“On Pasture is too nice to publish this.”
That’s what Troy Bishopp told me about his piece, “The Giving Farm,” that is running this week.
He’s right. I try to make On Pasture a happy place and I tend to focus on solutions to problems. My brain is always a little whirlwind of “what ifs” and “why nots.” So I’ve filled On Pasture with articles about how to grow grass, how to manage and care for the livestock grazing it, how to cut costs, and how to keep on thinking of new solutions to old problems.
But sometimes there are outside forces, things we have less control over, and those are the things that can take us down if we don’t look at them and talk about them.
So this week, let’s take a look at a problem: the difficulty of our U.S. dairy farmers to make a living, and how farm and ranch failures impact rural communities.
First let’s talk about what’s happening right now. The average price dairy plants pay U.S. farmers for milk fell from a peak of $25 per hundred weight in 2014 to about $16 – or $2 per hundred weight less than it costs even the most efficient dairy to produce that milk. No matter how close they cut expenses, they’re still losing money. Many of them are in the same spot as Arizona dairy woman Rosemarie Burgos-Zimbelman, “We’re losing money every day. I mean $2,000 a day and you times that by 365, that’s a lot of money.”
Thanks to dairy farmers’ efficiency more milk than ever is being produced. And while it’s true that per capita, Americans consume less dairy than they did in the 1970s, the USDA says that total dairy consumption has still increased as we eat more yogurt, butter and cheese.
So what can be done? As Troy notes in his article, we attempted to solve this same problem in the 1980s with a dairy buy out program. That may have helped stabilize the dairy industry for a while, but it wreaked havoc on the beef industry with slaughter dairy cows bringing down prices. That’s probably not a solution we want to try again.
So what about international markets? Had the U.S. gone forward with the Trans-Pacific Partnership (TPP) Canada would have agreed to import 3.6% of its milk from the U.S. To replace that, the new trade agreement boosts tariff-free milk exports to Canada to 4%, or about the equivalent of all the milk produced by Wisconsin. International trade on our southern border has also become a problem. About 45% of Arizona’s dairy business relies on exporting dairy products to Mexico. But right now it’s too expensive to do that because of Mexico’s retaliation to the Trump administrations increased tariffs.
The Only Country Without These Problems? Canada
We’re not the only country with these problems. Volatile milk prices are a problem all over the world. The only country without an issue is Canada, where, in July, farmers received the equivalent of $24.20 per hundred weight, or about 50% more than U.S. farmers (per data from the Dairy Farmers of Ontario).
This video from CNBC gives a good summary of what Canada’s doing differently and how it is that the average Canadian dairy farm makes about $160,000 a year. They created this system because keeping dairies healthy means healthy rural communities and that’s something that makes 75% of Canadians very supportive of this system.
Could the Canadian system work in the U.S.? Do you have other ideas for solving the problem? If you have thoughts, or would like to see proposals from dairy producers themselves, check out the Dairy Farm Income Enhancement Proposals website.
Meanwhile, though we’re talking about dairy farmers here, farmers and ranchers all across the country are facing challenges to profitability every day. Farms and ranches are the backbone of small communities and they are the reason that rural towns and their businesses and schools survive and thrive.
I believe that healthy rural communities are critical to the health of the U.S. and to every country. Talking about problems is a good place to start figuring out new solutions. Maybe we can find something together.
UPDATE: A Canadian reader wrote in to say that their milk prices are actually higher than what was listed in the graph. I did further research and found a more recent price survey done by a Canadian organization as a response to criticism of the Canadian system by the Trump administration. They found that a liter of milk in Canada costs $4.25 CAD ($3.18 US) and in the U.S. a liter went for $2.22 CAD ($1.66 US).
Their conclusion was:
“Canadians are paying more for milk than they would if the marketplace was truly an open market.” stated Doucette. “If trade barriers between provinces were broken down, we could have a more efficient system, although the smaller production systems in smaller provinces would likely be consolidated into larger systems in Central Canada.”
“A consolidated, more efficient, national milk production system may be a necessary evil in order to ensure that Canada’s dairy industry is competitive with a much larger system in the United States over the long term and delivers better value to Canadian consumers.”