Why are milk prices plummeting? 10

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1. 

   Ladybug Posted 1:49 pm
   10 Jun 2009

   I've read this a few times now, and I'm at a loss for what to make of it. It's considered "drinking the kool-aid" to believe that milk prices are dropping because of supply and demand? What else would be causing them to drop? Aren't supply and demand at the heart of the "global, free-market system" that the author decries?
   
   Other mysteries abound:
   
   How can a system be both free-market and controlled by an evil and anti-competitive cabal of companies? These would seem to be opposite claims.
   
   What are the statistics about non-milk dairy goods meant to suggest? There is absolutely no contradiction in the fact that demand for domestic milk is dropping while imports of dairy products rise. There's that pesky supply and demand again.
   
   Here's another question: why are we supposed to care about this? I'm interested in the environment, not the economic travails of dairy farmers. If anything, plummeting milk demand would seem to be a good thing for the environment.
   
   
   Basically, I can't make any damned sense of this. It's just a bunch of confusing statistics bolted on top of a rant about corporatism, globalism, and a bunch of other stuff the author seems not to like. (As an aside, if the author thinks the financial crash was engineered by Wall Street, he'd probably be better off not posting on economic matters.)

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      Clifford Wells Posted 5:17 pm
      10 Jun 2009

      Well I share your frustration, Ladybug.  It is so bad now that some states such as Vermont are plowing money into milk farms so they literally won't dry up.  Milk cow costs are way up but Big Milk pays low dollar.  Meanwhile, it sure seems like the cream for my wife's coffee hasn't come down, maybe even getting more expensive.The trend to merge, consolidate, centralize, and take over large market sectors is probably the main problem.  To that extent perhaps the article has a point.  It is not a failure of free-market capitalism as some very large companies with really smart people who did some incredibly dumb things.As to supply and demand - hah!  That's a myth they like to teach you in Economics 101.  I would say the price, supply, and demand are totally decoupled and tend to fly off in their own directions.  No, no, no, as any old trader will tell you, you have to screw your suppliers for the lowest cost and then sell as high as the market can bear.  Got milk?

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      1. 

         enviroperk Posted 5:23 am
         11 Jun 2009

         I think the LACK of free market is the problem here. More Dairy subsidies anyone?  http://www.boston.com/news/world/europe/articles/2009/05/27/29_countries_blast_us_over_new_dairy_subsidies/ 

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   2. 

      knowgreen Posted 7:29 am
      11 Jun 2009

      I agree - this is poorly articulated and argued. The point is not clear. But supply and demand is a myth in this case, and a lot of points are overlooked. Furthermore, you come across somewhat unfairly protectionist. I agree on the influence of Kraft etc. and the associated attrociities, but this is only one part of a deeply complex puzzle.First, dairy in the US (as is all farming) is HIGHLY subsidized. This would absolutely contribute to artificially low prices. It also creates unfair exports that destroy a lot of sectors in the world's poorest countries, who become dependent on the imports of US dairy. The end result of high prices is that your prices go up, and so do the prices of those import dependent countries who cannot afford the increased prices.Second, some of the imports are from other poor countries who may be given prefernetial trade access in order to boost their economies. To just demonize them is equally unfair.Don't aggregate and oversimplify the problem - nobody wins. These problems are extremely complex. More protection without better targets of who is protected in the US will likely still only benefit large scale farmers. Most of the dairy farmers are huge and multimillionaires. The smaller ones that are struggling need their own protections, but the subsidies of the big ones have to stop. The reality is we pay far too little for our food on every scale. Developing countries who have been deeply damaged by free trade need to be supported to rebuild. Considering some trade allowances will be important.Protectionist nationalism has to fall to the wayside. There will always be trade. Your rant (I'm sorry - that's what it comes across as) is not helpful. There is no reason why we cannot address the problems of the world more sensibly and in a way that truly seeks to "think globally, act locally".   

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      1. 

