An iconic central Pennsylvania industry is in the midst of a historic crisis, with some dairy farmers’ milk contracts being canceled and others struggling to pay bills.
“We would lose the farm,” said Alisha Risser, a Lebanon County dairy farmer who’s 17-year milk contract was recently canceled. The farm’s only customer is giving them 90 days to find another purchaser.
Farmers in several Pennsylvania counties, including Franklin, Lancaster and Lebanon, are in a similar position, with milk purchaser Dean Foods making a “difficult decision” to terminate milk procurement contracts, according to director of corporate communications Reace Smith.
An estimated 120 farms in several states are believed to be affected.
For those fortunate enough to have a intact contract, the industry is still brutally tough.
”We’re unfortunately not able to cover all our bills” with the current price of milk, said Gabrielle Wentworth, dairy farmer and executive assistant for York County Agricultural Business Council. Her contract with Land O’Lakes is still in place, but she has her “fingers crossed” that things will get better in the future.
There’s not one single reason for the industry’s struggles, but there are a number of companies, groups and people who have played a significant role in the recent downturn.
“It’s not a good situation for dairymen anywhere,” said Jack Martin, a Waynesboro area farmer.
Dairy farmers in the Midwest are benefiting from a new Walmart milk processing plant in Fort Wayne, Indiana. Their gain is likely Pennsylvania farmers’ loss.
“By operating our own plant and working directly with the dairy supply chain in the Midwest, we’ll further reduce operating costs and pass those savings on to our customers so that they can save money,” said Tony Airoso, senior vice president of sourcing strategy for Walmart.
Industry observers say Walmart’s move is a major factor in Dean Foods’ decision to end contracts this spring.
United States Department of Agriculture regulations championed by Michelle Obama and enacted in 2012 cracked down on the dairy options provided to students in schools, leaving students with less flavorful milk options.
The low-fat options allowed in schools simply don’t taste as good and fewer students are developing the habit of drinking milk, Wentworth said.
Some of those regulations have begun to be rolled back under Trump’s presidency, but Wentworth said the changes have already deeply impacted milk sales.
Trendy ‘milk’ drinkers
Almond milk, coconut milk, soy milk: they’re not technically milk, and they’re big competition for dairy products.
Forbes reports people are increasingly finding dairy alternatives to combat increasing lactose intolerance, for purported health benefits and because of sustainability concerns. It also reports that dairy has come under fire for a number of health concerns, including the industry’s use of bovine growth hormone.
Wentworth thinks the non-dairy products simply have better marketing.
But the growth of dairy alternatives is just part of bigger picture. Americans are drinking less milk than they used to: 42 percent less than they did in 1970, to be exact.
And while some dairy products like cheese and yogurt are more popular, it’s not enough to make up the difference.
The dairy industry
Demand for dairy is down, but production is up. From an economics perspective, that’s a bad place to be.
Wentworth said happy cows produce a lot of milk, so farmers like her struggle to limit milk production.
But some in the industry are working to combat the oversupply.
Waynesboro area dairyman JasonMartin said Land O’ Lakes — the buyer of his milk — has a system that encourages farmers to limit their milk production. The cooperative penalizes farmers financially for producing more milk at a time when there’s a surplus at the milk plant.
Others have criticized the agricultural industry at large for its reliance on government subsidy.
“Congress Gives Massive Subsidies to Farmers — It Shouldn’t,” Daren Bakst titled his 2016 commentary on the subject for the conservative Heritage Foundation.
He believes the result of government subsidies for the industry is “less choice for consumers, distorted prices, reduced innovation, and onerous government influence over a portion of the American economy.”
By: Joel Shannon,Jim Hook and Daniel Walmer
Source: York Daily Record