Independent Dairy Farmers Fight Big Milk's Cartels
Everyone who drinks milk watches the price carefully, but what most consumers don't realize is that the price actually paid to dairy farmers for raw milk is currently the lowest it's been in 40 years. That's because only a few large companies control the country's milk supply, and now the U.S. Department of Justice is investigating the situation and deciding whether to take anti-trust action against them.
Government regulators could stay out of it, but the situation has reached a crisis point where some farmers are losing money on every gallon of milk they sell. The U.S. milk market is dominated by Dairy Farmers of America (DFA), a massive farmers' co-op that has acquired smaller co-ops nationwide. DFA supplies Dean Foods, which produces major brands such as Land O'Lakes, Garelick Farms, Mayfield, and Meadow Gold. There's gold in those meadows, all right.
"Where there is a competitive market for buying milk, dairy farmers are paid more. When DFA comes to dominate a market, then farmers are paid less. Monopolists behave like monopolies," Carstensen says.
Dairymen are not saying all their problems can be traced to the consolidation of their business. Farming is more complicated than that. Prices for animal feed, equipment and land have gone through the roof. And most significantly, today there's a surplus of milk on the market, most agree, because of too many milk cows and a shrinking export market.
Now there are fewer family-owned dairy farms left, since it's not a sustainable business, a situation only exacerbated by the recession. (For a bit of anecdata, the neighbors of my old family farm in northern New York are selling their farms to the Amish, or contracting to have electricity-generating windmills placed on their land to get by.)
Independent Farmers Feel Squeezed By Milk Cartel [NPR]
(Photo: Joe Shlabotnik)
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Comments:
@corinthos: Except that milk cows (females) aren't used for beef. Steers (males) are what are used for beef as the meat is better then a cow's meat.
@Eat A Peach: No, they are. Dairy cows often become hamburgers at the end of their careers. Lower-grade hamburger, I believe.
@Eat A Peach: That's not to say they don't use females in beef production, but it's not dairy cows (which are only female) as they have very little muscle. Today, dairy cows are specialized and most have been bred to produce large volumes of milk, with little or no regard for their production of meat.
@Eat A Peach: Yeah, different breeds of cows are specialized for different purposes. Like tasty, tasty dogs.
@Eat A Peach: Steers are used for meat because they can't produce milk (or give birth to more cows). And by the time the females might be sent to slaughter, they're usually older and the meat is tougher, since they've been used for calving and/or milking a while. Is there any real comparison between the males and females of similar ages that suggests female cows don't produce good beef?
Damn! I hate low prices. Let's fix this quick!
"Government regulators could stay out of it"
Ha! Good one, Consumerist.
I know we like to blame capitalism for everything around here, but that's a little harder to do with a straight face in an industry where federal & state government bodies not only set the prices, but run the ad campaigns.
Some states used to have minimum retail prices for milk. Is that still true? This was state law, not federal.
My significant other works as a milk truck driver, delivering milk from Upstate NY down to Long Island, Massachusetts and such and it's not just the farmers who are suffering. The people who transport it as well are taking a hit, and jobs are being lost.
He delivers to Garelick, Kozy Shack (for their oh so yummy rice pudding, yay free samples!) and once these farms shut down, that's less loads to divide up among a bunch of drivers just trying to make a living.
So the problem is bigger than just the farms. I don't mind paying more for milk, I can't see why it's gotten so low. $.99 a 1/2 gallon? Sure, its easier on my wallet but I was fine paying $3 for the full gallon. Anything above $3.50 is a bit much. My kids love milk, it's good for them- I'd rather spend more on milk/cheese than anything else.
Ever since the advent of factory farms and conglomerates, the market has never been "competitive." (The bar scene in "A Beautiful Mind" expresses this better than me.)
ADM got busted for this behavior of controlling the market and even small dairies are attacked when they want to buck the corporate line. Monsanto sued a Maine dairy for daring to advertise its' milk as 'hormone-free.'
Since Monsanto is into everything from genetically-modified crap to bovine growth hormone, they have to protect their products and their monopolistic market share by bankrupting upstart farmers who want milk to taste like....well, milk. Milk without the carcinogenic artificial alterations.
Monsanto is like Conagra, ADM and other conscious-less mega-corporations who adulterate and poison for profit.
As long as they can afford the lobbyists to write the laws in their favor, they'll continue to treat the public as guinea pigs.
