Supply management for US dairy? No thank you

Low milk prices; widespread uncertainty; vanishing equity.

Dairy farmers have had enough with the prolonged depression in the dairy economy. So much so that some are opening their ears to the clamor for a Canadian-style supply management system.

{mosads}The willingness of U.S. farmers to even dream of what is being sold as a heavenly solution to the financial turmoil is understandable. For many, their livelihoods and legacies are at stake. But supply management is absolutely the wrong answer for our dairy community.

Hurry up and wait.

In Canada, most days there are waiting lists to become a dairy farmer. If you aren’t the son or daughter of a dairy farmer, good luck getting into the business. Even when a farmer is able to buy in through a government exchange, he or she rarely gets as big of a share as desired.  

U.S. agriculture already faces challenges finding labor to run farms today, much less recruiting the next generation to continue.

The U.S. Department of Agriculture charts a continued rise in the age of farmers. Between 1992 and 2012, the age rose eight years to 58. The next round of numbers will likely show the same trend. There are also fewer new farmers.

And, oh yeah, the cost of quota for a dairy farm in Canada would start in the tens of thousands of dollars — per cow. Good luck to a young newcomer with limited assets. It is hard to be a new dairy farmer in the United States. It is even harder in Canada. We do not want to head in that direction.

They are from the government and are here to help.

Ask almost any farmer their opinion of government and you will likely hear that there is already too much of it. Although well intentioned, regulations often do more harm than good and just make life more complicated for farmers. Why would we want another part of our business controlled by the government?

Now, it only makes sense for dairy processors and the farmers who supply them to discuss demand. Cooperatives and private processors are already having those conversations. No farmer can operate in a vacuum. His or her decisions to grow or shift production must be in line with the market for the milk. Those business-to-business conversations should continue, but there is no need for the government to get in the middle. Experience has shown us this does not help.

An eagle and a beaver are different animals.

It is difficult to compare the United States’ dairy economy to Canada’s. The size and scale of each is radically different. Canada has a far smaller population and the domestic market for dairy there is smaller than that of California alone. There is a higher cost of living, high tax burden and elevated government spending. It would be hard to find many fans of any of these.

America is the land of opportunity, where anyone can pursue their dreams. Farmers, by nature, are independent. Why would we want to be beholden to the government to run our farms? We do not want the government to tell us how many cows we have, what we can do with them or who we can sell them to. The beauty of our dairy community is that we are free to farm at the size that works for our family and our goals.

Trade more; do better.

So, then, what do we do to turn things around?

Some dairy groups have been focused on the rebranding and retrofitting of the Margin Protection Program (MPP). It is great if these changes help more dairy farmers. However, our co-op’s lobbying efforts have never been focused on MPP. We believe farmers should have access to more diverse risk management options.

With that in mind, we supported lifting the enrollment cap on Livestock Gross Margin-Dairy and creating the Dairy Revenue Protection program. At the same time, we have tried to empower more farmers to use the financial markets to address risk management. Ultimately, risk management plays a role in profitably farming, but reducing the need for it by creating higher and more stable prices is preferable. There may not be an easy way to do that, but if we’re looking for a fix, history can be our guide.

The last periods of high prices coincided with record growth in exports. Trade alone will not solve all issues with milk price, of course, but it is hard to imagine a recovery that does not have growth in trade at its core. Our co-op has worked with others from agriculture and beyond to safeguard the gains we have made from agreements like the North American Free Trade Agreement, while also looking for new opportunities and markets.

We must look at bilateral trade agreements and can start by focusing on potentially large markets like the United Kingdom and Japan. There is also potential in several rapidly growing markets for U.S. dairy products.

There is no doubt that times are tough, but farmers are resilient. We must continue to work hard, adopt new technology and think creatively. And dismiss the calls for government control.

Tim Trotter is executive director of Edge Dairy Farmer Cooperative, which represents farms of all sizes in nine Midwestern states on federal dairy policy.