By Susan Harlow, Editor
Almost everyone at the Professional Dairy Producers of Wisconsin meeting last month was in a pretty good mood despite the slumping dairy economy. No wonder, according to Gov. Jim Doyle. Wisconsin’s milk output grew 1.6% last year over the previous year. That 2-billion-pound increase in milk “is filling up cheese plants and creating an optimism for the future,” Doyle said.
Meanwhile a USDA survey found that Wisconsin dairy processors invested $1.24 billon over the last five years and plan to spend another $781 million in the next five. (To find more about the meeting go to our website, www.dairybusiness.com, and follow links to PDPW. )
From Madison, I went directly to Vermont, where a group of Northeast producers brought in speakers to discuss ways to control the sharp volatility in milk prices. Their starting premise: A system based on pooling offers only incentive for each producer to make as much milk as possible all the time.
Tops on the Northeast agenda was the Growth Management Plan proposed by California’s Milk Producers Council (MPC). It would assess producers making more than a certain annual growth in milk and return the money to other producers. (Find out more on this plan at: http://www.milkproducerscouncil.org/)
“In dairy, you can make milk and, as long as someone picks it up, you get your share of the pooled resources,” said MPC’s Rob Vandenheuvel. “Every incentive is to grow, grow, grow. So we have to change the incentive.” Holstein Association USA is ready to lead the effort for a growth management plan, said CEO John Myer. “But it must be producer-driven.”
“We don’t use the Capper-Volsted Act enough because we rely on the government,” said Bob Naerebout, executive director of Idaho Dairymen’s Association, who was at the meeting. “Is it a government program we want? If it’s to keep you and me on the dairy, it’s not happening.” Then Idaho dairyman Jim Stewart proposed contracts between producer and processors that include movers for input cost increases. And there was also a plan to base Class III prices on competition for raw milk in certain regions.
Clearly, as the milk business continues to change, as products become more differentiated and as production shifts geographically, the old methods for setting prices have become obsolete and unfair. The only way to match milk supply to falling demand is for dairies to go out of business. Whether this is good for an individual dairy or not is moot. What’s certain is that empty dairies aren’t good for processors, communities or the dairy infrastructure – and so ultimately for the individual dairy.
Counting on CWT to drain the industry of farms when we need less milk is not unlike Jonathan Swift’s Modest Proposal: That the poor Irish sell their children as food to avoid having to feed and keep them. Also, CWT is a ponderous instrument. By the time it culls a large number of cows, prices may already be headed back up, pointed out Penn State’s Ken Bailey recently.
There was a notable absence of Midwesterners at the Northeast dairy summit, but I hope that was because of the conflict with the PDPW meeting. I’d like to believe that historic friction between the dairy regions can be smoothed out by a pricing system that all agree compensates every producer fairly, based on demand and production costs, while processors can also make an adequate profit. “Let’s see what we can do for the industry as a whole,” Naerebout said. That’s a sentiment long overdue.
There’s no lack of ideas. Perhaps, the dairy industry might find that one of these proposals will fit, as Swift said about his notion: “But, as to my self, having been wearied out for many years with offering vain, idle, visionary thoughts, and at length utterly despairing of success, I fortunately fell upon this proposal [of eating the children], which, as it is wholly new, so it hath something solid and real, of no expense and little trouble, full in our own power…”