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2020 milk prices: The first question to ask to bring about change within your co-op

Mike Eby for Progressive Dairy Published on 31 March 2021

Editor’s note: The following is commentary from the National Dairy Producers Organization and is reprinted with permission.

For far too long, dairy farmers have remained silent. The 2020 milk prices paid to dairy farmers are the lowest in decades.

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While coronavirus market interruptions will be blamed by our co-op leadership for these low prices, our co-ops have still not adopted simple, elementary marketing rules that match milk supply with profitable milk demand for producers.

In 2020, these low milk prices have been supplemented by various government program payments, true, but as we go into 2021 there are no current plans for adequate government subsidies. Most agree that we should not have government subsidy programs as a part of our dairy producer milk marketing plan.

We producers have remained far too silent about this milk price issue, and the co-ops and the government interpret this silence as our consent to the milk industry’s mismanagement of our producer pay prices. More now than ever before, producers should band together and seek change within their co-ops.

We often hear from producers that when they seek answers to solving this low-price issue, they don’t get any answers or commitment for a positive change from co-op leadership. At co-op meetings, all producers should ask one question first: “What is my co-op doing to bring our producer pay prices back to sustainable levels?” All producers should make sure to stay on this question until your co-op commits to a plan of action that yields results. No issue at a co-op meeting should have a higher priority.

As policy exists today, co-ops are most concerned about their own survival and profitability. This is backward thinking. Co-ops, working together, can set policies in place to return producer pay prices back to sustainable levels and, once done, producers can only then afford to support their co-op’s sustainability. Today, co-ops are retaining funds from already below cost of production producer pay prices for their sustainability. Co-ops must first return their producing members to sustainability so that members can afford to help their co-ops.

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Let’s turn this process around. Only by producers asking the milk price question to co-op leadership will there be changes to low producer pay prices. Otherwise, your silence will be your consent to keep this system operating as it does.

As long as co-ops remain unresponsive to its members’ need for higher milk prices, we suggest the following legal steps for you to take to get answers.

Every co-op has its own unique set of questionable management practices. What is common among co-ops is that they resist collaborating among themselves to work on an industry-wide plan to improve and retain sustainable producer pay pricing. From the producer’s perspective, sustainable producer pay prices to protect as many existing dairy farm families and rural communities is our most important issue, and yet, in our opinion, it is the least-discussed issue inside our co-ops.

Producers must band together and develop a plan on how to get their co-op to think of its member producers first and put everything else behind this. It is not enough for a co-op to move your milk; it is there to profitably market your milk.

A plan of action for every concerned producer should include seeking specific information from your co-op which may reveal possible mismanagement and conflicts of interest within your co-op that directly and negatively impact your pay prices.

A letter can be written to the co-op board of directors, and signed by as many co-op members as possible, to initially request the following information from the co-op:

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1. Agendas of all board meetings for the previous 10 years

2. Minutes of all board meetings for the previous 10 years

3. Board member monthly milk settlement statements for previous 10 years

4. Business plans and budgets for each operation plant for the previous 10 years

5. Financial statements for each operating plant for the previous 10 years

6. Consolidated financial statements for the co-op for the previous 10 years

7. Income tax returns of the co-op for the previous 10 years

8. Compensation listing, bonus formulas and payments, and employment contracts of the highest- paid co-op officers

Requesting these mandated documents is supported by federal and state laws and sustained by co-op guidance from the USDA.

As long as you are a member of the co-op and have a “proper purpose” for the need for this information, the co-op is obliged to provide it to you. Seeking co-op information is nothing more than seeking co-op transparency, something we have all wanted for decades. If the co-op refuses to provide this information, you can seek legal help and a court order compelling the co-op to produce the documents. This is a fairly common practice in these situations. And why would the co-op withhold information you as a producer-member should be entitled to have?

Regardless how you ultimately receive this requested information, you will likely become very enlightened by what you will find in these documents. Interpreting the information you receive may take some professional help, but the cost of professional help shared by several farmers is small compared to the benefit of what could come from gaining a new level of co-op transparency.

What does a co-op owe to its members, first and foremost? A sustainable milk price. And secondly, transparency about the aforementioned points. We should expect nothing less from our co-ops, those who we trust to market our milk. end mark

PHOTO: Staff photo.

Mike Eby
  • Mike Eby

  • Dairy Producer
  • Chairman of the Board
  • National Dairy Producers Organization
  • Email Mike Eby

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