Farmers, Consumers Are Getting Milked

Farmers, Consumers Are Getting Milked
Joel Greeno, guest columnist, Capital Times, Madison, Wisconsin August 2, 2007

Despite recent media hype, farmers are not getting rich off record prices in the dairy case. The cost of milk has gone up 50-60 cents in the last few months, with consumers paying close to $4 per gallon in Los Angeles, Chicago and New Orleans. But dairy farmers are still getting less than half of that money -- about $1.60 per gallon.

Rising fuel costs and ethanol corn demands are partly to blame. Intense drought has also meant wilting pastures and hay crops. For the first time ever the creek that normally waters my cows has dried up, and as a result my milk production has dropped 50 percent this summer.

But the real culprit behind the current dairy crisis remains corporate greed. The lion's share of consumer money spent on milk continues to line the pockets of corporations: Kraft, Dean, Wal-Mart. Worse yet, consumers have been convinced to pay almost the same for skim and 2 percent versions of the real thing -- after the most valuable butterfat has been skimmed off to make other dairy products.

Less well known is the collaboration of corrupt dairy co-ops such as Foremost, Dairy Farmers of America, and Land O' Lakes in this price-gouging scheme, to the detriment of their own members.

There is no free market for fresh milk in the U.S. unless you happen to be buying it directly from a farmer. All the economic "theory" taught in land grant colleges is useless. Consumer prices at the grocery store are calculated by the USDA through a bizarre outdated formula and federal market order system. Worse yet, this USDA-imposed "price" is based upon secretive trading of 500-pound cheddar blocks on the Chicago Mercantile Exchange. At the request of Sen. Russ Feingold, the General Accounting Office recently concluded an investigation of the CME that found it prone to market manipulation and price fixing.

This rotten system is made even worse by globalization. The U.S. has been a dairy deficit nation for years now, and for corporate agribusiness it is much cheaper to import casein, butter substitutes, and milk protein concentrate (MPC -- a questionable dairy waste byproduct) from New Zealand, China, India, Ukraine or wherever than to pay U.S. family farmers a fair price for domestic milk. In April 2007 alone, the U.S. imported 11 million pounds of MPC.

Because of this type of abuse, farmers have been stuck with below-parity prices for decades. Even the USDA's own numbers indicate that it costs farmers over $30 to produce 100 pounds of milk, yet the milk "price" is set at $19 per 100 pounds. Under our current federal price support system known as MILC (Milk Income Lost Contract), I am expected to lose $8 per 100 pounds in price to get a 33 cents per 100 pounds subsidy. That means on my farm I would give up $3,600 per month in income to claim a $148.50 check from the government. And our politicians think they have done family farmers a favor by showing us how smart they are.

Parity pricing is an old idea that needs to be reclaimed as part of the wider fair trade versus free trade debate. Whether it is coffee, oranges or milk, farmers cannot expect to survive when they do not receive a livable income to cover their costs and sustain their families.

Under the current scenario, though, U.S. dairy farmers dwell on the brink of bankruptcy, awaiting taxpayer handouts, juggling off-farm employment, and praying the bank does not foreclose.

And let me tell you, dwelling on the brink of bankruptcy is no fun. I often have to work 18- to 20-hour days, skipping meals and wrestling with worn-out machinery. Government officials and university economists do not account for such equipment breakdowns, sick animals (and farmers!), or weather-related disasters when they reduce our work to some statistics. I cannot even find enough time to spend with my adorable 9-month-old daughter, and my wife is forced to work off-farm to help cover our living expenses and keep the operation afloat.

It hurts me to see the beautiful hillsides that once had soil-building pastures and contented grass-fed cows now taken over by endless eroding rows of biotech corn and soybeans. It hurts even more to know once-strong farm families that have now been destroyed by unfair market prices.

For over a decade now Family Farm Defenders has run a domestic fair trade project with Cedar Grove Cheese that helps consumers get their dairy dollars straight to family farmers.

The National Family Farm Coalition has also been working hard to overhaul the farm bill, demanding mandatory country of origin labeling (COOL), calling for antitrust action against the food giants, opposing taxpayer-subsidized commodity dumping, defending local control to enact tougher rules than the federal government, and thus ensuring more fair prices for farmers and consumers.

Along these lines, Sen. Arlen Specter, R-Pa., and Sen. Robert Casey, D-Pa., recently introduced the Federal Milk Marketing Improvement Act, which would put milk producers -- not the dairy industry -- back in the driver's seat when it comes to setting milk prices.

Farmers want to get a living wage with dignity just like everyone else. There is more than enough money in the marketplace to provide farmers a decent income and provide healthy affordable food to consumers. Farmers and consumers need to work together, though, to reclaim our food system. Otherwise we'll just keep getting the dregs.

Joel Greeno is a grass-based dairy farmer near Kendall, Wis. He also serves as the president of the American Raw Milk Producers Pricing Association and vice president of Family Farm Defenders and is on the executive board of the National Family Farm Coalition.