@t-r0y:
You must be a real student of commerce ding-dong. What do monopolies do after they have driven out the competition (often with artificially low prices) or bought it up?
We buy all of our milk from a family owned farm that delivers directly to the grocery stores. Glass bottles, no drugs for the cows. It costs $2.99 a half gallon but around here the crap milk that tastes awful is only about 50 cents less.
I don't see how anyone can go an investigate milk producers when oil/gas producers get to fix the market price to whatever they see fit? Everyone in my area are charging between $1.58 to $1.98 per gallon of either whole or 2%/1% milk. I would think that even at these prices someone is still making money and if not oh well cause I quit buying it when it hits $3 per gallon. So the way I see it you can have a percent of $2 or no percent of zero.
Oh damn. I thought this would be a wonderfully indicting post on what should have been a major plot point in Inglourious Basterds.
@mmmsoap: Plenty of heifers (female bovines who haven't given birth) are turned into beef. Steers are male bovines who have had their ability to reproduce removed. Beef heifers & steers are butchered at about 1.5 - 2 years of age.
Cows are female bovines who have given birth. Dairy cows are kept for 5-10 years before slaughter. The only male bovines who reach that age are bulls, who due to their increased testosterone are quite a bit tougher & stronger-tasting.
So female bovines will generally taste better than males, if both are unaltered and of the same age. But dairy cows aren't as good as beef cattle at market age, because they are both fatter & tougher.
i just paid $2.38 for a gallon and that was the price at sams club, about 50 cents lower a gallon than the grocery stores. i'd pay more than that though, if i knew it really would help the farmers.
but most people have less leeway than that in their budgets right now.
and of course so do the farmers... vicious cycle
@bigd7387:
And what if the cost of production is $2.01?
Personally I have no clue what it costs to process and deliver milk. But I do know there are hundreds or even thousands of companies in this country for whom the cost of manufacturing their products is far greater than the selling price of those products. Selling at a loss is great for the consumer, but eventually payroll obligations have to be met.
Then you'd LOVE Canada, where a gallon (Well, 4 litres, ever so slightly more than a gallon) of milk for under $3.97 is a STEAL of a deal (In fact, my city has one of the lowest prices for milk in all of Canada, in many places $4.97 is a good price). And remember, $1 CDN = $0.93 US, so that's about $3.50.
Weirdly enough, that's despite the savings on them only putting it into bags (we don't have jugs in most all stores here).
What's neat is that despite those high prices, virtually all the milk that's that price still comes from the dairy giants Parmalat or Nielson. In fact, you need to get to $6 or $7 for independent brands, which I've never bought because it's just too excessive of a price, and I'm lactose intolerant.
I haven't seen milk below $2.99 a gallon in the last 2 years so those of you getting it for $1.50 and $1.99, enjoy it.
You shouldn't be drinking milk anyway. Seriously nasty stuff with all kinds of weird health risks.
@H3ion:
I know in Massachusetts grocery stores must offer milk they put on sale to all customers, no card required (for stores that use loyalty cards). I also remember something about not allowing coupons for white and chocolate-flavored white milk ("real" milk) but it was ok for the super processed milk drinks (like strawberry or coffee flavored milks).
@Hanshiro:
Most milk sold here in Massachsetts seems to have that little "bgh-free" labor, stating that there has been no difference between bgh-free milk and cow's hopped up on hormones. Even the store's brand (I know shaws uses one of the larger processors, so it's the same milk) is BGH-free.
That should be bgh-free label, not labor. Although I guess the cows are working bgh-free as well.
I'm lucky if milk is $1.99 a half gallon around here.
@bigd7387:
[consumerist.com]
Someone is making money, but it's not the farmers. Many farmers are losing money and, technically, paying the co-op to take their milk away.
That's because of agricultural subsidies.
The DoJ should be talking to the Dept. of Agriculture, not milk companies.
Let's try that again.
@bigd7387:
Everyone in my area are charging between $1.58 to $1.98 per gallon of either whole or 2%/1% milk. I would think that even at these prices someone is still making money
Someone is making money, but it's not the farmers. Many farmers are losing money and, technically, paying the co-op to take their milk away.
Damnit! Sure, I know, milk farmers have gotta eat too ... but I like paying $2.19 for a gallon of milk. It's one of the most affordable drinks that I really enjoy and it's pretty good for you too.