         Avelhingst Posted 10:54 am
         16 Jun 2009

         The DEIP program that is the heart of this article you've linked to are targeted ONLY in markets where dairy exports are competing with others that have the benefit of export subsidies - i.e. dairy products from the European Union.  Of course they are going to complain.  Brazil complains incessantly because of the protectionist stance of the ethanol (highly subsidized) industry.  Australia and New Zealand are adamantly opposed because they will not or can not afford to compete with the export subsidies of the European Union. I oppose all export subsidies.  The U.S. dairy industry will not really benefit from this at all - only a few multinational food conglomerates that now openly pit the US and EU against each other to push the price down on the backs of producers AND taxpayers.Secondly, I dispute that dairy is a highly subsidized aspect of US agriculture. The MILC program, the only program to subsidize dairies - is a drop in the bucket of total spending and only an emergency stop-gap in dire times.  Dairies - particularly the megamega dairies of the West (California, Idaha, and increasingly Utah and New Mexico/Arizona) and the emerging megamega dairies of the mid-west DO benefit from the low cost of certain feedstuffs produced in over-abundance by subsidized crop farmers... the real complaint is that now so much of our grain crop is going to ethanol, subsidies do not really push down total price.  It is the smaller dairies, usually supplying the fluid milk for urban markets, that are in fact punished by such policies and subsidies.The real issue at hand is the skyrocketing use of extremely cheap dairy import powders - usually Milk Protein Concentrates (MPCs).  MPCs are not made in this country - they are not allowed in real cheese and real fluid milk is more cost-effective in the cheese vat.  However, MPCs do come into this country from all over the back of beyond in ever-increasing quantities.  Lax oversight of powerful processing monopolies allows this.  More importantly to the public at large, however, is the complete lack of inspections on both MPC imports and MPC manufacturers and their suppliers.  Dairy farms are the most highly inspected and regulated aspect of agriculture in this country today; it is for SAFETY.  Dairy imports allow for processors to bypass the safety, and therefor the market-oriented expense - of purchasing domestic milk.  It is supply and demand, but in a grey-market sort of way.

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2. 

   Tasermons Partner Posted 5:50 pm
   10 Jun 2009

   I dunno.  For years now, milk cost more than gasoline did in the states.  And unfortunately, I consumed more milk than my sipper-car did gas.  Which meant I spent more on milk in a month than I did gas.  And that didn't include the money I had to spend to satisfy my cheese addiction.Besides, if these farmers were truly good investors, they'd realize that there's plenty of money to made off of methane (i.e. cow dung).I also don't buy their complaint of high feed prices.  Yes, feed prices are high, but if ya didn't cram so many cows together onto overgrazed land that couldn't support 'em, then ya wouldn't need to spend so much to import feed in the first place!

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   1. 

      Avelhingst Posted 10:59 am
      16 Jun 2009

      Ummm... Tasermons Partner, you have a couple of competing ideas here.  It is only cost-effective (with substantial grants and other subsidies) to have a methane digester if a farmer has LOTS AND LOTS of cows cooped up ALL THE TIME.  They are exteremely expensive (see FARMAC's post lower down).And dairy farms don't really overgraze land; you CAN'T overgraze a dairy cow because she will stop giving milk.  Well, some poor farmers do, but it IS silly.  I pity their cows and their balance sheets.  However, one can't really graze one's cows and have a methane digester because the cows go out and eat, and distribute their nutrients all over the land; which is almost immediately consumed by soil biota and bugs in rich pasture.

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3. 

