Drowning in Milk
Plenty, and dairy farmers are drowning in it. Current conditions are killing thousands of small dairies across the country. They struggle to stay afloat, but eventually succumb to the market pressures created by increasingly larger and larger dairies. There’s a new normal in size, and it’s forcing smaller farmers out of business. Herd size (number of cows a dairy milks) has been increasing for decades, but in the last 10 years or so it’s grown at an unprecedented pace. Your grandparents may have been able to make a living milking 50 head, your parents milked 100 and survived, but you can’t survive on 300. The relatively recent creation of mega-dairies, milking tens of thousands of cows, has sent it hyperbolic. The scale of these operations is producing a wave of cheap milk that is wiping out smaller farmers nationwide. Consolidation isn’t new, nor is it unique to dairy, but this wave is beyond normal business evolution, and is in a larger sense symptomatic of the polarizing world we live in today. Dairy is the perfect canary in the causality coal mine.
Milk is a very unique product. It’s a singular blend of commodity and highly perishable household staple. As the original loss-leader it has anchored consumers visits to the grocery stores for generations. It’s typically sold at or below costs by retailers to get customers in the door (they make their margin on other products customers buy while shopping). This unique combination of reliable demand, consistent frequency, perishability, weight, and temperature (a gallon of milk weighs about 8.6lbs and it needs to be kept cold, so transport is expensive) has kept dairy regional from the time of the first colonist’s arrival. It’s a unique product, requiring a specific setup, investment, skillset, and proximity to market. This created a unique farming opportunity, which has for the most part always made milk “local”, and as such supported local economies.
Dairy farmers squeeze their life into the time in between milkings. If you’ve ever had the privilege of knowing or working for a dairy farmer, you learn the extent of their commitment and work ethic, as they seem to work 24–7–365. Imagine for a moment that you had two fixed points every day (most farms milk twice a day) about twelve hours apart which never yielded. Bovine lactation sets the schedule, it’s the cadence of daily life. When a cow is bagged up (full of milk) they need to be milked or they’ll get extremely uncomfortable. Like in Goodfellas : You’re sick — milk the cows. Your daughter is getting married — milk the cows. Place got hit by lightning — milk the cows. Death in the family — milk the cows. Nothing is normal, commitment, work hours, sleep, nothing. Being a dairy farmer is all consuming, requiring determination, grit, and perseverance. As a group you will find no more dedicated, fully engaged, or harder worker than a dairy farmer.
All farms are miraculous little manufacturing centers. They take sun, water, soil, and make a basic human need — food. They create sustenance from nothing. The fruits of their labor are the basic financial building blocks of many rural economies…dollar zero. (The money farmers earn is new money in their local economy, they’re running a trade surplus with other communities.) They sell the food they create and use that money to pay employees, buy local feed and hay, and support all kinds of local business. Dairy farms are different than most other farms. The frequency with which cows lactate, coupled with perishability, and constant demand for the product creates day to day stability, unlike the seasonal spikes found in other types of farming. That reliability creates consistent income and employment, and provides a solid base for the community.
Small dairies anchor their rural communities, and as they’re forced under, they leave a sizeable hole in those communities they once helped support. Pricing pressure, competition, and pressure to scale isn’t new, but this time it’s different. Current market pressures are unlike at any time in history for dairy farmers. As a result, there has been a tragic and alarming increase in suicide rates, which has even caused some dairy related business to include suicide prevention and hotline info in correspondences with farmers. The operating leverage achieved by larger dairies, as well as increasingly restricted market access for small dairies is a milk Tsunami which is drowning thousands of small American dairy farms. It seems dairy has reached the warm waters of the Pacific in the Manifest Destiny laid out by Richard Nixon’s secretary of agriculture Earl Butz in 1972 when he said “get big or get out.”
When farmers drown, they drag a portion of their community to the bottom with them, amplifying the impact. There were nearly 650,000 dairy farms in America in 1970, but by the end of 2017 only 40,219 remained. Think about all the lives, jobs, and compounded local spending lost in rural economies. Last year we lost over 1,600 and this year is looking far worse. This should raise the point that if we value hard work and healthy communities, why do we allow so many of these anchors to fail? The lives destroyed, and the large voids created should put this issue on the legislative radar. This isn’t a conversation about a type of farmer going through a difficult time, it should be a catalyst for change, an opportunity to broaden the discussion, As jobs and people continue to urbanize, subsidizing the pillars of many rural communities may be the only way to ensure stability.
There is no better illustration of the scale game than dairy. It’s an amalgam of some of the biggest issues we face as a society, a perfect example of how the kind of conversations that we need to be having aren’t happening. Instead we’re all drowning in a sea of toxic rhetoric and cheap milk. Action needs to be taken. Government supports and subsidies have been the traditional tool to stabilize markets, farmers, and maintain a stable food supply, and they’re our only near-term tool to arrest the decline and provide support. No one likes subsidies, by their very nature they’re anti free market, which is perceived as anti-American, but they have long track record of working, especially in agriculture. The startup costs in farming are high, the risks in farming are big, and the rewards are small. (If you want a stable food supply — which you do — because although a shortage of Apple products may irritate people at the mall, a shortage of apples has cost many a king their head). Government needs to provide the agricultural market supports that Dairy farmers need now, but more needs to be done long term.
To have a truly fair and open marketplace there must be transparency. You can’t determine value if you can’t fully evaluate quality. Information is essential to price discovery. This means that although short term help can and must come in the form of Government subsidies, long-term stability will only come from clear market support, a base of consumers subsidizing through commerce. Consumption is support, your purchases are the most direct vote you can make, and you get one with every meal. Demand transparency, so you can make an informed decision and financially support food that aligns with your beliefs. When we can differentiate between products, we can differentiate between cost and value. Buy from small dairies, buy regionally, or don’t, but demand transparency. You have the right to know, and information is the only thing that will bring about change.
It’s the only way to support what you value and bestow value to what you support.