encouraged.

“It was encouraging to find a strong desire, from coast to coast from so many organizations, to put a supply management in place,” she said. “I found commonalities in the plans presented, giving me additional confidence.

“Some of the things I did not hear and we need to talk about more clearly, are what are the trigger points of the beginning and end of a period of mandatory supply management, and how we get the ‘privates’ incorporated in that. Whatever it is, it has to work for both producers and processors,” she added.


Policy alternatives

Since the August meeting in New York, the number of policy and marketing proposals on a summit website has grown to more than 20, ranging from direct crisis management payments for dairy farmers to base-excess programs and mandatory supply management. To facilitate more input, the proposals are available for review, download and comment.

Co-op accountability urged

While WFU has put forth a policy proposal calling for implementation of a milk supply management program, the teleconference featured Gary Genske, treasurer of the National Dairy Producers Organization (NDPO). He shared his organization’s belief that holding dairy cooperative leadership boards accountable for the welfare of co-op members – and not federal policies – would do more to benefit dairy farmers.

“Asking the government for any help at all has not yielded any benefits in this millennium,” Genske said. “Even if we get help from the government, we end up with the same shenanigans back in our co-ops. If we fix the co-ops, getting them to do the job they’re supposed to do, with 80 percent of the milk in the country, we’re going to get there the right way.”

Genske, a dairy accountant who also operates a 2,000-cow dairy operation in New Mexico, contended dairy producers ”have done an excellent job running their farms, but have done a terrible job running their co-ops.” He described his organization’s path to sustainable pay prices: “We have to get our co-ops to operate in accordance with our membership agreements, which indicates co-ops will market our milk, not just move it, not just handle it. Marketing involves a definition that there will include profit associated with it.”

He charged that many co-op leaders deviate from state and federal laws. “The board of directors at most co-ops truly do not understand the full amount of responsibility they take on, particularly when federal and state laws require the boards to work solely for the benefit of the members as producers,” he said.

As a “quick fix” to the ongoing dairy crisis, Genske urged co-op adoption of four NDPO policy goals:

1. Implement pro rata, across-the-board reductions in the amount of milk accepted from members until the co-op’s milk supply is balanced with profitable demand.

2. Accept no non-member milk unless the price received for that milk is greater than the cost to produce it.

3. Do not own, operate or be involved in any processing facility, make any dairy product or chase any dairy market, that will not pay a price greater than the member dairy farmer member’s cost to produce it.

4. Use a “100% USA Milk” logo on packaging, which would entice many consumers to pay more at retail when they are assured the higher price goes to support U.S. farmers.

“These four [steps] alone, adopted on the 80 percent of the milk controlled by co-ops in the country, would yield us a price far in excess of the cost to produce,” he said. “It’s our quickest path to our own permanent recovery.”

“We always talk about hope,” Genske said. “I’m tired of listening about hope. We have to make our own plans.”

He challenged individual producers to spend part of their day trying to improve their milk price. “It’s the biggest number on your P&L [profit/loss] statement,” he said. “Go get it. We hold the keys to the kingdom; we’ve handed those keys off to others.”

Other opinions

Brad Rach, dairy director with the National Farmers Organization (NFO), Ames, Iowa, reflected on the summit.

“Low milk prices as a result of too much milk is creating a crisis situation on the farm and adding to the already damaged economy of rural America,” Rach said. “The meeting itself was good because it brought forth an abundance of information that could be taken home and shared with others. Perhaps, the most enlightening thing coming from the meeting was a consensus that something in terms of a ‘supply management’ program needs to be implemented.”

To preserve smaller family farms, NFO has proposed a two-tiered production and pricing policy, with a cutoff of 1 million pounds of per month. There are no quotas, but the pricing system provides disincentives for unrestricted growth. A cooperative would continue to sell all of its milk to processors as it does now. However, the proceeds of those sales would be distributed as follows:

• All milk production on a farm under 1 million pounds per month (Tier One) be priced at a level to provide a “reasonable profit” for a farm family.

• Once these payments have been made, the cooperative would take the remaining money and divide that by the total amount of Tier Two milk produced by all member farms. That would be the Tier Two price.

In the event the market price received by the cooperative for selling all milk was higher than the Tier One price, all milk from member farms would be paid that higher market price.

There are no quotas in this system. It simply provides an incentive for farmers to remain family-sized and a disincentive for unrestricted growth among megafarms.

Bruce Drinkman, Glenwood City, Wisconsin, secretary of the National Family Farm Coalition (NFFC), said he left the Albany meeting cautiously optimistic.

“The toughest issue may be to get everyone on board,” he said. “Although, the flip side is ‘get on board or be out of business.’

“As the dairy industry moves forward, it must realize that what we have been using as a business model has not been working,” Drinkman said. “Farmers need to come to grips with some form of supply management. Many processors are already practicing this in some shape or form, just that they are not calling it supply management.

“We as an industry need to also reach out to our consumers in urban America and let them know of the plight of the family farmer in the U.S.,” Drinkman said. “That is where we can find the votes to make the necessary changes.”  end mark

PHOTO: Members of the Wisconsin Farmers Union chartered a bus to a dairy summit, held in mid-August in Albany, New York. The group joined other dairy farmers to seek policy and marketing ideas to balance milk supplies with demand in an effort to improve farm milk prices. Photo courtesy of Wisconsin Farmers Union.

Dave Natzke