Local dairy crisis
Global dairy rises
REGION — Six Sullivan County dairy farms may have to close their doors at the end of June because of cancelled milk contracts; 52 dairy farms across New York State received cancellation notices.That sparked a dairy discussion at a meeting of the Sullivan County Senior Legislative Action Committee on June 1.
If those farms don’t find new processors to take their milk by then, the operations may have to shut down. One resident of an estimated 50 in the room demanded to know what could be done now to save those farms. There were no good answers.
As to why these particular Sullivan County farms are being impacted at this time, at least part of the answer was provided by Michelle Lipari, the agriculture educator at Cornell Cooperative Extension. She said these farms had contracts with Marcus Dairy, which supplies a lot of schools as part of its business model, and it doesn’t need as much milk in the summer as the rest of the year. She said it was not likely that the dairies would regain those contracts after the summer.
But that’s only part of the picture, and the problem of small dairies going out of business is not unique to Sullivan County or New York State. Earlier this year, Dean Foods cancelled milk contracts with about 100 farmers in eight states effective May 31. That was sparked at least in part by Walmart, which has opened a new 250,000 square foot milk processing facility in Indiana. Dean Foods will no longer supply milk to some 600 Walmart and Sam’s Club stores in the Midwest that it had supplied in the past; thus the cancelled contracts.
Therefore, the search for new buyers for milk from Sullivan County farms becomes more difficult. And the issue is more complicated than that, because milk and milk products are global commodities. Only about 25% of milk is sold as liquid milk or cream, and the rest goes to products like cheese, yogurt, powdered milk and other products which are sold around the world.
Most analysts who follow the global dairy industry say that there is currently a global oversupply of milk and milk products caused by a number of different factors. One is that the European Union in the past had quotas on how much milk its dairies could produce. Those quotas were abandoned in 2015, at about the same time Russia banned sales of EU milk and other foods within its borders.
China, meanwhile, has increased the amount of milk its farmers produce from 13 million tons in 2002 to more than 36 million tons in 2017, according to the United States Department of Agriculture. Some analysts believe China will overtake the U.S. as the world’s largest dairy-producing country this year. This means it is importing less milk and fewer milk products from elsewhere.
But getting back to U.S. policy for moment: The U.S. government has been setting the price of milk through a complex formula that dates back decades. Sometimes that formula results in a price at which small dairy farms can break even or make a small profit, such as in 2014 when the price of milk was about $22 per hundred pounds (aka hundredweight or Cwt) of milk. But for the past four years or so, the price of milk has been below the cost of production, and, according to the National Family Farm Coalition (NFFC), it’s currently at about $15 Cwt.
A letter from NFFC, which has 53 member groups, to the U.S. Secretary of Agriculture and lawmakers in Washington, asks them take several steps to address the small-dairy-farm crises: one would be to adopt a floor price of $20 Cwt for milk used for dairy products; another would be for the secretary to use his authority to establish a program that would “encourage domestic consumption of farm products by increasing their use by low-income groups.” The letter was posted locally on the Diehl Homestead Facebook page.
Separately, Sen. Kirsten Gillibrand has also proposed raising the floor price for milk; she has suggested $23 Cwt. The Farm Bill, however, which is where such legislation would likely be addressed, is currently stalled over a battle about how deeply to cut the Supplemental National Assistance Program (SNAP, formerly food stamps).
In the meantime, Cornell Cooperative Extension sent this email regarding resources for farmers, from Tom Overton, Director, Cornell University PRO-DAIRY program: “Our Cornell Cooperative Extension local associations and regional team specialists are working with farmers, NYS Department of Ag and Markets, and others to support our local dairy farms during this challenging time. We are providing technical expertise for farm operations and connecting farm families with resources such as NY Farm Net for help during stressful times and PRO-DAIRY for help with technical aspects of dairy farm business management.
“In addition, farms that have lost milk markets can contact the NY State Department of Agriculture and Markets for a list of those who buy milk in New York State. For more information please connect to: NY Farm Net: www.nyfarm net.org; PRO-DAIRY: prodairy.cals.cor nell.edu; CCE: www.cce.cornell.edu; NYS Department of Agriculture and Markets: www.agriculture.ny.gov.”
In Pennsylvania, dairy man Brian Smith, who is also chair of the Wayne County Commissioners, has invited dairy farmers from Wayne County to attend a focus group on Wednesday, June 27, from 11 a.m. to 2 p.m. in the cafeteria of the Park Street Complex (the old Stourbridge Elementary School) at 648 Park St. in Honesdale. Lunch will be provided. [See editorial page 6.]