Put yourself in the dairy farmer’s shoes for a minute. Imagine you’re milking just ten cows a day – ten cows, twice a day, every day. Some days you love it, some days it’s just OK. Generally you like the routine. You get paid for what you do, and you get to live in God’s country. Beautiful sunrises and sunsets, and a connection to your farm, land that may have been in your family for generations. Prices go up and down – you do better some years, and worse in others, but you get by.
Now imagine that pay prices go down. You used to make a few bucks per cow every time you milk. Now you see your pay price lower than it’s every been. You realize you are losing a dollar per cow every time you milk. Weeks pass, months pass, you are two seasons down the road, Thanksgiving and Christmas are around the corner and you realize it’s $1.50 or $2 you are losing per cow – every time you milk. You are now down to losing $3 or $4 dollars per cow, every day. Now imagine it’s not ten cows, but 60, or a hundred, or three hundred.
That’s reality for the majority of dairy farmers in Minnesota, and all over the country. It varies from state to state, and it varies from month to month as prices bounce around. But the basic theme is right. It’s an old story, but one where the action has been heating up faster than anyone can keep track of. The farm crisis of the late 70’s and 80’s seems like a long time ago, but the price fluctuations today are direct descendents of that credit and pay price crisis.
The farmers of PastureLand formed this company in 1998 so they could farm in a way they believed in – grass-based dairying – and to try to insulate themselves from the market. By making PastureLand butter and cheese we limit the effect the broader market has on our pay price, but we are still subject to the ups and downs.
The dairy business is incredibly interconnected. We have an agreement with a larger company who buys our excess milk when we can’t use everything we produce. They, in turn, have an agreement with an even larger company who buys their excess. Ripples at any level of the food chain affect business partners up and down the line. If we have too much milk we try to make extra butter and cheese, but many times the guys above us have to just find a way deal with the extra milk. In turn, if the big guys above them get a cold – too much milk, too little demand, retail prices down – we get sneezed on.
Minnesota state commissioner of agriculture, Gene Hugoson, said, “This whole volatility thing is so tough. It can’t correct itself.” It’s cliche now, farmers struggling, but the reality is that the math doesn’t work any longer. If farmers are losing money every day but processors like Dean Foods are making record profits and, in turn, consumers are paying less for a gallon of milk than at any time in recent memory, something has to give.
This article in the Star Tribune does a great job of explaining the economics of dairy price fluctuation. There are no easy answers, but understanding the issues is the first step toward helping fixing them. Supporting family farmers who charge a fair price is a good first step toward creating a stable, sustainable connection between farm and consumer. Let us know what you think.