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Kardashian’s new book details industry’s squeezed margins

PD Editor Walt Cooley Published on 29 October 2012

Milk Money

I accidentally stumbled upon Kirk Kardashian’s first-ever book early this fall. I read the advanced copy his publisher sent me and interviewed him shortly after the book’s release date. Click here to view my one-on-one with him.

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In summary, the Vermont-native’s manuscript is the best compilation of all of the gripes I’ve ever heard from dairy producers about why their industry is perpetually plagued by squeezed margins.

Its throw-the-kitchen-sink-at-it approach is aided by Kardashian’s careful research into the historical context for how current industry scapegoats – such as sexed semen, ethanol, dairy policy and Federal Milk Marketing Orders – have, over time, impacted the difference between what it costs a farmer to produce milk and what he or she gets paid for it. From beginning to end, the book portrays a milk margin that has been squeezed thin and is perpetually getting thinner.

The genesis for Kardashian’s research into the industry stems from the 2009 milk price crisis: “There were heart-wrenching human-interest stories about farmers who killed themselves because of the financial stress, of farm-equipment auctions on sixth-generation farms, of communities left wondering what they really stood for anymore. Without intending it, these dispatches were forming pieces of a mosaic that depicted a country and a culture undergoing revolutionary change.”

Many of our readers will disagree with Kardashian’s suggested solutions to these problems – as they are rooted in a Northeastern, small-dairy, progressive-leaning approach to policy reforms. However, he does clearly lay out the challenges in addressing environmental, social and dairy product pricing policy for raw milk so that a consumer who reads the book would see the conundrum that often faces lawmakers presented with the industry’s ills.

Kardashian interviewed several dozen dairy farmers, many of them from the Northeast, to illustrate the industry’s challenges from the perspective of dairy farmers who live it daily. The details about these farmers’ struggles demonstrate the day-to-day challenges of many in the industry. Overall, I would guess that a dairy consumer who reads the book would feel sympathetic toward the plight of today’s dairy farmers.

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Many of the book’s narratives carry the reader through the industry’s most gut-wrenching time period – 2009. In Kardashian’s rearview-mirror assessment of that year he writes: “What most dairy farmers didn’t realize in the years between 2003 and 2007 was that they were sailing into a perfect storm – the collision of a deep recession with an antiquated, nonsensical milk pricing scheme – that would have ruinous effects on the dairy industry.”

Kardashian writes that he began researching about dairy farmers to discover “how it could be that such honest, hardworking people could produce a nutritious food almost everyone consumes, and do it well, yet lose money. It seemed wrong that, in this greatest of meritocracies, the faithful could deposit their capital and sweat equity and skill into the market and emerge on the other side with a debit instead of a credit.”

Many of the near-poetic phrases Kardashian writes about the dairy industry champion the ongoing effort of dairy farmers of all sizes to make a living. He writes: “Modern farmers are a different breed than people in other lines of work, with their willingness to do back-breaking labor for modest remuneration, the tenacity with which they cling to their land and their pride in a lifestyle suffused with mud, manure and dramatic uncertainty.”

Unfortunately, in the author’s quest to provide balance between putting a familiar face to the small-scale, family-owned farmers who are struggling to make milk that is more valuable than the costs required to produce it, he often portrays larger dairies as faceless CAFOs that force unintended costs on society and extinction on smaller dairies and must grow larger in order to add a few cents to the margin.

“With shrinking margins for milk, farmers out [West] have done the economically shrewd thing – they’ve created economies of scale, cut costs and become ruthlessly efficient, just like thousands of others dairy farms across the country,” Kardashian writes.

Sympathetically, he writes: “We pay less for food, and have commanded farmers to become factory efficient, but we don’t give them enough money to operate in harmony with their communities.”

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While the author acknowledges most large dairies do little outside the bounds of the law and that any business school analyst would probably concur they move toward consolidation for economic advantage, the balance in his reporting comes from retelling the worst stories from the past history of bad actors who were also large-herd dairy owners.

While some of his points about the social and environmental repercussions of larger operations are valid, I believe the author has missed the complete portrayal of reality in pursuit of awakening consumers’ ethical consciences about milk production.

In the preface he states, “If consumption is akin to voting, then today we are largely voting for a system that values efficiency over quality and low, low prices over a healthy environment, fair wages, animal dignity and robust communities. Changing the system might be as easy as changing your vote.”

While larger dairies may be more profitable than smaller ones, these dairies’ margins aren’t hundredweights better than small dairies. They both operate in the same tilted system.

I believe there are “good actors” of a larger scale who consumers would be just as willing to support with their dollars as small farms. Fair Oaks Farms might be one such example.

No such “mega dairy” is given the same name-with-a-face treatment in the book. It would have been just as easy to find third-generation-or-greater families who operate large dairies who are law-abiding, environmentally conscious and forward-thinking farms in the same quantity as those of the small farms featured in the book. Thus, while not overtly stated, the book’s quiet suggestion to stereotype all large farms as the root of the industry’s ills is the book’s most unfounded claim.

Kardashian’s featured solution to the challenges in the industry, which is summarized in the last chapter, supposes the biggest hurdle in the industry is its inattention to promoting a quality product, rather turning milk into an indistinguishable commodity. He highlights a small Northeastern co-op with strict milk quality standards – under 200,000 SCCs per mL at all times of the year, one with most farms SCC tests ranging from 45,000 to 160,000.

“Chances are, [consumers] don’t know where [their] milk comes from … milk is pooled from farms in the same cooperatives and sometimes multiple cooperatives, usually spanning states. The milk trucks go from farm to farm and fill up their tanks, then they drive to the plant and unload the milk into a bigger tank. Good milk, ‘shit milk,’ it all gets mixed together and pasteurized – or ultra-pasteurized – and bottled. That means there’s little incentive, besides the paltry quality bonuses and premium awards, to make an excellent product. Under this system, consumers are deprived of the power to choose the maker of their milk. And the farmer is deprived of the financial recognition of creating a premium good,” the author concludes.

He, and the co-op, may be onto something with that line of thinking, although even the author admits he’s not sure that the idea is scalable enough to cover the entire industry.

Thus, if you read the book or hear of someone who does, you’ll have to inject your own understanding of the large dairy owners you have met – perhaps you are one of them – who suffer the same economic challenges of small producers yet who are just as concerned about being good environmental, social and community stewards as those operating small dairies. PD

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