Today’s Agriculture: Difficult at Best, Perilous at Worst

By Karen Baase

The economic status of the nation’s dairy farms could be summed up by “Difficult at Best, Perilous at Worst.” The same can be said for many of the businesses that support a dairy farm’s day-to-day operation. No one is immune from the trickle-down effects of the current milk price trough, which began last January. They’re – or rather, we’re all affected in one way or another: farm employees, service providers, banks, feed companies, local municipalities, and consumers.

On the other hand, I’ve heard “the flip side” too; new milking center installations, the purchase of good cows for bargain prices, or farm purchases. But those reports are more often the exception, and not the rule.

Because of the all the press in dairy circles – especially now, I regularly visit web sites like Dairy Today or Dairy Business, which are popular trade magazines with helpful, “just in time” information.

Recently I discovered a master’s thesis from the American Society of Animal Production dating back to1939. I was astounded at the number of references to the future of dairy farming as though the author were describing 2009.

Dairy farming, like “Topsy” (the cow), has just grown up during the past quarter of a century. Today, however, the basic shift in agriculture, made necessary by the loss of world trade (a factor in today’s case) … is likely to cause some very definite changes in the basic organization of dairy farming.

… (There is a) continued struggle of dairy farmers of higher cost areas to produce milk at the prices likely to prevail or their eventual elimination.

When the mere milk man (or grocery store owner), who sets the bottle of milk on the doorstep (or in the dairy case), receives more for this service than the farmer receives for the milk in the bottle, … it may well be questioned whether the whole system of distribution as now used may not be in for a very radical overhauling in the near future.

I believe that the future of dairy farming is more dependent today upon the satisfactory solution of the problems of regaining and holding the public support and confidence than upon almost any other factor.

One well known dairy market economist in Wisconsin summarizes the three principal avenues to higher milk prices: market forces, government market intervention, and private market intervention. The last two, government market intervention, and private market intervention, are already taking place in the form a recent temporary increase in the prices the government pays for excess product like cheese and non fat dry milk, also know as the Dairy Price Support Program. Another is USDA’s MILC program, which compensates dairy producers a nominal amount when Class I fluid milk prices drops below a certain level.

Cooperatives Working Together, better known as CWT, is an example of private market intervention. This year, it is essentially a cow buyout program funded by dairy farmers themselves – no government money here. CWT has already conducted 3 buyouts in 2009, all with the goal of eliminating cows and ultimately reducing the flow of milk into the marketplace. Earlier years has seen CWT take milk products and sold them overseas, but today’s world economy and a slightly stronger dollar doesn’t offer much promise there – at least not now.

The first solution, market forces, is the one that industry leaders, dairy market academics, and other influential people say holds the most hope. An improved economy both here and abroad will entice consumers back to restaurants, and bring them back to organic milk purchases, for instance. On the word’s stage, an economic recovery would help the U.S. sell more product overseas.

But, in the meantime, how long can our dairy farmers hold on with the way things are now? In my opinion, that’s the biggest question of all.

Karen Baase is the Extension Issue Leader for Cornell Cooperative Extension of Madison County.

One Comment on "Today’s Agriculture: Difficult at Best, Perilous at Worst"

David L. Sadler on Wed, 2nd Sep 2009 11:03 am

Dairy farms should to start their own bottling plants. Get rid of the processors.

Today’s Agriculture: Difficult at Best, Perilous at Worst

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