The system for supporting dairy prices is so complicated, nobody understands it. And, by the way, it doesn't work.
Our dairy herd is for sale.
My husband has been a dairy farmer his whole life, up until a few weeks ago. Ivan worked his way through school at his uncle’s dairy farm, then worked as dairyman on several farms before buying his own herd. We eventually built a barn and milk room on our farm.
The farmer’s price for milk has been down for months and dairy has not been profitable for most farmers for a long, long time. Even the glimmer of hope we were seeing in anticipated price increases wasn’t enough to keep us going.
Now we are selling the herd.
As difficult as this has been on a personal level, I also deal with the challenges of dairy farming from a policy perspective. I am a state representative in Maine, serving on the committee that oversees agriculture. I start the day with farm chores before showering, putting on a suit, and heading to the state capitol. So I empathize with the farmers who come to our committee, as I balance their plight with the hundreds of other issues that come before the legislature each year.
When I first became involved in farming, I needed the obvious pointed out to me. For instance, a cow, like any mammal, does not produce milk until she gives birth. This means there is a two-year cycle to milk production. The heifer (young cow) should be a year and a half old before being bred, and there is a nine-month gestation before the calf is born and milk is produced.
As dairy farmers love to say, once producing, a cow doesn’t have a faucet to turn milk on and off according to the demands of the market. How many other businesses have to plan for a two-year inventory cycle on their product?
Dairy farming is a complicated business. A dairy farmer must develop expertise in many areas over the years. A farmer has to be ready to act as veterinarian, equipment mechanic, electrician, bookkeeper and public relations director. There is a herd to keep healthy and productive (fed rations balanced to ensure the cows are getting the right mix of nutrients, protein, and roughage). There are fields to tend to and crops to harvest, equipment to maintain, neighbors to talk with and sometimes to accommodate.
American dairy farmers operate within a federal pricing system created decades ago. Originally designed to protect farmers (and America’s food supply) from volatility that could destroy farms, this system is so complex it’s said jokingly that only two people in the country understand it, and that they are not allowed to travel together lest we lose them both in an accident.
All I can tell you is that the system no longer works. One day of trading cheese futures determines what farmers will be paid for their milk. Meanwhile, the federally-set price paid to farmers is often well below what it costs those farmers to produce the milk.
The policy behind dairy farming and milk pricing is well intentioned. And here in Maine, we have a state program intended to supplement the federal price. When the federal price drops below the cost of production (as determined by a university study for different size farms), Maine’s farmers are provided some additional income from the state. It’s not nearly enough to cover our full costs of production, but it sure does help.
The state pays for this program in part through a so-called “milk-handling fee” collected by wholesalers and based on the federal price. The fee is higher when the federal price is lower, which is exactly when the farmers need more support, but also when the cost to retailers is lower. So the system both supports farmers and helps stabilize the price of milk for consumers. It works well, and is in fact the envy of many other dairy states. But it works in Maine for reasons that are not common elsewhere, including the fact that Maine’s consumption of dairy products is fairly close to how much we produce.
All of Maine’s efforts to support dairy farms are principally designed to stabilize the industry. We cannot save every dairy farm. As a policy maker, I accept that there is only so much we can do with laws, regulations, and programs. We have policies in place to offer assistance and balance. As a farmer, I face these challenges every day.
The cost of the animals, equipment, land, and buildings is in the hundreds of thousands of dollars, even for a relatively small farm like ours. (We have — or, I should say, had — 40 dairy animals.) Many farm families respond by adding income, either by diversifying their farm or having a family member work off the farm.
We do both. Ten years ago we began raising and marketing natural meats and poultry. And I have earned a small salary from the legislature for eight years. Sales of the natural meats and poultry have steadily increased, and our efforts have shifted to this type of farming. As we step away from dairying, we will increase free-range poultry, grass-fed beef, rose veal, and natural pork. Our neighbors are willing to pay a premium for locally grown, healthful meats from animals humanely raised.
This is the future of our farm, not dairy.
The federal pricing system creates regional disparities that pit farmers against each other in national policy debates. No one wins in this setting — not the farmers and not the consumers who depend on them for fresh, healthful dairy products.
Rep. Nancy Smith represents Monmouth, Litchfield and Wales in the Maine legislature, where she serves on the Joint Standing Committee on Agriculture, Forestry and Conservation.