Government purchases encouraged to slow the freefall of prices, but it may not be enough
When Jeff Peck first heard about Wisconsin farmers dumping tens of thousands of gallons of fresh milk on the ground, it was hard for the dairy farmer to believe.
Peck, a 35-year-old who milks 180 cows on his farm south of Chippewa Falls, said he hadn’t heard of milk dumping happening since the recession of 2008-09 after demand for dairy products dropped.
But Peck knows all too well the struggles dairy farmers face these days. Tough times in recent years that have seen a record number of Wisconsin farmers declare bankruptcy got even harder in recent weeks as coronavirus concerns have shuttered some of dairy’s biggest buyers: restaurants, schools and food service businesses.
“It’s a crazy situation,” Peck said Friday. “When you see farmers dumping their milk because they have nowhere to sell it, you know things are bad.”
With dairy supply chains suddenly dried up, some dairies in Wisconsin are at full storage capacity because they have fewer places to ship their milk, cheese and butter. In some cases farmers have little choice but to dump the milk they produce because they have no processors to buy it.
The list of dairies who are at full capacity and can’t purchase more milk from farmers continues to grow. The Ellsworth Cooperative Creamery in Pierce County sent a letter this week to its members urging them to cut milk production by 7% and stating their customers may have to start dumping milk soon.
“We may need to dump milk if our milk supply is not reduced,” the letter states.
The dairy crisis related to COVID-19 prompted a rare bipartisan show of support from members of Congress. On Friday a letter sent jointly by U.S. Sens. Tammy Baldwin and Ron Johnson, and U.S. Reps. Mike Gallagher, Glenn Grothman, Ron Kind, Gwen Moore, Mark Pocan and Bryan Steil urged U.S. Department of Agriculture Secretary Sonny Perdue to take action to address the crisis.
Among the steps the lawmakers want are moving cheese and other dairy products from Wisconsin plants to consumers; providing funding to resolve supply chain disruptions; and reopening enrollment for the Dairy Margin Coverage program, and making payments retroactive to the start of the year.
“Wisconsin’s dairy and agriculture economy is in crisis, and we write to ask for your immediate attention and aid,” the letter states. “Supply chain disruptions are cascading through communities across the state, putting dairy farmers and dairy processors at immediate risk of layoffs and closure.”
Pocan, D-Madison, whose 2nd District contains just under 10,000 farms that generate $1.5 billion in product sales annually, said agricultural recovery must be included in coronavirus relief legislation.
“We just need to hear from people where there are some gaps in what’s out there and how we can best try to affect them in the next package that’s especially focused on recovery.” Pocan said. “So we are open to suggestions and we’re hoping people will forward ideas to us.”
Kind, D-La Crosse, said Wisconsin’s dairy farmers are in desperate need of federal assistance.
“Our dairy farmers were already struggling, and this pandemic puts them into even more of a crisis. They cannot afford to have the USDA stall on helping farmers in Wisconsin by reopening the Dairy Margin Coverage program,” Kind said.
A news release issued Friday by Wisconsin Farmers Union noted milk futures predict a milk price of $13 or less in May, a figure less than the cost of production for nearly all farmers. The release states that WFU is calling on Congress to allow dairy farmers to remain in business while they quickly decrease production to prevent further flooding of the milk market.
WFU also is urging the adoption of a mandatory, nationwide program to balance milk supply with demand.
“Congress just passed a $2 trillion economic stimulus package that will offer some much-
needed relief, but it will not be sufficient to prevent a mass exodus of dairy farms throughout the
country this summer if we can’t find a way to balance supply and stabilize prices,” WFU President Darin Von Ruden said in the statement.
In a statement posted Thursday, Wisconsin Farm Bureau President Joe Bragger, a Buffalo County dairy farmer, said Wisconsin’s farmers are facing unprecedented challenges amid the COVID-19 outbreak. Those difficulties come on top of five years of low milk prices that have prompted a record number of dairy farmers in the state to declare bankruptcy.
“It is with a heavy heart I make this statement,” Bragger said. “The slight optimism that was floating around at the beginning of the year for our dairy farmers has been buried … Our farmers, especially our dairy farmers, are being served a big dose of the sad reality we are living in with the COVID-19 pandemic,” he said.
Peck sells his 12,000 pounds of milk each day to Land O’Lakes. So far he hasn’t had to dump milk, he said but the dairy processor recently told Peck and its other members they too may soon have to begin dumping their milk if coronavirus concerns continue and demand remains low.
In an effort to reduce supply, Land O’Lakes recently said it would only pay $10 per 100 pounds of milk for any produced above farmers’ targeted amount. “They’re basically saying don’t give us any extra,” Peck said.
A few weeks ago Peck received about $17 per hundredweight for his milk. Then the coronavirus pandemic hit, and today he gets $14 for every 100 pounds, a figure that makes him ponder whether he’ll be able to remain in business if COVID-19 continues to wreak havoc on the dairy industry.
“Dairy farmers in Wisconsin have been struggling for years,” he said. “This was supposed to be a good year, a year when we could get higher milk prices and recover a bit, write off some debt. That recovery lasted for two months. Then the virus hit.”
Given struggles of recent years, Peck said he has come to grips with the sad reality that he is likely the last generation of his family to continue the farm. Now he wonders how long he will be able to hold on.
“I’m in the middle of this career and saying ‘is this worth it?’ ” Peck said. “I’m just keeping it going for as long as I can.”