Wisconsin has seen a steady decline in dairy farms over the last decade. In 2003, the state was home to more than 16,000 dairy farms, but a new report from the U.S. Department of Agriculture shows that number is now less than 6,000.
One of the reasons farmers are exiting the industry is because it's become harder to make a profit from milk. A national trade association of dairy cooperatives hopes to change that by updating the system for pricing and selling milk across the county.
The National Milk Producers Federation has proposed five changes to the federal milk marketing order system. In a letter to the head of USDA's Agricultural Marketing Service, the group asked for a federal hearing to consider their proposal and begin the process for making changes to the system.
Federal milk marketing orders were first created in the 1930s in order to establish a minimum price for milk and stabilize the market for the perishable product. It's a long-running industry joke that most people don't understand the details of how milk gets priced. Many regulations used today were created during a reform of the system in 2000.
Jeff Lyon is general manager of FarmFirst Dairy Cooperative, a Madison-based farmer group that is part of the National Milk Producers Federation. He said the group was prompted to look at updating the system during the COVID-19 pandemic. Changes to consumer eating and demand for certain dairy products revealed weaknesses in the way milk is priced.
"It caused great distress and lost money for farmers," Lyon said. "People wanted to try to do an emergency hearing. USDA decided not to do it, but it got people thinking that we do need to do some things and look at the federal orders."
The federation's proposals include changing the price formula for beverage milk back to the version that was in place prior to the 2018 Farm Bill, a change supported by the Wisconsin Farm Bureau and other organizations. It also includes updating the standard for milk components like protein and nonfat solids. The change is meant to better reflect today's quality of milk due to improved genetics and better feed practices.
Chuck Nicholson, ag economist at the University of Wisconsin-Madison, said these more technical updates are needed because the industry has changed since the last rewrite of the formulas. He said some of the biggest changes in the last two decades have been around manufacturers' costs for turning raw milk into the products on store shelves.
Milk price formulas work backwards by taking the value of finished dairy products and subtracting the cost of processing, called a "make allowance," in order to get the price of milk that plants have to pay farms. Nicholson said these allowances haven't been updated since 2008.
"A lot of things obviously have changed in 15 years, including a lot of cost increases particularly for things like labor and for utilities," he said. "So it has become harder and harder to use that old value to accurately represent what it takes to transform a pound of farm milk into a certain amount of cheese."
Source: wpr.org
Photo Credit: NMPF
Categories: Wisconsin, Livestock, Dairy Cattle