Editor’s
note: It’s not often that a high-profile state attorney
general agrees to spend a day with farmers. So when we saw
that New York’s Elliot Spitzer was to address dairy
farmers on the subject of “Concentration and Market
Power in the Dairy Industry,” we wanted a farmer’s
eye report. About 170 people attended the session, held April
1 in Syracuse, N.Y.
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"The improved image of dairy
products at the current time gives us a super opportunity
to move the farm dairy price ahead.”
--Richard Tulley, New York dairy farmer |
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Attending and gathering reflections from two dairymen
near her was Molly Ames, a Cornell Extension farm business
management educator for Jefferson County, based in Watertown.
She attended with Ed Waldroff, a dairyman from her county
who milks 100 cows and on a 400-acre farm. She also work with
dairy farmer Richard Tully to create this report. She is now
on sabbatical pursuing a graduate degree at Cornell on how
farmers make strategic business decisions.
Jefferson County is in the northwest corner of the northern
tier of New York, bordered on the northwest by the shores
of Lake Ontario and the banks of the St. Lawrence River (with
Canada on the far shore). To the east are the Adirondack Mountains.
St. Lawrence County, another large milk producing county,
is just to the north, at the top of the state, along the Canadian
border.
Jefferson County, consistently ranks in the top three
counties in New York State for overall milk production. The
dairy industry here is one of the mainstays of what is predominantly
a rural economy. Area dairy farmers have experienced trends
similar to most dairy regions and the trend continues: fewer
farms, more milk, but still many more small farms than large
ones.
WATERTOWN, N.Y. -- Dairy farmers from my
county face the same difficult challenges today they faced
before April 1, but we came home from Syracuse with some new
thoughts about who our allies are, where our support might
come from, and some new hope for our future.
The reality that faces dairy farm businesses here is the
same, on-going challenge dairy farm businesses face everywhere.
How do we make a decent living in the face of rising costs
and increasingly volatile milk prices?
Dairy farmers and the agribusinesses that support them are
hungry for information that helps them understand the economic
pressures and market forces that influence the price of the
product they sell.
Two small farmers and an Extension Educator
It was in this spirit that local dairy farmer Ed Waldroff
and I headed down to Syracuse to find out what Elliot Spitzer
and other speakers might have to offer in the way of new information.
I serve as Extension Educator for Jefferson County in New
York State, covering the areas of Farm Business Management.
The meeting appealed to us because we are concerned over a
trend in the food system that has finally reached the dairy
industry. That trend is one of consolidation, merger and takeover
into a very few mega-buyers and mega-processors. As a result
of this trend, the returns on food products are not being
returned to the producer of the raw product.
Also attending was Richard W. Tulley Jr., a 100-cow dairy
farmer from neighboring St. Lawrence County. He came “to
better understand a way to fix rural America and move forward.”
The National Family Farm Coalition (NFFC) sponsored the meeting.
According to its website, the NFFC “serves as a national
link for grassroots organizations working on family farm issues.”
The organization was founded in 1986 to serve as a national
link for grassroots organizations working on family farm issues.
Membership currently consists of 33 grassroots farm, resource
conservation, and rural advocacy groups from 33 states.
“I like the big picture perspective that the National
Farm Coalition can offer,” Waldroff said. “Many
times in agriculture, we only concern ourselves with short-term,
local situations. This can destroy whole sectors of production
agriculture. NFFC appears to be broad-based.” He noted
that there were people at the meeting from California, Pennsylvania,
Washington, D.C., as well as New York.
Attracting farmers were the promised examination of the correlation
between farm-gate milk prices and trading at the Chicago Mercantile
Exchange, and monopolistic characteristics within the dairy
industry.
State has authority, but needs farmer
data
As the days’ lead speaker, Attorney General Spitzer
was invited to describe the state’s authority to take
action on market concentration in the dairy industry. “Markets
do not work unless rules of competition are maintained. The
securities and anti-trust laws must be rigorously enforced,”
Spitzer said. “My office needs numbers and data collected
with precision and care to make a case. We need to hear from
producers. We can’t do anything without that. If we
can do something within the law, we will.”
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"“The door to his office
is open for us to use. We need to report inequities and
help change unfair practices if we are to receive a more
equitable piece of the action.” |
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Tulley liked what Spitzer had to say. “The door to his
office is open for us to use. We need to report inequities and
help change unfair practices,” said Tulley, “if
we are to receive a more equitable piece of the action.”
Tulley, Waldroff and many other producers want to see more
attention paid to the issues of consolidation and horizontal
integration in the U.S. dairy industry. “Consolidation
in production agriculture, both on the supply side and on
the processing/retailing side, is occurring so fast it is
hard to keep track.”
“But the good news,” Waldroff observes “is
that consumers are paying attention!”
“Consumers want products that are produced locally
and they want the profits to be returned to the producers,”
he says. “This has been proven in the market place and
was shown here today by the presence of consumer organizations
asking for our products.”
