The Producer's Voice
December 23, 2009
We rely on history in our search to move forward, it recounts lessons of our success and failure and is littered with the many experiments, which put us here today. Some of the problems we face today result from yesterday's solutions and literally glare at us waiting for a response in order to move forward, a lack of response confines us to facing the result of our current dilemma in a repetitive cycle of crisis after crisis.
Let's talk about survival of the fittest, the process of natural selection observed by our friend Charles Darwin which reminds us: It is not necessarily the strongest or most intelligent who survive but those most capable of adapting to a changing environment which prove to be most fit and ultimately survive. The argument suggesting survival of the most fit is an efficient means of achieving balance is our first recognition of a need for balance and that's exactly where our focus should be if we expect to stabilize the U.S. Dairy industry. Balance.
In early January 2009 Milk prices began a dramatic decline, in short order milk checks were cut to less than half those of 2008. Today we recognize volatility as a threat and an obstacle in the dairy business, resulting from a continued effort to produce milk beyond market demand and of our failure to observe signals indicating market need.
Our reluctance to recognize the role played by surplus milk, which determines the price for all milk, has reduced the number of operating dairy farms in this country from 648,000 in 1970 down to 78,000 in 2006 and today only 54,000 remain. During 2006, Economists predicted a dairy crisis would occur in 2009, the next to follow is expected during 2012 and was forecast then as well.
Dairymen largely ignore information which in retrospect proves to have been valuable; the economic forecasts, the trend analyses and market signals are not observed in a business like manner which comes at the expense of producers. After nearly a year of crisis on the farm, the price of milk is showing an increase but remains below the cost of production. Economists expect milk to continue its upward trend and remain high until 2012. The upcoming year will see an influx of 300,000 heifers join the national herd, a result of sexed semen breeding. During 2012 milk prices are expected to decline back to $11 per hundredweight (cwt) for lack of a management plan, and once again rely on survival of the most fit to provide balance.
There is an inherent conflict of interest between dairy food processors and dairy producers, the group controlling the milk controls the industry and producing beyond market demand results in the farmers' loss of control. During the present crisis, processors are enjoying profit and market control while producers are depleting equity at a rate of $800 million per month in order to produce milk well below the cost of production.
Dairy food processors make significant contributions to stimulate political interests, they employ lobbyists and rely on industry experts to maintain a control over the dairy industry which is closely held and fiercely protected.
Those who profit from cheap milk maintain control of the dairy industry relying on the dairyman's inability to achieve consensus and speak with a unified voice, they will resort to divisive measures among the co-ops and National Milk Signaling Washington of the discord. The loss of industry control amounts to billions of dollars, maintaining control requires big money and political influence, control is profit.
Dairy farmers are in a desperate situation and their voice lacks an effective means of communication, they are not represented with any sense of urgency for several reasons:
1) They do little to stimulate political interests.
2.) They remain relatively complacent during crisis
3.) They pose no immediate threat to anyone except themselves.
Dairy Co-ops were organized to represent the interests of their producer members and for the most part do a fine job. However, the dairy co-ops are at a disadvantage in the marketplace representing the producer's voice; they operate in fear of political ramifications, retribution, or ultimately the loss of market share. During times of milk surplus cooperatives maintain a cautious relationship with processors and rightfully so.
National Milk Producers Federation (NMPF) serves as a lobbyist organization working on behalf of dairy cooperatives to ensure adequate markets for a burgeoning supply of milk. Our Congressional delegates are concerned for the stability of an adequate food supply in this country and prior to calling for corrective action to improve the system they demand consensus, warily protecting their political capital before venturing forth. The working relationship of such groups is reminiscent of the legislative process, taking too long to produce results often not representative of the dairymen's real interest.
Oversupplying the market with cheap food at their own expense creates no sense of urgency for anyone to help the farmer. Remember, everyone in this picture is enjoying profit, business as usual, everyone except the farmer.
Ensuring an abundant supply of fresh food on a regional basis is of vital importance to the well being of our country. While allowing the market to determine our needs we appear to be inadvertently off course and headed in a direction most of the country will later find unacceptable. The demand for milk products in the United States could be supplied by 800 farms milking 10,000 cows each, farm numbers are decreasing with each cycle, dairymen need a management plan and a voice.
The Dairy Price Stabilization Plan is a budget neutral management tool capable of stabilizing the dairy industry. The dairy price stabilization Plan would save billions of dollars in government funding and spare farmers the anguish of relying on survival of the most fit.
Find your voice, Join the effort to stabilize the U.S. Dairy industry and protect our food supply.
View the plan at www.DFWT.org
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