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Getting creamed

 

Creamed

 

“I lost my land, a single tractor took my land. I’m alone and I am

bewildered.”

 — John Steinbeck, from The Grapes of  Wrath.

 

By Joel Preston-Smith

In the final scene of John Steinbeck’s classic, The Grapes of Wrath, Rose of Sharon— the landless, orphaned daughter of a failed farmer, hiding in an abandoned barn and grieving the death of her stillborn child—cradles an elderly, starving man in her arms, and draws him to her breast, to suckle. After 534 pages of dust and destitution, Steinbeck offers this final, harrowing image as a moral beacon—if the displaced and dispossessed are to find salvation, to heal the land and their families, they would only do so by cooperating, by sheltering and feeding one another.


It’s somewhat ironic then, that 70 years after the novel’s publication, “cooperative agreements” and a surplus of milk, some argue, are starving dairy farmers into bankruptcy, deprivation and suicide. John Kinsman, president of Family Farm Defenders, based in Madison, Wis., calls the current milk debacle “the worst crisis for farmers since the Great Depression.”


Throughout America, dairy farms—both organic and conventional—are failing, awash not in dust, but in milk. The alleged surplus has driven the price of raw conventional milk to its lowest level since 1940, says Kinsman, and has dairy farms teetering on the brink of extinction.


Irene Lin, a policy analyst for the National Family Farm Coalition, headquartered in Washington, D.C., says the U.S. has lost 80 percent of its dairy farms in the past 30 years, but not since the Dust Bowl have so many farmers faced such a dire future. 


Kinsman, who is also secretary of the Coalition’s executive board, says his nonprofit wants the federal government to restructure the dairy industry, and enforce the National Organic Program rules. The Coalition supports Senate Bill 1645 (formerly Senate Bill 889), the Federal Milk Marketing Improvement Act of 2009, which would allow the U.S. Secretary of Agriculture to base the price of conventional milk on the national average cost of production. The price is currently influenced by a host of factors, but largely by the price of cheese as it is traded in the dairy pit of the Chicago Mercantile Exchange.


The Coalition wants the feds to dictate conventional milk prices, and thus break what Lin describes as a “corporate monopoly on milk,” orchestrated by industry giants such as Dean Foods, Kraft Foods and a handful of conglomerates. To illustrate the need for government oversight, Lin cites a $12 million fine levied December 16 last year by the Federal Commodities Futures Trading against Dairy Farmers of America “for attempting to manipulate cheese cash markets” at the Chicago stock exchange. 


“We’re dealing with a very flawed pricing system controlled by a very few corporate entities,” Lin says. “That system has led us to a price collapse that you can only describe as a depression. Conventional milk is bringing a price lower than we had in 1980.”


U.S. Senator Bernie Sanders (D-VT) has asked the U.S. Justice Department to investigate “possible antitrust violations” by Dean Foods, which the senator claims controls 70 percent of the dairy market in the northeast. Dean, he argues, posted record profits in the first quarter of 2009, whilst the company cut payments to farmers from $19.50 per hundredweight in 2008, to less than $11 this July.


“Declining income is a huge crisis for farmers and the communities that depend on them,” Lin argues. “Our contention is that we need a new pricing system and we need new antitrust measures that take corporate control away from the system.”

“Declining income is a huge crisis for farmers and the communities that depend on them,”

Doug Sinko, who serves as a liaison between Western dairy farmers and Organic Valley, says there’s a 7-10 percent overproduction of organic milk nationally. “The surplus means that some people don’t have markets for their milk,” says Sinko, who once operated what he says was the first certified organic dairy in the Pacific Northwest, in Myrtle Point, Ore. Organic Valley has dropped its pay price to farmers $2 per hundredweight since January, Sinko notes and has instituted a quota program to stem the tide of milk.


Earlier this year, distributor HP Hood cancelled eight dairy contracts for farmers in Maine, and demanded a production cut of 15 percent by the majority of the state’s 14 organic milk producers. Hood also cancelled 22 contracts in California, according to the California Farm Bureau Federation. The New York Times reported May 28 that 32 dairy farms in Vermont have closed down since December first.


Ed Maltby, Executive Director of Northeast Organic Dairy Producers Alliance in Deerfield, Mass., argues that the flood of organic milk is largely due to lax enforcement of the National Organic Program (NOP). “They [the processors and distributors of organic milk] have been taking on farms whose quality isn’t high, whose organic standards aren’t high. Lack of enforcement on key parts of the organic legislation on origin of cows and access to pasture,” he claims, “grew the milk supply very rapidly.”


Maltby says that some smaller dairy operations have taken a lesson from the CAFO (Concentrated Animal Feeding Operations), shirking the NOP’s recommendations, but still market themselves as organic. “There are some 300-cow herds that don’t graze at all,” Maltby observes.


