In general, one of the driving forces shaping food and agriculture is a chronic repetition of farm prices below the cost of production.
It has brought consolidation in farm numbers, loss of the family farm, incented poor soil stewardship and brought some scary technology to the world. This is also true for the dairy industry.
A few years back, when working as an agricultural credit officer for one of the nation’s largest agricultural banks, I was handling a large dairy portfolio. When milk prices dropped, some dairy farmers pushed their cows to the limits. I remember hearing about challenge feeding – a practice of getting cows to eat more so they would produce more. Some cows ate so much they just dropped dead.
Another survival tactic is to heavily cull the weak producers. Decades ago, a cow might live to be 10-12 years old. Today, it is not unusual for cows to be sent to the packing house before the age of 4, sometimes less. The introduction of rBST, an administered hormone, causes the cow to artificially continue in high milk production. Normally, a cow’s body decreases production several months after a calf is born – conserving the cow’s strength for the next calf. Many a dairy adopted the use of the hormone in order to increase the chances of economic survival. Numerous studies show that rBST can increase health problems and pain for the cow. Estimates are that around 17 percent of cows in the U.S. are administered rBST. rBST has been banned in Canada, Australia, New Zealand, Japan, Israel and the European Union.
The year 2015 ushered in low milk prices – far below the cost of production (see info-graphic #1). As you can see, the USDA’s estimate of $24 – what is needed to produce 100 lbs. of milk – is often not achieved.
Dairy farmers must employ corner-cutting tactics to survive. It can be a painful life for both people and animals.
According to the USDA and Hoard’s Dariyman magazine, dairy farm numbers dropped from 650,000 in 1970 to 49,000 in 2013. Over the last 45 years, 75 percent of America’s dairy farms – by number – have gone out of business – leaving large dairies in their wake. The 600,000 dairy farms that went out of business often shared the same symptom – financial losses.
The uploaded video is an interesting look into America’s largest dairy – Fair Oaks Farms. The video is an eye opener both in terms of its sheer size and the company’s efforts to be transparent and create a kind of Disneyland atmosphere.
The struggle for financial survival has vectored American food and farming far off its original production and economic roots. Can capital be re-trained for a different vision?