Tulley agrees. “The improved image of dairy products
at the current time gives us a super opportunity to move the
farm dairy price ahead.”
He sees several steps ahead. First, understand the pricing
structure: who makes the structure and how it can be re-structured
to work to the benefit of the farmer.
“We have an excellent opportunity to recruit the American
public as our allies by enlightening our consumers on the
differences between high-quality, American-produced products
and less expensive inferior imports,” he says. Tulley
wants consumers to understand that the dairy imports do not
meet the same guidelines as our domestic dairy products.
Next, changes to the industry need to be made to encourage
US manufacturers and processors to use American products that
also provide them with an equitable profit as well as a reputation
to be proud of.
“The American consumer needs to understand that the
American dairy farmer puts forth our very best effort to provide
a high-quality food product.”
New Emphasis on Grassroots Leadership
The day’s speakers confirmed what many of us
already knew, but what has also become increasingly important
in our current dairy economy: we need strong leadership and
grass-roots involvement in our cooperatives and agricultural
organizations.
Carole Knight, a former Mid-America Dairymen Board member,
urged the audience to remember that this must never be taken
for granted. Dairy farmers cannot afford to overlook the importance
of understanding the external market forces that influence
the price they receive for their products.
Consolidation and mergers have increasingly challenged the
ability of individual producers to stay informed and meaningfully
involved with issues directly impacting their livelihood.
When dairy farmer-members give up their personal control for
any reason, whether benign neglect or exclusionary policies,
they will lose in the end.
The story of Knight’s struggle to have a voice in her
cooperative and her subsequent termination as a MidAM (the
former Mid-America Dairymen, a precursor to the current Dairy
Farmers of America) director illustrated that in a compelling
way. Knight told the story of a small cooperative that prided
itself on its openness, accessibility and transparency. When
a large cooperative took over, the climate changed to one
where conflicting information and denials became commonplace.
The Knight’s eventually won their suit but not before
they lost their market for their milk and sold their dairy.
She said that dairy farmers must understand their markets
and pay close attention to leadership and management of the
companies, cooperatives and agencies that make up the balance
of the supply chain beyond the farm-gate.
For Knight, staying active means asking questions, staying
informed, engaging in election processes, expressing one’s
viewpoints through whatever avenues are available to them,
and advocating for their business and their industry.
That is a tall order when producers must manage the day-to-day
workings of their operation. But as meeting attendees learned
from Knight’s story, the price of neglecting those responsibilities
can be high.
Testing the limits of influence
There may be limits to what can be done to effect change or
influence much of what happens once milk leaves the farm,
but these limits need to be tested. “We need to make
sure there exists a level and fair playing field,” according
to Thomas Dubbs, an attorney, who shared his experiences with
the National Cheese Exchange (NCE) and its impact on the price
of cheese.
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"The American consumer needs
to understand that the American dairy farmer puts forth
our very best effort to provide a high-quality food product." |
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Dubbs described a lawsuit alleging price fixing. The case
grew out of a 1996 study entitled “Cheese Pricing: A
study of the National Cheese Exchange.” The study was
conducted by Willard F. Mueller, an agricultural economist
and emeritus professor from the University of Wisconsin, and
others. The report found that the price on 0.2 percent of
all cheese produced was used in setting the price on 90 to
95 percent of the rest. “That simple fact creates a
great incentive for attempting to influence the NCE,”
Dubbs said.
He said this and other studies that lead him to believe that
cheese prices are determined by what he describes as “small,
thin markets.” This kind of market, as Dubs puts it
“allows for fiddling.”
Other presenters included a university economist, an activist
dairy farmer, an activist with the Organization for Competitive
Markets and Peter Hardin, editor of The Milkweed, a publication
that covers dairy events from a family-farm perspective.
As evidenced by the broad range of participants at the meeting,
the importance of the dairy farm economy goes beyond the increasingly
few people directly involved in production agriculture. Dairy
farmers know they need to do more than produce excellent milk.
This meeting showed them that other groups are asking how
they can help.
State policy, as well as legal challenges to mergers and
market practices, can level the playing field and improve
economic equity for fluid-milk producers. These structural
changes could provide a more positive market environment.
That would be a start. To really bring the dollars necessary
for profitable farming in northern New York, however, we need
new, profit-capturing marketing connections. These economic
links could provide greater return to farms based on premium
quality and on New York origin. They will have to be created,
nurtured and sustained.
That means lots more meetings. The question is: can we (Ed,
Richard and all the other dairy farmers in the area) keep
going until the going gets better?”
Molly Ames is Extension Educator for Cornell Cooperative
Extension of Jefferson County, NY, specializing in Farm Business
Management. She writes articles covering issues impacting
the agricultural economy, the rural community and farm business
management for the Association newsletter as well as for other
local publications.
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