Dairy farmers struggle to survive
The Kansas City Star
Nobody ever said farming was easy. But for Missouri’s struggling dairy farmers, the last few years have been particularly tough.
The recession of 2008-2009 caused farm milk prices to plummet just as costs for livestock feed spiked. That wiped out our profit margin, creating a desperate struggle just to stay afloat.
Among those who survived, many piled up debts that will take years to repay.
Nationwide, dairy farmers lost $20 billion in equity between 2007 and 2009.
Here in Missouri, we lost nearly 8 percent of our cows between 2009 and 2010.
The last two years were better. But 2012 is shaping up to be another challenge, with falling milk prices and high feed costs combining to squeeze profit margins down to nothing.
In theory, the federal dairy program provides a safety net to help us through these rough patches.
In practice, it hasn’t worked for years — and for good reasons.
Much of the current safety net was designed in the 1930s, in a very different economy than the one we face today. For starters, dairy exports — which account for more than 10 percent of all the milk we produce — were virtually non-existent in those days.
Also, the current safety net focuses on propping up prices, when the problem we face most often today is tight margins.
We can have record high milk prices and still be losing money if feed prices soar.
To their credit, dairy farmers took it on themselves in the wake of the recession to modernize the system.
After a year of study, we took our ideas to Congress, where they were introduced last fall by Reps. Collin Peterson, a Minnesota Democrat, and Mike Simpson, an Idaho Republican, as the Dairy Security Act of 2011.
The Peterson-Simpson bill repeals most of the current federal dairy program and creates in its place an insurance plan focused on margins.
No longer will the government be buying up cheese and butter in an attempt to prop up farm milk prices.
Instead, federal support for dairy farmers will be triggered only when margins shrink to specified levels.
To prevent serious problems, a standby program could put temporary limits on how much milk each farmer can producer.
This is insurance for hard times, not a handout when times are good. For that reason, it saves money compared with the current program. And it won’t cause consumer dairy prices to spike, either.
The Senate Agriculture Committee endorsed the Peterson-Simpson approach late in April as part of its twice-a-decade rewrite of federal farm programs. But the bill is still a long way from becoming law.
The Missouri congressional delegation can help by endorsing the Peterson-Simpson bill now.
This is more than a fight over dairy policy.
Missouri has been losing dairy farmers for years. What’s at stake is whether we will continue to have a viable dairy industry and whether Missouri consumers can count on a plentiful supply of locally produced milk.
Dairy farming is still a $200 million business in Missouri. But Missouri milk producers need a federal dairy program that works.
Bill Siebenborn milks 100 cows on a 340-acre farm in Trenton, Mo. He is vice chairman of the board of Kansas City-based Dairy Farmers of America and chairman of both the United Dairy Industry Association and the Midwest Dairy Association.
Much of the current safety net was designed in the 1930s, in a very different economy than the one we face today. … dairy exports — which account for more than 10 percent of all the milk we produce — were virtually non-existent in those days.