I was asked via a comment on our Blog, why processors are dumping milk and if consumers could help. Hopefully I can give a simple answer to a complex situation.
The dumping is a result of overproduction brought on starting in 2014 when milk price per 100 wgt got to $24+. Why? because China was importing very heavily, yogurt sales took a jump here in the U.S. and milk demand was up. Then starting in 2015 China dropped way off on imports, Russian banned our imports, yogurt sales flatlined and fluid milk consumption continued to go down. The European Union dropped their quota system so countries like Ireland, Germany and Holland, where dairy is bigger that you would think, grew in production.
Also, New Zealand, who trades big time with China, finally got rain to end their drought; making for a milk price of $14 per 100 wgt. in 2016, but even worse, a glut of milk and milk products on the market!
Your next question I hope, is why don’t farmers cut back on production? Believe me, so don’t I! But easier said than done. It is like a ‘catch 22’ as a fellow farmer who milks over 1000 cows told me, :It’s like a snowball going downhill; once it starts there is no stopping and it only gets bigger!”
Statistics say dairy farmers are the most indebted of all farming types . In this borrowing process, cow numbers are part of the equation used by lenders. There has to be a cash flow, which in turn, due to the fact the gov’t sets milk prices, has in recent years continually caused overproduction in an attempt to bay bills…Price goes up, produce more to pay down debt…price goes down, produce more to cash flow….hence trend to larger farms!! Very unappealing business venture for younger generation!
I hope this gives some insight; just keep in mind this is a simple version.
P.S. How should you help as a consumer? Call your representatives and tell them the system is broken; tell someone the farming story and ask them to tell someone else or give them my email address (email@example.com) for questions or comments. Or perhaps they could access our Blog.
Also, farmers are in part, responsible and should live up to it. While working with processors, gov’t,etc… with fair production pricing and milk management via supply and demand represented truthfully by all parties.
So, can’t everyone just get along? Perhaps with a glass of milk! As a lone farmer, more so because of our small size here at Bejosh, the feeling of helplessness is unrelenting. Also changing greatly, is the ideology of a farmer’s lifestyle, which I’ll express my thoughts on in my next post. Thank you for asking.