Co-ops give more time, and a new state law could help, but there remains little hope in a tough market.
Fewer than 20 days remain until Dean Foods terminates its contract with dairy farmer Caleb Watson and his 221 milk cows. The countdown, if nothing else, has become easier to compute; the days can be tallied on fingers and toes now.
Watson and 10 other East Tennessee farmers were given a 90-day, out-of-the-blue notice. Time is up May 31.
The company cited an overabundance of milk in the market as reason for the cuts. Dean Foods subsidiary companies include Purity, Mayfield Dairy, Land O’Lakes, Dairy Pure, TruMoo and many other regional and national brands.
The other farmers have found new homes for their milk or decided to abandon the industry altogether.
Watson remains committed to his profession and also remains a lonely free agent in a saturated market.
He isn’t stubborn so much as he’s waiting a deal, any deal. But one may not be coming.
“I’m hanging in there ‘til something opens up … I’m just making calls, trying to get on,” he said.
Oversaturated market keeps prices low
Dean Foods isn’t the only operation dropping farmers, Tennessee Farm Bureau Federation president and former dairy farmer from Washington County, Jeff Aiken, said.
State projections show a likely 20 percent drop in dairy farms across the state by the end of the year, he said. That figure, more than anything else, highlights the crisis, he said.
Farmers, Dean Foods or not, are feeling the pinch. A glut of milk on the market has caused prices to plummet and keeping up with major producers is hardly feasible.
“Farmers are, for the most part, eternal optimists and I still possess that optimism with caution,” Aiken said. “I say we have challenges, but if we work together we can turn those challenges into opportunities.”
U.S. Secretary of Agriculture Sonny Perdue was asked about the crisis when he visited Knoxville last month.
“I just want you to know that I may not have the answers, but I do know there’s some legitimate anxiety about that and we’re going to do everything we can from a business perspective to talk people into taking this milk,” he said at the time.
Can a local co-op be the answer?
One such opportunity for a number of farmers in East Tennessee has come from the newly-formed Appalachian Dairy Farmers Cooperative. The co-op is run by a board of directors but has entered into an agreement with Piedmont Milk Sales LLC out of Blountville, Tennessee to produce the milk.
The co-op bought the farmers something they didn’t have — time.
The setup allows the 120 members, many of whom were Piedmont farmers to begin with, to continue to farm and get paid, even though it’s below the federal minimum. Piedmont continues to produce the milk and the farmers continue to have a place to send it. Even at a reduced rate, it’s better than going out of business. Costs are spread around the members.
The group took on five former Dean Foods producers, four from Tennessee and one from North Carolina. The five were all previous Piedmont producers or were on Piedmont’s waiting list.
As for Watson, he has been in contact with Piedmont and other companies about a possible deal but nothing has materialized yet.
“No, it’s not at a profitable level currently.”
Brian Stooksbury is a dairy farmer in Jefferson County and vice president of the newly-formed co-op. He has about 220 milking cows and was a Piedmont client when they came to him and another farmer earlier this year and told them Piedmont would have to cut them because of the down market. The two sides worked together, lawyers and all, to form the co-op.
The reduced rates aren’t great, he said, but it beats closing up shop.
“The co-op, I guess, it may not be the best alternative, but it’s the only alternative right now for us to continue to market our milk and to hope that our products, 100 percent milk and beef, that the demand goes up and the price goes up, Stooksbury said.
“No, it’s not at a profitable level currently,” he continued.
To that point, Stooksbury said he’s not been profitable in two years. He guesses most farmers have turned a 1 percent profit or worse the past four years.
At some point though, he said, dairy farmers, even those in the co-op, will have a choice to make.
“These farmers love what they do. They love working with animals,” Stooksbury said. “The problem is you can love what you do a whole lot, but if you’re not making a living out of it, you’ve got to seek something else.
Labels advertise local milk
Gov. Bill Haslam signed a bill into law April 19 that authorized the labeling of any milk sold in this state as “Local Tennessee Milk,” or a statement that indicates the milk is Tennessee milk, if the milk contains only milk produced in Tennessee.
The hope, from the state’s perspective, is the law will encourage consumers to choose locally-sourced milk.
“Processors are able to use the Pick Tennessee Products logo to show consumers their use of Tennessee milk, and they will soon be able to use 100 percent Tennessee Milk and Tennessee Prime Milk logos as well,” Will Freeman, spokesman for TN Department of Agriculture, said in an emailed statement.
Running out of options
With time ticking, what comes next?
For a man with dwindling options, Caleb Watson keeps a positive spin on things. He doesn’t want to be the first generation of Watson men to stop milking. Maybe he can start his own creamery, he said, and sell local, nothing big.
“I don’t want to close down. I’d rather get on with somebody and sell to them and then every now and then suck some milk out for my creamery,” he said.
Watson’s had regulators from the state come out and inspect his plans and land for a creamery if he were to build one. He knows where it would sit and where it would drain.
For now, it’s just a dream. As likely as anything else.
Aiken, the state’s Farm Bureau president, is an optimist like Watson, but even he knows the odds of a homegrown creamery in a rural area are long.
“If you’re in an area in close proximity to an urban area would be good … if you’re in a very rural part of our state, (it) would obviously be a greater challenge to succeed,” Aiken said.
Watson is ready for the hard work. He knows getting his name out will be a challenge. He’s hoping some American Ninja Warrior exposure, of which he’s been a candidate before, will give him a boost. It’s one of the only chances he has.
“There ain’t nobody else that I know of … it’s a lonely feeling, tell me about it.”
By: Tyler Whetstone and Calvin Mattheis, Knoxville