Editorial: Got milk but no profit

Published 12:00 am Friday, December 11, 2009

These are tough, tough times for America’s small dairy farms. Although the demise of small farms in general is an ongoing story, we’re witnessing a bleak new chapter as dairy farmers battle a convergence of hurricane-force factors. The price they get for raw milk has plummeted. Their operating costs have risen. And the globalization of markets has introduced new complexities. Farmers are accustomed to dealing with some forces over which they have no control, like the weather. Now, their fates also are linked to monetary exchange rates and international commodity brokers.
Stories in today’s Post (Front page and 1E) examine the dairy crisis in both its larger and local contexts. On a larger scale, the statistics are stunning. In the past two decades, North Carolina, like the rest of the nation, has seen a dramatic drop in the number of farms with cows that produce milk for commercial consumption. In Rowan County, the number has dropped by more than two thirds. That decline accelerated with recent plunges in prices for raw milk. Earlier this year, dairy farmers were selling their product at 1970s-era prices while having to shoulder 2009 production and living costs.
What that means on a local level is the loss of dairy concerns like that operated by two generations of Rowan County’s Hoffner family. Lonnie Hoffner and his family recently had the sad experience of auctioning off the Jersey cows that grazed and produced milk for half a century at their Amity Hills Farm. While Lonnie Hoffner will be able to keep the land and remain involved in agriculture, the auction marked the loss of a way of life for his family, a loss felt by countless other dairy farmers around the country. It’s also a loss for the communities where those dairy farms have been an important aspect of the social fabric and economic vitality.
Dairy prices have always fluctuated, and dairy farmers have weathered tough periods before. What’s different this time is that many of them aren’t going to survive. Like most small farmers, dairy operators tend to be an independent-minded group. They want to succeed on their own. Even so, some say more federal intervention is needed to help stabilize markets and support a price floor that will keep profits from drying up. In response to their plight, Congress recently set aside $350 million to help struggling milk farmers. While that will provide modest aid for some, it’s too little, too late, for others. Many say that stopping the blood bath will require new price stabilization efforts and controls on imports. Yet, from another perspective, others argue that price supports and government-purchase programs themselves are part of the problem, artificially distorting supply and demand.
For consumers, what’s frustrating ó and puzzling ó is that, while the price farmers receive for milk has dropped, that isn’t reflected in prices at the store ó nor in the profits of major dairy distributors. Dean Foods, the nation’s largest processor and shipper of dairy products, more than doubled its earnings (to $75.3 million) in the first quarter of this year, compared to a year earlier. Obviously, somebody’s still making good money from milk, but it isn’t your local dairy farmer.