Friday, October 16, 2009

When food is too cheap: Milk prices

I write here about the regulatory burden that farms work under.    That's the front of the problem.  The back of the problem is that most farms just aren't very profitable.  It's a cyclical business, and right now, dairy farms are suffering bigtime.   If farms were more profitable the regulations wouldn't be as much of a problem -- you'd hire someone to deal with it and move on.  But when the entire operation isn't profitable, and every penny is precious, there's no way you can do that. 

Current milk prices are so bad that the producer cooperatives are offering to buy out the herds of local dairy farms to try to reduce production to bring it more in line with the current market.   This program is dairy farmers buying out the herds of other dairy farmers, and sending those herds to the slaughterhouse.   What other business can you think of where businesses buy out the competition for the sole reason of putting them out of business?   Here's a list of families that are no longer in the dairy business.

Right now milk is very cheap; $1.99/gallon is probably under the cost to produce it, and quite a few dairies are losing thousands of dollars a month (or tens of thousands.) 

I've said that I consider dairy farming the hardest, must relentless form of farming that there is.  You work 7 days a week, 10-12 hours a day, and you're on call for the other 12 hours.   To do that sort of work it's a labor of love and commitment.  Dairy farms used to be a major component of Snohomish county.  There are fewer and fewer each year, and what replaces them is often houses.

Here's the story of the Van Dam family, selling their dairy herd.   At least 7 employees out of work, taxes no longer generated, local food no longer produced.  This is a fellow who ran a top-grade dairy and had managed to stay on top of the regulatory burden, but when I sat down next to him at the Snohomish County Farm Bureau dinner, even he admitted that the regulations were one of his biggest headaches.  "That's one thing I won't miss." says Nick Van Dam.   Mr. Van Dam used to keep 400 acres busy and productive in agriculture; without the business, that land will seek other uses; and given difficulty of making a profit farming, I'm going to guess that the new uses won't be agricultural.

Regulations have a cost.  Here's part of it. 

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