Dairy
(Conflmwd from
duction in traditional areas, which
arc generally closest to the domes
tic markets, transportation costs
fell tremendously over that time.
Deregulation of die trucking
industry during die 1970 s abend
much of what could be moved,
where and when. Competition
from independent start-ups and
haulers wreaked
havoc with (he established track
ing industry.
It increased unemployment and
decreased the standard of living for
those who remained emptqyeed in
the tracking industry, though k did
serve to lower the cost of some
consumer goods, and increased the
availability of some goods to some
areas.
Further, daily production has
spread and boomed in non
traditional states, where die crops
may be easier and less expensive to
obtain (in some part dunks to
cheap water through irrigation in
dry climates that combined can
create superior hay), and land
prices are much lower and regula
tions much fewer.
For years, the federal govern
ment has controlled dilftfrfoes.
They did this througk btrjdtig up
excess production at basement
Wesu
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Industry Is A Complex Beast
prices, using some for federal
give-away programs and school
programs (domestic and interna
tional) and storing the rest until it
could be released onto the open
market when open market prices
would begin to climb.
After driving up a tremendous
federal deficit through outstanding
debt from several wan and
increased defease spending start
ing shoot 1980, along with
iiyreasesin
ing, the federal government tried
to control die growth of noo
wdfarc domestic spending.
The greatest expense or busi
ness for the USDAhas been insap
parting domestic social programs.
The federal government then
authorized what some still consid
er an ill-fated program
commonly known as the “herd
buyout program" to control die
growth of dairy production and to
lessen the volume of fluids used
annually for the program.
In the buy-out program, partici
pating dairy fanners were to sell
their entire herds for slaughter and
not have any dairy production for
10 years.
While that provided an oppor
tunity for many to leave the indus
try permanently, it also decreased
die price of beef, did little to stem
Page AN)
Rootworms eati
our
est a li
1-800-433-5080 • ag.fmc.com
die increase in milk production,
and arguably wasted taxpayer
(which includes dairy fanners)
money.
It also seemed to turn some
public sentiment, and therefore
some political sentiment, away
&om supporting the dairy industry.
More recently, federal policy
changed and Congress withheld
spending to fund the traditional
market price control program.
Instead making farmers pay for
their production overages, or herd
expansions, based on documented
productions of recent years.
That has slopped, but the USD A
sdß carries a minimum milk price,
although it became locked in fay
Congress at below die cost of
production.
While production and market
conditions resulted in a steep peak
in daily prices In 1996, prices
dropped below most costs-of
production at die end of 1996,
slowly recovering through 1997,
and mote recently gaining
strength.
Other farm commodity support
price programs were affected as
well in the Farm Bill, but dairy far
mers have been attempting to deal
with being too successful at pro
ducing milk.
The dairy industry is a strange
rofits?
uid diet.
member of die modern-day agri
cultural American production
industry.
While the hog, poultry, egg, and
other production Industries have
adopted more of a contractual pro
duction agreement, whereby a
grower can better determine a
return on investment prior to
investing, the dairy industry is
apparently in an awkward transi
tknal stage.
Dairy producers have been
expanding operations tremendous
ly in times of generally low prices.
They have nothing except! record
of fluctuating prices received upon
which to base potential return on
investments.
As Ills now. Cram one month to
die next, many daily producers
don’t have any sense of security
that they will receive even a zero
profit return on investment, much
less an ability to offset deprecia
tion of facilities and equipment, or
pay for their own and their fami
ly’s labor.
Other dramatic changes that
have oocured, related to the effi
ciencies gained through research
based information and technology,
include the dramatic reduction in
the number of people necessary to
produce milk.
Fewer than 2 percent of the gen-
The Un-Granular Solution
Lancastar Fanning, Saturday, Fafaruary 28,19M-A3l
eral population lives oa a farm, or
farms for a living. At one
most Americans fanned, and even
in the 19405, the percentage of Car
men, those living on farms, and
those with family living on <«"«
was a significant portion of the
general population.
General fanning knowledge and
origin of food was widely known,
and respect for the hard labor and
low income of fanning was wide,
even if not necessarily desired,
compared to the relatively high
wages and benefits paid for indust
rial labor.
The shrinking of the dairy fam
ing population, the shrinking dally
cattle population
ally increasing production per
cow), and shrinking operational
funds have led tomergetsand con
solidations and disappearances of
cooperatives, private businesses,
and support industries.
As far as the changing structure
of cooperatives, within the past
year and a half, mergers of dally
cooperatives and consolidation of
businesses have happened that
have changed the structure of the
industry dramatically.
Dairy Farmers of
America (DFA) is the
result of the Jan. 1 merg
ing of four large
cooperatives. Land
O’Lakcs Cooperative is
the result of an earlier
merger of several large
cooperatives, including
the Atlantic Dairy
Cooperative.
DFA is the largest
cooperative in the
nation, with 22,000
members marketing an
estimated 38 billions
pounds of milk per year.
It controls the marketing
of about 21 percent of
the nation’s milk.
In the private sector,
Dean Foods, among
others, has been buying
up family dairy process
ing businesses. While
the effect may not be
noticeable to most, it
does change the nature
and operational
decision-making of loc
al business.
Across the United
States, daily fanners are
at odds.
People are taking
sides over policies of
government, business
and cooperatives.
Previous alliances
between some coopera
tives have been severed,
leaving some smaller
cooperatives to fend for
themselves.
Other cooperatives,
mostly larger, have
formed new alliances.
Part of the problem
for producers in the
United States dairy
industry is that availa
bility of milk is always
an unknown. There arc
few contractual quota
relationships between
taw milk producer and
processor.
Some dairy proces
sors have found them
selves short in supply
when their usual sup
plier instead sells the
milk to other states or
businesses, because of
temporary higher
prices.
In other times, the
processor may become
swamped with milk