 Approximately 9,900 CAFOs operate in the U.S, producing more than 50 percent of the animals stock consumed in the nation, according to a 2008 report authored by Doug Gurian-Sherman, a senior scientist for the Union of Concerned Scientists in Cambridge, Mass. The watchdog defines a dairy-or-beef CAFO as an operation hosting more than 1,000 animals. 


Gurian-Sherman has argued that small dairy farmers are at a competitive disadvantage with CAFOs, given that the enormous industrial operations often qualify for federal subsidies to reduce their environmental impact, thus passing the costs of production onto U.S. taxpayers. A dairy CAFO can qualify for up to $450,000 in individual grants, the report notes. Organic dairies, with a decidedly smaller environmental impact, don’t generate enough pollutants to present a significant threat to the environment, and therefore can’t suckle at the federal teat. CAFOs may have netted as much as $125 million in environmental protection subsidies in 2007, Gurian-Sherman notes.


There are 20 large organic industrial dairies in the U.S., according to the Organic Consumers Association, in Finland, Minn. The Association claims that combined, CAFOs produce as much as 40 percent of the nation’s organic milk supply.


In a direct challenge to CAFO’s, the Northeast Organic Dairy Producers Alliance has petitioned the USDA to adopt new NOP rules, clarifying a national standard for access to pasture. Namely, the alliance has proposed that organic dairy livestock over six months of age “must graze on pasture during the months of the year when pasture can provide edible forage,” and that “grazed feed must provide significant intake for all milking-age organic dairy cows.”
Bruce Pokarney, director of communications for the Oregon Department of Agriculture, says that almost all of Oregon’s conventional dairies, numbering somewhere between 500-600 operations, are classified as CAFOs. The largest, according to the state Department of Environmental Quality, manages 16,000 cattle.


The state legislature funded a “Dairy Air Task Force” in 2007, to study a narrow range of environmental impacts by CAFOs. After meeting in session eight times, the task force published a report noting that CAFOs are “very thorny issues” and evoke “deeply held, diverse opinions.” The committee recommended that the state consider tax credits to CAFOs, in order to encourage wise environmental practices, but also set 2015 as the target date for when its target air-quality goals would be mandatory.


Ed Zimba, an organic dairy farmer in Deford, Mich., believes that CAFOs are unfairly judged on size alone; he says it’s more important to question whether a given dairy is adhering to the rules of the National Organic Program. “I don’t care if they’re milking one cow, or a thousand cows,” says Zimba, “as long as they’re grazing like they should be.”


Zimba, who says he milks 300 hosteins and crossbreds on a farm certified organic by the Kentucky Department of Agriculture, adds, “There are dairies that milk 50 cows that don’t have access to grazing. We’re more concerned about the integrity of organic, than about how many cows someone milks.”


Zimba, who serves as an at-large member of the Northeast Organic Dairy Producers Alliance, says he grazes his herd from about May 1 to Nov. 15—opening day for Michigan’s deer season, when cows are healthier indoors than out to pasture. He also argues that CAFOs aren’t getting an unfair competitive advantage by tapping into federal grants for environmental protection. Zimba points out that the same types of grants are available at the state and county level, throughout the U.S., for small farms that want to limit their ecological footprint.


Arden Tewksbury, a Pennsylvania dairy farmer and head of Progressive Agriculture, is the principal author of Senate Bill 1647, sponsored in the legislature by Pennsylvania senators Arlen Specter and Bob Casey. Tewksbury, a retired dairy farmer, and executive director of Progressive Agriculture Organization, in Meshoppen, Penn., says, “It doesn’t matter who you are, whether you’re conventional or organic; if you’re in the dairy business, you’re in serious trouble. Tewksbury says that U.S. dairy farmers are estimated to gross $16 billion less in 2009 than they did in 2008. “That’s just loss of revenue, without calculating costs rising from 25 to 35 percent.”


There were approximately 350,000 dairy farms in the U.S. in 1981, Tewksbury observes, when President Ronald Reagan deregulated the dairy industry. “Now we’re down to 57,000. Hawaii has five farms, as of 2007. Every state has been hemorrhaging dairy farms. In 1992, there were 131,000 licensed dairy operations. Today we have less than half of that.”


He says his legislation, which he coauthored with neighboring farmer George Carlin, would pry loose the stranglehold CAFOs have on both organic and conventional dairy operations. “What used to be family farms has been taken over by these huge facilities that poison the land and the community. They’re shipping grain from Iowa to produce milk in Pennsylvania, that’s sent to a processor in New York that’s then sent back to the shelf in Iowa. You can’t run a business like that and call it sustainable. What we want is a sustainable market, and we want a fair price for our milk.”

What we want is a sustainable market, and we want a fair price for our milk.”