The problem here (this is typical of the current political situation extending to most industries) is not too little government interference but TOO MUCH government interference.
We don't actually have a free market and it doesn't work.
Let's open it up and actually have some competition for a change.
Like Reagan said, "The scariest 9 words in the english language, I'm from the government and I'm here to help"
"Where there is a competitive market for buying milk, dairy farmers are paid more. When DFA comes to dominate a market, then farmers are paid less. Monopolists behave like monopolies," Carstensen says.
Monopsony, folks. Monopsony.
We did fine here in Tulare County CA... one of the leading dairy areas in the US... before Land O Lakes tied up virtually every drop of milk in the family.
They managed to take over in spite of local processors having banded together into co-ops to try to stay competitive with what the big corporations were were able to offer. Now, in a county where milk and dairy products production runs into the hundreds of millions, we pay outrageous prices for our own products just like you do.
Never be too quick to blame farmers for food prices... they probably make less than anyone else along the food chain.
@wrjohnston19283: No, this was actually a minimum price and I know it existed at one time in New Jersey. Some chain of dairy stores wanted to sell milk at a lower price that was allowed and wound up suing the state to have the law overturned. I'm not sure what finally happened.
@English, MF, do you speak it?: All of which is true, but not really relevant to the heart of the issue underlying the initial statement in the thread. Not only will a dairy farm get comparatively little compensation for selling their milkers for beef, it's a one-shot deal. The next year they're no longer dairy farmers. Butchering milkers is mitigation of loss, not a sustainable business model, for what should be obvious reasons.
So it makes more sense just to say "Stop milking your cows and find another way to make a living."
@t-r0y: If you'll notice in the article, the price that the consumer pays hasn't changed - just the price paid to the dairymen.
Oh come on....
I'm in Wisconsin. It's the land of cheese and dairy farms. This whole idea of the lowly "family farm" is simply crap. Those farms - the family farms that had no idea how to be lean - are out of business. The family farms I know are multi million dollar bussinesses. They still are "family farms," though.
Imagine a business that's propped up by the government - that's what they are. They are bought and paid for by the US governement, and every year they bitch about their prices being too low.
Whatever.
If they can't make it, go out of business. The next million dollar "family farm" will buy them up and make a business out of them.
@corinthos: Actually it won't work. The problem is that the rules of supply and demand aren't really working all that well given the monopolist control. Dean Foods has a 100% supply agreement with DFA. So if you want to sell you milk to Dean Foods you have to join the DFA co-op, and they have already determined the price.
What they didn't mention in the writeup is that the price of milk is still pretty high in the grocery store (Dean Foods also owns Horizon) but the profits are all being absorbed by Dean Foods and not passed on to the farmers. Dean made record profits last year.
@shepd: Yeah, I didn't understand the whole "bagged milk" thing, nor did I believe it til I stayed with a friend. Sure enough, theres a bag of milk in the fridge. I thought he was just stupid. Now I relize, he's just been brainwashed to believe thats normal.
@catastrophegirl: $2.88 at a grocery store? Damn, I wish. Lowest around here is $4.39.
And we're surrounded by cows!
@ryaninc: my endocrinologist practically prescribed it! i'm vitamin D deficient and i can't take pills.
for people using food subsidy programs where milk is included, it's a great way to get vitamin D into their kids.
@Verucalise-WelcomeBethany: A gallon of milk here in NorCal is around $6+, although I only buy half-gallons since we can't get through it before it goes bad.
@jayphat: I'd love to buy milk in bags. It's a whole lot better than jugs for shipping purposes, uses less material, they pack denser, less fuel per gallon of milk delivered, etc... Why are you against superior logistics?
@ludwigk: Because it's less useful. Ever try pouring out of one of those things? Also I'd imagine (though I don't know for sure) that it spoils more quickly. For someone like me that drinks milk occasionally, that would be a huge problem
@ryaninc: Its Pastuerized! So anything harmful is taken out of it. Apparently someone didn't pay attention in science class.
@MichaelBrazell: Actually, it isn't that good for you. The saturated fat alone makes it prohibitive, and that's just 2%. It also doesn't account for the sugars/about half a coke's worth in 1 cup.
Then there's the chemicals and hormones, etc. If anything, stick to organic.
So stop milking your cows and send them off to be butchered. Problem solved.