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.
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
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 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
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
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.”
||"“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.”
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
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
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
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
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
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.
||"The American consumer needs to understand
that the American dairy farmer puts forth our very best effort
to provide a high-quality food product."
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,”
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
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.