   farmac Posted 7:31 pm
   15 Jun 2009

   I'm a Dairy Farmer in NY trying to survive on an 800 cow farm that's been in my family for 80 years.  If you truly understood this article , you would agree with it.  I stumbled upon this article while searching the web in hopes that the boys in Washington were finally going to help us get a fair milk price. We work our a$$es off.  Weekends , holidays , 70 hour weeks. Look , my father ; who's 67 now , helped his Dad in a livelihood where he planted crops on a few hundred acres and harvested them to feed to cows he bought to make milk. Together , they took fields that didn't produce anything but brush and weeds , half covered in stones , and turned the land into productive soils that in turn could feed hundreds and provide and income for their family. My Dad grew up with half the kids in the neighborhood in his home , as his kind and generous family helped raise many who had little in the 50's , 60's and 70's. As I grew up , I felt compelled to help my father who worked long hours in order to make our farm successful. In 20 years , we've gradually increased the number of cows on our farm because the government has allowed milk handlers to increasingly take advantage of Dairy Farmers , making it necessary for farmers to try and make as much milk as possible in order to make any kind of profit. Today , we are facing a crisis like never seen before. My father , my brother and myself are trying to keep the land we've worked so hard to maintain for generations and it's killing us. We are borrowing over $60,000.00 each month to pay regular monthly expenses , instead of making a profit. So far since Feb. 2009 , we've borrowed over $300,000.00. When you've sacrificed so much of your life , and watched your father work all his life to help make what you have today , it's hard to just walk away like it doesn't matter. For years , the Government has tried to make up for farmers getting taken advantage of through subsidies.  These dollar amounts ; which may seem large , are really quite ineffective when stretched across so many.  When the government finally admits that we need supply management in this country similar to what they have in Canada , consumers will pay less for milk and milk products like cheese , and Dairy Farmers in this country will get a fair price for their milk. NO MORE SUBSIDIES. We don't want a hand-out. We don't want a bail-out. ( example.. GM. ) Just a fair price for our hard work and efforts to conserve America's farm land.  There are some large corporate farms run by investors who are cashing in on subsidies , and others are using them for tax purposes. I hope that the public can be informed of the differences between them and the thousands of legitimate family farms across the U.S. with sincere intentions of producing safe , healthy food for our countries citizens and their children , while trying to make an honest living.  Since the gas price explosion last year , the price of everything has gone up. Every consumer has seen it. Milk prices for Farmers have declined at the same time. Rations that cows are fed are carefully balanced for milk production and for the health of the cows. Happy ,healthy cows make milk. Healthy cows need protein and energy that comes from the grains that are added to forages harvested on the farm. These grain prices have skyrocketed due to the inflated gas prices and the diminishing  supply of grain , brought on by the start of ethanol - made from grain/ corn.There is a great deal of corruption involved in what's currently going on with milk prices  " on the farm ".  There isn't one single Dairy Farm in the United States that isn't losing money at this unsustainable rate.  When there's no more equity left for farmers to borrow money to keep their farms , that's it. It's obvious that politics is playing an important role in the oppression that Dairy Farmers are facing. Call Tom Vilsack ( the secretary of Agriculture ) (202) 624 -5442  or (515) 281-5211  and ask how many farmers have to loose their homes and family businesses before it's time to help. Oh , as far as methane digesters go , great idea.  The technologies involved in making these units profitable are finally a reality. They eliminate the odor associated with manure , and have the potential to produce enough electricity to offset all electricity used on farms and more. The carbon footprint from cattle ; though small in realistic relative terms in comparison to naturally occurring instances , can be drastically reduced as well.  The problem is , the cost of building a methane digester facility averages around 1.5 million dollars for one needed on an average size family farm of my size. Considering the fact that we aren't making a profit , and are in fact borrowing money to pay bills , we probably won't build one any time soon.  Thank you for your time. And remember :No Farms , No Food

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4. 

   knowgreen Posted 7:47 pm
   15 Jun 2009

   FARMAC - I hope you noticed my point about better targeted supports. They are extremely high on aggregate in the US and in OECD countries, but I agree that they are not targeted properly and many struggle. And I don't dispute the need to get prices right. My point mirror yours. I would like to see distorting farmers targeted, corporate pressures on farmers tempered, and most important, a fairer and more sustainable food system, for all - in the US, in Canada and in many of the developing world. For example, the dairy industry in Jamaica has been devastated because markets were flooded with cheap imports of US dried milk. Farmers were dumping fresh milk b/c they couldn't compete. Then the price of dried milk increased, and Jamaicans couldn't afford it. Nor could they afford to restart their dairy industries. Agriculture is a global, interconnected problem, and many of the struggles in the developing world are because of the developed (which is linked to the interests of a few). We also have duties. That's all I was trying to add. We need to "think globally". And indeed, many farmer movements are emerging that do just this.

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