George L. Siemon, CEO of Organic Valley sums it up thusly, “Around 2004, organic milk became short for an extended period as organic dairy experienced double digit growth.  During the tight supply situation, many new competitors entered into the organic dairy marketplace hoping to cash in on the growing market.” He concludes that  “The new competition caused high prices. Just as the recession set in, the organic dairy supply was over stimulated and this era came to an end. The recession had an immediate impact on the organic dairy market which dropped from a 25 percent growth rate down to zero percent.” 


To look at recent dairy stats is like opening an artery. Conventional dairy farmers in Wisconsin are paid $9.50 to $11 for every 100 pounds (one hundredweight) of unprocessed milk, Kinsman notes. But the cost of production for Wisconsin farmers, according to the USDA’s Economic Research Service, was $21.81 per hundredweight as recently as July. Organic Valley was paying its Vermont dairy farmers, with higher feed and production costs, $26.50 that same month.


The high costs of production, combined with dwindling income, has farmers begging bankers for extended credit, selling off equipment or “accepting” foreclosure. Bruce Drinkman, an organic dairy farmer in Glenwood City, Wis., says he and his wife recently cashed in her IRA in May, in order to pay expenses and the principal on a farm-credit loan.


“We’re not doing very well at all,” he admits. “The banks don’t want to work with us. There’s no forgiveness, and we’re living check to check at best.” He says he’s getting $14 per hundredweight for his milk, but the production costs are $35. His wife needs medications for her blood circulation. She isn’t getting them. He says he recently bought a $10 pair of reading glasses at Wal-Mart, rather than spend $300-$400 for an eye exam and prescription lenses.


Hilde Steffey of Farm Aid recently told the National Family Farm Coalition that hotline calls in July for emergency help were up 500 percent at her relief agency, compared with the same period in 2008.


“There was a time when every 80 acres around here had a dairy farm with chickens and hogs,” says organic dairy farmer Kinsman, who milks 36 cows on the rolling hills of Sauk County, “and they sent their children to college.”


Now a third of them are dropping out of high school. When the food you sell is worth only half its value, you look on yourself as foolish.”


Kinsman says his land is divided into rolling hills and flats—the latter the product of an advancing ice sheet roughly 170 miles wide, which ironed Wisconsin into what would become America’s iconic pastureland, and enabling Milwaukie legislators, roughly 10,000 years later, to proclaim milk the official state beverage.


“It looks like Stonehenge,” Kinsman laughs, but then observes that he’s comparing Sauk County to an abandoned civilization. “It’s a beautiful area that should be in dairy farms,” he laments. “They’ve all sold out or are about to sell out, or they’re bankrupt. There’s a lot of divorce, a lot of anger, families in crisis. Farmers won’t admit it, and families won’t admit it.”


Kinsman says he knows of farmer suicides related to failed—or failing—dairies, but prefers to not name anyone specifically.


While dairy farmers are seeing smaller and smaller milk checks, both production and corporate dairy profit continues to rise. The latest data available from the U.S. Agricultural Statistics Service points out, for example, that cheese production rose 1.6 percent in 2008 over 2007 figures. Butter production (1.64 billion pounds)  was up 7.3 percent over 2007 numbers. Whey was down 2.3 percent, but “American-type cheese” was up five percent. The USDA’s Agricultural Marketing Service, in a September 17 report, notes that rising dry milk prices are “increasing buyer interest and transaction volume.”


Why, then, are farmers seeing little of the green? Maltby says the organic dairy market is expected to grow 3-4 percent in 2009, compared with 20 percent in previous years. Slower growth, combined (arguably) with overproduction, means that farmers are overextended; dairying is a capital-intensive industry, and it’s just not that easy to unburden oneself of cattle and equipment if the market suddenly (or even hesitantly) stagnates. Nor is it easy to shrug off farm-credit loans. 


Since January 2008, U.S. milk prices have fallen by nearly half, from $20.50 per hundredweight (45kg) to $11.40 this June, according to the London based journal The Economist. Belgian dairy farmers protested falling milk prices September 16 by spraying an estimated 40,000 gallons of milk over fields in Marche-en-Famenne, in southern Belgium.


In May, the U.S. Senate Appropriations Committee set aside $585 million for direct farm loans, but Lin notes that without price supports for milk, the emergency funds will dry up quickly. Tom Vilsack, USDA Secretary of Agriculture, met with organic dairy farmers at a West Salem, Wisc. rally July 17, and promised the vocal crowd that his agency is taking a closer look at corporate dairies and processors.


“We are focusing on rules that will level the playing field so that small and medium size producers have a fair shot,” Vilsack said at the rally, organized by the Cornucopia Institute, in Cornucopia, Wisc. “We are, as you are, asking questions about how producers can make so little and how others who are in the chain can make so much.”

Joel Preston Smith is a Portland-based writer.



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