Step Up or Step Down

Editor’s note: This is a letter written by Dave Rama of the The Cattle Exchange, Delhi, N.Y., and distributed widely to dairy producers and others for their sponsorship.
To Elected Officials, Dairy Industry Leaders, Dairy Producers and Consumers:
U.S. dairy industry producers deserve to know what the future holds for them. All agribusinesses dealing with dairy and agricultural lending institutions deserve to know how to plan for the future.
Recently, dairy producers — a small, essential segment of our society — have been thrown smokescreens, including hearing how exports have dropped, dairy producers had a good year last year, too many cows and too much milk, etc. We never hear much about the increasing import problem, the inability to enforce SCC (somatic cell count) standards, level playing fields in the world market or the fact that our pricing system is, essentially, controlled by monopolies.
We see co-ops offering an extra 5 cents per hundredweight and some short term government assistance, but let’s face the facts. Rome is burning and the string quartet is playing jive music in the background. As concerned U.S. citizens, consumers and dairy industry enthusiasts, the situation being played out is an embarrassment as well as a major national food security issue. Short term gains for a few global companies come at the expense of our dairy producers and our nation’s long-term future.
Dairy farmers’ financial mess is all about globalization, period. How we deal with globalization is the ultimate question. Our nation, the innovator of free markets has witnessed manufacturing diminish over the past 30 years at an unprecedented rate. Manufacturing now accounts for just over 12 percent of our nation’s GDP. China has remained constant at 33 percent. In China, 60 percent of the labor force is devoted to agriculture and in the U.S. it is just 1.8 percent.
Our nation’s agricultural producers are some of the world’s most efficient, yet we struggle to compete on the world market. Our counterparts in England, France, Germany and other countries that have raised their standards also realize these struggles to compete. Standards for environment, consumers, employees, animal welfare and more have vastly improved over the past 50 years in some countries. With increased standards come increased costs. Globalization sees no boundaries and rarely adapts to higher standards. Dairy production/processing practices in nations with few quality standards can now be procured by a global company and shipped to a nation with the highest standards for everything. Throw in currency exchange rates on the right day and a global giant can make millions at the expense of our nation’s consumers and producers.
CEO’s of global companies and dairy producers will try to procure the least expensive inputs for maximum returns. Feeding meat and bone meal was a very attractive least cost input for some producers in various countries years ago. The results were horrific. Bovine spongiform encephalopathy (BSE), more commonly known as “mad cow disease,” is an excellent example of how least-cost inputs and inferior standards can destroy an industry and inflict serious health consequences on consumers.
If the world is a global economy, why not adhere to the highest global standards? Why should our nation’s producers jump hurdles which increase the cost of production, while our elected officials allow millions of tons of substandard food into this country for corporate profits? If we are going to talk about health care, we better talk about dangerously contaminated, unregulated, imported food from nations with little regard for consumers, workers or the environment.
It all starts with leadership. Our elected officials are either not hearing or receiving mixed signals from the power brokers in the dairy industry. These “leaders” are the CEOs of every dairy co-op, state Farm Bureau, breed organization officers, and all others that claim they represent the best interests of the dairy producers and the American consumer. If these people are not going to step up, they should step down.
Short term gain for a few is not in our nation’s or dairy producer’s best interest. What will the U.S. dairy industry and our nation look like in 10, 25 or 50 years? If you are an industry leader or elected official, “outsourcing dairy products” sold to U.S. consumers is a matter of national security as much as anything. If you are collecting dues from members, you should be representing their interests at every level. Step up or step down.
Ag industry leaders must emphatically convey to elected officials that our producers need some protection of price and some control of imports of substandard product. We should only trade with countries with similar policies and practices. Country of origin is a must. If changes are not made, this industry as we know it is finished. Better to tell those dairy producers now than drag their families through hell for the next 10 years. Three good years out of 10 would not suffice for a global company or that company’s CEO and it should be no different for the producers! Every producer, dairy processor and retailer should have a piece of the pie all year long.
U.S. dairy producers have been losing an average of $100 per cow per month since Jan. 1. All size farms from all corners of the U.S. are experiencing these losses. The dairy industry needs an overhaul and we need our dairy leaders, government officials and the CEOs of global milk companies to all join at the table. At no time should every processor, producer or retailer lose money every day.
Supply management makes sense to many. To others, supply management stifles growth and opportunity. We could perhaps learn a little something from OPEC (Organization of the Petroleum Exporting Countries). Everyone talks about a “free market” yet the OPEC countries appear to control the supply, along with price — and it works. Oil is almost four times higher today than it was 30 years ago and milk is priced about the same. Perhaps the food-producing nations of the world should form a similar cartel and tie food prices to the oil price — a form of parity. At the very least, we should be discussing growth management. Those that want to grow should be able to, those that hold firm on production should be rewarded and an entry method established. Regardless, we need to bring a quality, safe, nutritious product to the American consumer and hold the price steady for every link in the chain to make a profit. Smart business for everyone involved.
If we do not handle the dairy import issue and address some form of growth management, the dairy industry in this country needs no more than four to five million dairy cows, maximum. Fluid milk and quick turnover dairy items will be made here and the rest can be made overseas. Google American Dairy Inc.: it trades on the New York Stock Exchange and you will begin to get the picture.
The question for our elected officials and silent dairy leaders is this: with the lack of leadership you have shown this industry and the security of this nation’s food supply in jeopardy, should some of our producers pack their bags and move overseas? Should they bring their expertise to emerging nations with substandard quality controls and really show you how inexpensive milk can be made? Rest assured, they would make more money, be more valued in their new countries and they would have access to the great U.S. dairy market like never before. But to some it’s not about the money — it’s about right versus wrong. About commitment to consumers, loyalty to a nation and pride in a product, taxpayers, jobs, communities and working with other countries to raise their bars, not lowering ours. It’s about participating on a level playing field.
Producers, global processors, co-ops, consumers and elected officials must all come together at one table to find a balance. If not, someone in the chain will ultimately fail and the cycle will continue.
It has been said, “It is better to die on your feet than live on your knees.” It is time to take a stand for producers, consumers, our dairy industry and most of all our national security.
Elected government officials, industry leaders — if you want a serious debate on these issues, we offer this: let’s debate this situation openly. We suggest producers holding a debate with processors and have four representatives from both sides of the equation. Perhaps this forum could take place at World Dairy Expo. We ask dairy cooperative leaders to put this together and then decide which side of the table they will sit on. It’s time to come to one table. It’s time to step up or step down.