Commentary: How USDA policy damages dairy farmers
The national federal milk marketing order pricing formula hearing, held in Carmel, Ind., commenced on Aug. 23. If the goal of the federal government and the USDA in particular is to destroy the family dairy farm, U.S. dairy policy should continue on its current course, as it has been very effective in destroying the traditional dairy farm.
The number of dairy farms in the U.S. has declined by 90% since 1980. The decline continues, taking with it dairy support businesses, which are no longer viable in many areas since there are too few farms to serve.
In fact, a June 2023 edition of a prominent farm paper, featuring ads “honoring” dairy farmers, had 29 ads, 28 of which were placed by auction services, cattle dealers and real-estate agencies. This is quite telling of the current situation.
If the goal of the USDA is to preserve the traditional dairy farm, dairy policy must make a 180-degree change to make dairy farmers’ cost of production the foundation of future milk pricing.
The Federal Milk Market Improvement Act (FMMIA) of 2007, 2009 and 2011, authored by dairy farmers Arden Tewksbury and Gerald Carlin, and introduced in the U.S. Senate by the late Sen. Arlen Specter and Sen. Robert Casey, addressed the cost of production in milk pricing.
The FMMIA was recently revised by Mr. Tewksbury and Mr. Carlin to address excessive milk check deductions by dairy cooperatives, forcing them to pay the full announced FMMO minimum price without deductions.
Clearly, small and mid-size dairy farms are being abused by large dairy cooperatives, while USDA runs cover for corrupt dairy cooperatives, as evidenced by USDA’s stonewalling of the GAO’s efforts to find information on the impacts of market concentration.
On April 5, 2023, American Farm Bureau Federation stated in a letter to Secretary of Agriculture Tom Vilsack that the average dairy farmer in the U.S. lost $6.27 per cwt. in 2021. This figure was taken directly from the most current “USDA ERS Milk Production Costs and Returns per cwt. sold.”
On May 1, 2023, USDA ERS “erased and replaced” the figures for 2021 by dramatically lowering cost estimates from $27.50 per cwt. to $23.04 per cwt. with no explanation given. This was not the first time USDA ERS played the “erase and replace” card. In 2018, they lowered 2013 to 2016 cost of production figures.
Since USDA allegedly tracks farm milk price data, how did they supposedly misreport the gross value of milk sold in 2021 by $0.67 per cwt.? The new figures show gross value of milk sold in 2021 at $18.49 per cwt. compared to the original value of $19.16 per cwt. Total gross value of production for 2021 dropped from $21.23 per cwt. pre-May 1, 2023, figures to $20.11 per cwt. post-May 1, 2023, figures. Value of production less cost listed for 2021 “improved” from -$6.27 per cwt. to -$2.93 per cwt.
Dairy farmers’ costs and returns are not the only areas where the federal government is playing the “erase and replace” game. Behavior like this, at the very least, calls ERS figures into question, and, at worst, renders them totally unreliable. Parity is the best economic indicator of a dairy farmer’s ability to participate in the real economy.
Source : Capital Press USA Oct 2nd 2023 by Gerald Carlin of Meshoppen, Pa., is a former dairy farmer and chairman of policy development for Farm Women United