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The Milk House: Saving the American dairy farm requires different thinking

Ryan Dennis for Progressive Dairy Published on 19 July 2021

Last week (at the time of this writing), I gave an interview for an Irish farming website. They titled it “Can We Save the Family Farm?” Naturally, they meant in an Irish context.

They asked about my novel and my Ph.D. work but mostly pressed me on the headlining question.

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My answer was the same as it has been for the last 10 years: only if the EU learns from America’s mistake.

It was the type of interview that could have only occurred recently. I know this because I put down the same ideas on paper in 2009 and submitted them to the major agricultural journals in Ireland, pointing out the dangers of relying solely on the market for farmgate pricing. At the time, the EU was finalizing their debate on phasing out milk quotas. Instead of publishing the article, the journals released printed and video-based manifestos supporting the removal of supply control. The logic behind it was not hard to guess: At the time, most farmers wanted the quotas lifted, and these publications made an income from a readership of farmers.

I grew up on a dairy farm and believe I can understand why farmers resisted the quota. Farming is a hard lifestyle, but one of the benefits of the occupation is being independent to make your own decisions. A farmer puts everything they have into making their operation work, and they don’t want to be told what to do. Farming is also a repetitive act, one that allows the mind to wander. While going about the daily routine of milking, feeding and fieldwork, there’s not a farmer alive not thinking that if only they could just have X more cows, then they would make X more money. Certainly, there were Irish farmers thinking that.

There is a term used internationally in agricultural economics called “the productivist treadmill.” It illustrates the negative feedback loop of farms expanding to compensate for low profit margins. When this happens, more supply is produced, further driving down farmgate prices and encouraging farmers to expand yet again. It becomes an endless sequence, forcing the average farm to become larger and less profitable. Willard Cochrane was the American economist that coined that term in the 1950s, fearing that such a detrimental cycle could be the outcome of American agriculture without proper intervention.

Dr. Richard A. Levins, an economist at the University of Minnesota, chronicles Cochrane’s time in Washington in the book Willard Cochrane and the American Family Farm. He labels Cochrane’s efforts as “the last serious fight to save the family farm.” With the support of JFK, Cochrane introduced legislation for supply control on most major agricultural sectors, detailing how it ultimately led to a stable income for farmers by removing volatility, as well as saved taxpayer money by avoiding the need for government bailouts whenever farmgate prices plummeted. He warned of the productivist treadmill and the structural changes American agriculture would experience, ultimately ending in the sacrifice of the family farm. Instead of looking at the economics, however, conservative groups labeled Cochrane a communist and a “killer of freedom.” The bills never passed, and Cochrane was run out of town.

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Unfortunately for American agriculture, Willard Cochrane was right.

Although a quota system has sustained a profitable living for family farming in countries such as Canada and Iceland, the U.S. has been stubbornly resistant to the idea. There are many who view the free market as an “American identity” and have weighed the term down with political and emotional baggage. Nonetheless, any dairy farmer should well understand why the free market cannot successfully be applied to agriculture.

In order for the free market to work, all actors in the supply-demand relationship must ultimately have equal power (countervailing agency, in economic terms). In essence, farmers must have the ability to influence the market as much as processors and retailers. However, dairy farmers can’t withhold their milk and wait for higher prices, since the cow doesn’t stop milking (milk is a flow product) and fluid milk can’t be stored for long. Hence, farmers will always be vulnerable to processors and retailers, as evidenced by currently receiving 3 cents profit above costs on a gallon of milk that nationally prices at $3.43.

Within the last year, both American and Irish dairy farmers have been asked to dump milk due to overproduction. Ironically, major co-ops in both countries have put quotas on their farmers, thereby enacting the type of supply control both industries had shirked. Nonetheless, without national direction, the implementation of these quotas has been messy and has not been constructed in a way that provides sustainable solutions.

However, for the first time since perhaps the 1960s, there has been momentum building for the implementation of supply management in the U.S. Last year, the International Dairy Foods Association (IDFA) and the National Milk Producers Federation (NMPF) submitted the Milk Crisis Plan to the USDA, soon followed by the Dairy CORE plan by the Minnesota Milk Producers Association. Both proposals sought to enact similar quota systems during the COVID-19 pandemic to stabilize the milk price. Even before that, however, a farmer-led coalition called Dairy Together went on the road across the country to educate other farmers on the concept of supply control. The movement backs the proposal of the National Farmers Organization (NFO), which includes a federal, two-tiered milk pricing plan that would pay dairy farmers a $4 premium on their first 1 million pounds of production each month and a lower price for any milk after that.

The interviewer asked me if I thought it was too late to save the American family farm. I told him that it would take radical change and that it would have to happen fast. It would mean an entire nation checking their personal and platform politics at the door and putting the farmer first. It would take admitting that one economic idea is no more “American” than any other, and that the American idea here on out should be supporting the family farm. It would require learning from other countries that enacted supply control as well as from those who didn’t. It would mean the entire dairy industry in the U.S. finally coming together to save itself.

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All of that is a lot to ask for. If you want to get started, visit Dairy Together end mark

Ryan Dennis is the son of a former dairy farmer from western New York and a literary writer. He tweets at @PenOfRyanDennis

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