Farmers confront too much milk, low prices

By Gloria Nzeka
Capital News Service

Michigan’s top commodity, milk, has suffered a series of economic blows since 2014.

When dairy cows produced about 9.6 billion pounds of milk in 2014, prices in the state began to drop, leaving farmers scrambling to sustain their businesses.

Michigan farmers produce 4.9 percent of the milk in the United States and are ranked 7th in production in the nation. However, over the last three years, dairy farmers have produced more milk than the market could process.

“The current supply of milk in Michigan is abundant but the processing capability hasn’t kept with this increase in supply. “says Burke Larsen of Larsen Farms in Scottville.

As a result, some farmers go out of business, use up their financial reserves or sell their herds says Zachary Clark, director of government relations at the National Farmers Union in Washington, D.C.

Ernie Birchmeier, a Michigan Farm Bureau livestock specialist, said that “dairy production is up because Michigan has the best dairy farm managers. In the last decade, we have added lots of cows to the herds.”

Clark said economic challenges in agriculture are affecting more than just dairy farmers. “Commodity prices across the board have been bad over the years. The prices of wheat, corn, soybeans and grain sorghum have been going down.”

Generally, when one crop or type of livestock is not doing well financially, farmers often use yields from other commodities that are doing well to balance their budgets. But when prices are bad across the board, it becomes difficult to offset low prices, Clark said.

For Michigan dairy farmers, the past few years have been challenging. To help address the problem of overproduction, dairy products are exported to other states.

But that comes with its own challenges.

Larsen said, “Sometimes milk has to be shipped to Florida because of the deficit Florida experiences due to heat. However, this increases transportation costs.”

And Clark said, “There is need for consolidation in the dairy industry.  We need to see recognition out of federal programs, a fair pricing system through federal orders, an assistance program for farmers during uncertain economic times and supply management.”

To help address that challenge, U.S. Sen. Debbie Stabenow, D-Lansing,proposed a new farm bill which received bipartisan support in the Senate. She’s the top Democrat on the Senate Agriculture, Nutrition and Forestry Committee.

The state’s dairy industry supports 40,000 jobs and contributes more than $15 billion to the economy. according to Stabenow.

The new farm bill proposes several risk management and insurance tools intended to protect farmers from market uncertainties.

The Farm Bureau’s Birchmeier said the Senate action is a vital step towards the assistance needed by the state’s struggling dairy industry.

However, he said the legislation would not solve the problem of overproduction.

“The risk management tools proposed in the Senate allow farmers to protect a margin between prices and the cost of production. It’s not a fix and will not make farmers profitable,” Birchmeier said.

Mark Iciek, a board member of the Michigan Milk Producers Association from Gladwin, said,  “There’s a long-term solution which is adding processing capacity. Several organizations are working to increase milk processing capacity but this is something that will take several years.

“At the moment, there is no short-term fix to this problem,” Iciek said.

Birchmeier said that to solve the problem of overproduction, people need to consume more dairy goods, adding that prices are reasonable and dairy is great source of protein.

“Milk contains nine nutrients that people need,” said Janice Jackson of the United Dairy Industry of Michigan, which promotes dairy products to the public.

A 2015 Dietary Guidelines for Americans report showed that there are four nutrients that Americans don’t consume enough.  Three of those nutrients – calcium, vitamin D and potassium – are found in milk.

“Consuming milk has also been associated with reducing the risk of cardiovascular diseases, hypertension and type two diabetes in adults,” said Jackson.

Besides encouraging consumption, Larsen said trade plays a role in handling excess production.

“We need to push dairy products. Globally we are doing all right, domestically we need to improve.”

And Birchmeier said, “We need to increase trade worldwide and cut production in order to bring it in line with demand.”