Minnesota and Wisconsin dairy farmers lose contracts with Canadian milk processor
April 18, 2017
In early April, 75 dairy farmers in Wisconsin and Minnesota opened their mailboxes to find an unsigned, generic letter. The letter, sent by Grassland Dairy Products, Inc., informed recipients that on May 1, 2017, the farmers' contract with the milk processing plant would come to an end.
"I had heard the news before it had reached my family's dairy back home," said Londa Lauber, whose family runs a 150-head dairy in La Crescent, Minn., called Pine Creek Farms. "I called my brother Paul to see if he had received a letter yet. He hadn't, but later that day, he got a call from the Grassland field rep telling him about the letter he would soon receive, and on April 6, we got the official word that we had been cut from the Grassland contract."
This was a devastating blow for Pine Creek Farms, which produces 10,000 pounds of milk daily and is now scrambling to find a new processor, in an already flooded market, to take their highly-perishable milk products.
"We've called 104 processors already at least three times each," said Lauber. "A few processors have told us they really want to help us, but they simply can't take on new patrons because it would jeopardize their current patron base. We just keep calling, hoping someone will change their mind."
Pine Creek Farms, along with the 74 other dairies facing the May 1 deadline, are frantically searching for a buyer who will take the more than 1-million pounds of milk they produce daily. If they are unsuccessful, many dairies will be forced to sell the cows and shutter the doors on their family farms.
"If we can't find a market for our milk, we simply won't be able to afford to feed our cows anymore," Lauber said. "It costs $6.80 per day to feed each cow. Economically, we just can't do it. We now face the dilemma that everyone in this situation is facing — if we can't find a buyer, we'll be forced to sell out. Some farmers already have sold."
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This nightmare scenario is playing out at the worst time possible, said Lauber, as cow prices are down 30 to 40 percent in just the last few weeks.
"These cows are my parents' entire retirement plan; they've worked their whole lives for this," Lauber said. "Now the market is flooded, and if they are forced to sell, they'll only get a fraction of what the cows are worth."
On April 14, the 75 dairy operations met to discuss possible solutions. Among them was Wisconsin dairy farmer Carrie Mess. Although her dairy isn't on the list of those impacted, she's been actively working to find buyers for these farms and has reached out to elected officials for help.
"On Friday, most of the dairy farm families affected by Grassland's letter telling of their decision to stop picking up their milk with less than 30 days notice, came together to share ideas and resources," said Mess, on her Facebook Page, Dairy Carrie. "The people in the crowd were men, women, young, old, from small farms and from large farms and they all want to keep their dairy legacy alive. Right now their best chance at keeping the doors to the farm open is for a dairy processor to make room to add them on. Which is exactly what Mullins Cheese Company did late last week when they opened their doors to eight farms."
In addition to Mullins, Grassland has agreed to take back a few of the farms it had previously cut. Mess has joined the impacted dairy farms in a social media campaign to urge other processors to "just take five" producers to help solve this market problem.
"We are coming together as an industry and dairy product lovers to ask our dairy companies to 'Just Take 5,'" Lauber said. "Follow the example Mullins Cheese set, and find the room to take on these farms."
"The meeting reaffirmed to us that everyone of the 75 producers is in the same boat," Lauber said. "Several processors have worked hard to add some farms to their routes, and we are hopeful more processors will step up and add farms. If every processor added five farms, every farm would have a market. However, as an industry, we do recognize that we have an oversupply, and we all need to work together to solve this issue. Production per cow has skyrocketed in the last decade as we've learned to become more efficient and produce more volume. This growth is great, but when we don't have an established market for it, that volume hurts us tremendously."
This oversupply comes in the face of a declining 10-year demand for dairy products. Additionally, Grassland said it was forced to drop these producers after the Canadian buyer of the processor's milk product, Ultra Filtered Milk, cut ties with the U.S. company.
"This is a terrible situation for everyone involved," said Goedhart Westers, Grassland vice president of business development, in an interview with Farm Journal's MILK publication. "We don't want people to think this a decision that came from a desk, because we really do care. In a normal market where milk is not coming out of our ears, the search (for a new processor) includes many factors including distance from the plant, how milk is paid for and recent history of patronage dividends if you're looking at a co-op."
Many farmers are frustrated with Canada's decision to no longer accept the powdered milk product from the U.S. and argue that it is an unfair violation of trade agreements.
"Our worst nightmare, of the impact of Canada's trade barriers, appears to be unfolding. We need to fight on behalf of our dairy industry," said U.S. Sen. Tammy Baldwin, D-Wis., in an interview with the Milwaukee Journal Sentinel.
TRUMP IN WISCONSIN
In a recent stop in Wisconsin, President Donald Trump vowed to help the dairy farmers.
"We're using every tool at our disposal to restore the American dream," President Trump said to a crowd of people at the Snap-On Inc. headquarters in Kenosha, Wis. "We're going to stand up for our dairy farmers in Wisconsin."
In his speech, Trump criticized trade agreements and said, "We are going to make some very big changes, or we are going to get rid of NAFTA once and for all."
While empathetic about the plight of the U.S. dairy farmers, the Dairy Processors Association of Canada said they are not to blame.
"We don't feel good about U.S. farms going out of business. But you know what? It's not our responsibility. It's your own responsibility, as a country, to manage your production," said Isabelle Bouchard, director of government relations for the trade group Dairy Farmers of Canada, in an official press release, which was reprinted in Farm Journal's MILK. "We are a nation of 36 million people, less than the population of California. How do you expect us to (consume) your over-supply of milk when we already produce milk for our market? By contrast, in Canada, supply management — literally matching supply with demand — avoids overproduction and reduces the impact of devastating market fluctuations such as those the U.S. is currently experiencing."
With the May 1 deadline creeping closer and closer, the impacted dairies have no choice but to keep calling on processors and politicians to help save the family farms.
"We just keep praying that someone will take our milk," Lauber said. "We have someone sit by the phone all the time, just in case we get a call back. The U.S. dairy industry has some major problems to fix beyond this; I'm afraid if we don't, our industry will no longer look the same and family farmers will be a thing of the past."
— Radke is a cattle rancher, freelance writer and agricultural speaker from Mitchell, S.D. She can be reached at email@example.com.