Dairy industry hits an utter surplus
November 14, 2018
Supply and demand must be in a delicate balance in order for dairy farmers to make a profit, and for consumers to feel they paid an appropriate price. In the dairy industry today, this supply and demand model has been shaken. The industry has produced a surplus, and prices have been low over the past four years, causing issues for farmers.
Milk can be made into two types of products, perishable and less perishable. The perishable category contains fluid milk, yogurt, cottage cheese and things that have a limited shelf life of only a few weeks. Less perishable items are hard cheeses, which can be stored for several years.
“The way the industry works it that the milk that’s coming from farms directs an amount to the perishable market. They do this knowing how much sells at the grocery stores, so they only use that much milk. All the excess milk goes into hard cheeses,” Says Professor of Animal Science Larry Baumann, adding, “Right now storage is just jam packed with cheeses.”
Farmers have no place to go with this excess milk. New tariffs put in place have hurt trade relationships, and also contributed to the surplus. “Mexico left to buy milk and dairy products from the European Union. Same thing with China, who is now buying their products from New Zealand and Australia.”
In an effort to mend some of these trade relationships, there has been an agreement made between the U.S., Canada and Mexico called the USMCA. U.S. dairy farmers lost a fair amount of market due to the tariffs put in place last summer. “This is a glimmer of hope to rebuild these relationships with Canada and Mexico,” said Baumann. This agreement won’t go into effect until December.
In Wisconsin, the other issue that has contributed to existing dairies is the lack of labor. According to Bauman, when stricter immigration enforcement came through, dairies lost a large amount of workers. Some farms have switched to robotic milkers, but this is a very high cost.
According to the Wisconsin Department of Agriculture, Trade and Consumer Protection, Wisconsin has lost 584 farms so far this year. Since January of 2004, more than 7,000 farms have left the dairy industry in Wisconsin alone. “Farmers nowadays aren’t doing things to maximize profits, since they can’t really do that, they’re doing things to cut the red ink,” said Baumann.
“It’s really heartbreaking, almost everytime I go on Facebook I see something about another farm selling out. Since milk prices are so low, you basically lose money every time you turn the lights on to milk,” says Sophomore Kenni Bores, a dairy science and agriculture marketing communications major who lives on a 55 cow farm in central Wisconsin.
In order to survive, dairy farmers have had to majorly cut costs. Some ways farmers have done this by doing their own breeding, or finding a deal on feed. “At home, we’re selling the less profitable cows because we just can’t afford to keep cows that don’t produce enough milk to pay for their feed. This week we actually just shipped three cows because it had to be done,” shares Bores. Even with strong management, dairy farms have struggled.
An anonymous junior at UW-River Falls majoring in Agriculture Business recently switched her farm over from dairy to beef. The farm had about 40 cows, and was located in midwest Wisconsin. “We’ve been dairy farming for several decades. With milk prices being low it makes it hard to keep the farm running. Recently we sold our cows due to the dairy market, and because it’s hard work to maintain,” she says, “We are transitioning to beef right now.”
There are things being done to help the dairy industry get back on it’s hooves. Bores said that Dairy Management Inc., an organization created to help increase sales and demand for dairy products, has partnered with food companies to increase cheese use. One of the partners, Pizza Hut, will now add 25 percent more cheese to it’s pan pizzas. Other partners include Dominos, McDonald’s and Taco Bell.
There are also creative ways to help the dairy industry. Bores also discussed the “Ten Gallon Challenge,” which is where someone buys ten gallons of milk and donates it to a food pantry. “This is helping the dairy industry, as well as people that utilize food pantries,” says Bores. Another way to help is through baking, “A friend of mine brings a dessert to work made with at least three dairy products every Friday,” shared Boers.
Some organizations on campus have participated in the “Ten Gallon Challenge,” including dairy club and the fraternity alpha gamma rho. Organizations on campus have been challenging each other to make the donations in order to keep the momentum going.
“Students should be involved and aware of the forces and issues in our society,” says Baumann. There are several options to aid the dairy industry. Wisconsin has seen steady decline in licensed dairy farms, but with potential to rebuild trade relationships, and increase dairy sales in creative ways, there is hope for the future of dairy farms.