Never, not even in the Great Depression, after adjusting for inflation have farm milk prices been so low. Family farms are being destroyed, but that's nothing new. "Well, they didn't save the Mom and Pop grocery store, why save the family farm?" many will say. Larger, more efficient farms are replacing them, we are told. The giants will save us, experts have maintained.
This time, however, the giants are falling as well. Some banks are trying to prop some of them up. Some farmers are borrowing from their implement dealers and some are racking up personal credit card debt at high rates. Just this month, a dairy farm with 1,700 cows in Wisconsin, and an 850-cow dairy farm in Vermont, have filed bankruptcy. Several farms in Idaho have been served with foreclosure in one week. The smallest had 950 cows.
The 2002 Farm Bill did create a new dairy payment called the Milk Income Loss Contract (MILC) program that compensates farmers when the farm milk price falls below a certain level. While this small payment helps cushion losses by providing about 1/3 of farmers' income lost during this past year, it does nothing to increase the price for dairy farmers.
Adding to the confusion is the current system for farm milk pricing. If ever there was a program designed to deny understanding it is milk pricing. Most farmers don't understand milk pricing, nor do their Cooperative Extension agents. Questions on the system are directed to PhD dairy economists at land-grant colleges. These experts will happily spew forth facts and data on cows and milk and efficiency until the questioner is blinded by facts. At this point the processed ready-to-eat conclusion is offered: "Farmers are just plain too efficient." They will say. "When the price was high last year, well, they just cranked up milk production." they will add. "What it really comes down to is the fact there is too much milk," they continue. If there is one thing Americans learn about economics in school it's the old supply and demand story. Too much of anything and the price goes down. Americans are assured there is just too much milk.
Overly simplistic explanations of supply and demand wither when the import data is revealed. While experts talk about supply and demand driving down farm milk price, the United States increased imported cheese by 12.6 percent (up over 34,830,475 pounds from January through September of 2002 alone).
Before leaping to the conclusion we have developed a taste for exotic imported cheese, it is important to know we now import plain old cheddar from India and Poland. Goya, a hard grating cheese, is pouring in from Lithuania. The only criterion is cheap. Cheese imports from Argentina, where the currency has lost 73 percent of value, have increased 63 percent this year.
Some of the stress and impacts are visible: farm foreclosures, auctions, and their impacts on the rural community. Other results are much harder to see - the stress and depression among farm families and the escalating level of dairy imports. Some dairy imports are very obvious - trucks hauling across our borders; others are in the form of dairy substitutes in processed foods.
Corporations benefit from a depressed domestic farm milk price and cheap imports fueled by a strong U.S. dollar. Consumer prices remain at their same levels or are on the increase. Normal theories of supply and demand fall before corporate greed. Dairy farmers, the environment, and consumers of all dairy products are the losers.