What's going down in west central Wisconsin's dairy industry
Complex problems, confusion and miscommunication.
The dairy industry is experiencing all three and then some.
Finding a definitive solution or even a definitive reason for the depressed milk market might mean wading through a big pile of manure.
In the mix is a confusing and volatile milk pricing system, tight farming budgets, newly imposed tariffs, contradictory farming regulations and a weary outlook on dairy farming's future.
The life of a price-taker
"Farmers are in a unique spot, in that they get what's left over. I don't think people understand that," Ellsworth Cooperative Creamery CEO Paul Bauer said. "At the end of the day, they don't get to set their price. If you're a grocery store or retailer in some other small business, you get to change your prices."
These last few years have been far from satisfactory for Wisconsin dairy farmers, the state's price-takers.
Jim Harsdorf, former state politician and lifelong Spring Valley dairy farmer, said the dairy industry is seeing its worst years for the prices dairy farmers are subject to take.
"We're used to having cycles and we're used to having volatility, but we've never seen where the volatility on the low side has been this long. I mean, we're going into almost three years of prices below what the cost of production is."
There is also no correlation between what consumers pay to what the farmer gets on commodities, Bauer said.
"The price dynamics in the store are not reflective of the dynamics on the farm," Bauer said.
According to statistics from the United States Department of Agriculture (USDA), Wisconsin's June 2018 milk prices per hundredweight received by farmers sat at around $16.50. That price, which fluctuates each month, is approximately $10 less per hundredweight compared to average prices in 2014.
However, the amount on the payment checks put into farmers' hands one month after sending their milk supply out is determined by multiple factors, most which are foggy to even dairy farmers themselves.
"The formulas (for pricing) are fairly complicated," Harsdorf said, "There's a producer price differential that has to be taken into consideration, but it's still based on the supply and demand for our product."
The Federal Milk Marketing Order (FMMO) system, established in 1937, was originally put into place to regulate the pricing and protect farmers from unfair milk prices.
Kim Beebe, a marketing representative from the Ellsworth Creamery, said the FMMO publishes values for components of milk including butterfat, protein and other solids.
"Each dairy plant then sets the value they pay for each component, plus additional premium payments for volume and quality, minus the cost of hauling," she said.
But Bauer said there are issues with the outdated system.
"If you want to try to explain the snooze fest of the federal milk marketing system that's been around for over 60 years in a paragraph, it's not going to happen," he said.
Bauer said he hopes there would be oversight within the system to regain fairness in the modern dairy industry.
"When you're a price taker, there should be some protections against large companies that can take advantage of that," he said.
In the land of milk, there's plenty
The pricing system may not be completely clear, but it is clear to the industry that dairy farmers do not lack in production efficiency.
"We understand the science of being productive in agriculture but it's to a certain extent biting us because we are so productive," Harsdorf said.
"It's a whole other story when people are producing milk for a loss. Because you can only lose so much and then things have to change."
The glut of milk is partly a result of global signals sent to the eager American dairy industry in 2014 and 2015 to increase production, Harsdorf said.
"Europe took their quotas off so prices were showing that the world needed more milk," Harsdorf said. "So Europe takes their quotas off at the same time we have high prices here, signaling that people maybe should grow in the dairy business. We had a lot of dairy expansion occur."
Around that time, the USDA reported Wisconsin alone had over 10,000 dairy cow herds. In August 2018 there were a little over 8,000.
Harsdorf said because of worldwide demand along with America's great reputation for dairy, keeping free trade and taking the opportunity to export dairy products would help with the overproduction of milk.
Market signals would help regulate the flow of milk, Harsdorf said, and would inform farmers of the actual demand for the product to stabilize efficiency and manage facility expansion.
"We have to send signals to us as producers from our co-ops as to what is the supply that's needed and from the banking and lending agencies to say 'do you have a market for your milk before you get a loan to build a facility?'"
Regulation from the government is unwanted by many, Harsdorf said, and most would rather have regulation set by the board of directors on the co-ops.
"People don't know how big they need to be, how small they need to be, how they fit into the picture of a dairy industry that really is changing fairly drastically," Harsdorf said.
Need for clear communication
Farmers are looking to maintain better communication and media coverage about dairy farming.
"It's very disheartening to have people say 'oh, these farmers are just in it for the money' or 'they don't treat their cows well'," Bauer said.
Holly Vasfaret, Vice Chair of the Pierce County Dairy Promotion Committee, said it can be difficult for farmers to dedicate time to maintaining clear communication with consumers about dairy farming.
Harsdorf, whose farm is responsible for nearly 600 cows at Trim-Bel Valley Dairy, said he is aware of the growing need to communicate how dairy farmers treat their animals.
At his own farm, his wife names cows, the cows have their own beds of sand to lay in which reduce leg sores and they have the freedom to eat and drink water whenever they need.
His operation also ensures that cows are receiving all their nutrients by running a programmed machine along the floor which pushes their feed together instead of allowing cows to pick out only certain ingredients in the pile.
His livelihood is dependent on the animals' health and comfort, he said, and some people who are far from the original production of food can be persuaded by those who don't have interest in protecting producers.
"A lot of that gets missed to the consumer, they don't realize that in most cases, some of those cows are like their children," Vasfaret said. She said she hopes to see a rise in dairy consumption, specifically in the schools where children might enjoy milk and continue asking their parents for it rather than juice or soda.
"Whatever size farm, it doesn't matter, these people have a passion to take great care of their cows," Bauer said.
Along with the relationship with the consumer, farmers want their concerns heard about regulations, especially regarding environmental and animal care rules.
At Tim-Bel Valley Dairy, Harsdorf has recently wrestled with environmental regulations.
"I've got a manual that's thick about our manure management plan for our farm and some of those regulations counter each other," Harsdorf said.
He had tried building a new feed pad and asked two agencies about the restrictions. Both had different answers.
"Regulations can stifle people's ability to deal with the everyday production of a product," Harsdorf said.
When a new regulation is asked to be imposed on farming, there should be input from actual farmers, Vasfaret said.
Finding a future
On June 5 Gov. Scott Walker announced that a Wisconsin Dairy Task Force 2.0, a sequel to the first force established in 1985, was formed.
In a news release one month later, the force's members were announced which include farmers, allied organizations and milk marketers and processors from the state.
"By creating this task force, industry experts can work together to create real solutions that can help our farmers, processors, and allied organizations," Walker said according to a June news release from his office, "to ensure that our dairy industry is not only our past, but our future."
Harsdorf said the force, of which he is not a part of, has just begun meeting. He wants the group to specifically look at reviewing rules that may not be beneficial or practical to the dairy industry.
Without changes made to the system and regulations, the future generation of farmers are likely to decline.
"I get worried about the next generation seeing how hard it is for their parents to survive the dairy industry," Vasfaret said. "What is going to be their want to stay in this industry if we're not able to make this where they can make a living at it?"
Harsdorf, who has sons who have helped him on his farm, said he is also worried about the future but continues to love the industry and the advantages of raising a family on a farm.
"I hope that we can make changes to keep both our competitive nature but also our opportunity alive for the next generation of farmers," Harsdorf said.