Got M-m-m-m-management?

Monday, August 16, 2010 by Dick.

A lifetime ago in political terms I ran for state representative. I visited every dairy farm, rich and poor, in our then-two-Town district (Puffin East and North Puffin).

I spoke at some length with Etienne Chasseur, a North Puffin farmer milking about 75 head on 180 acres over on the Sweep Road.

“You need to sign on to the Canadian supply management system,” he told me. “I’m going broke here on an $11 milk check but my brother-in-law up north gets $18 U.S. for milking the same size herd.”

What, is he nuts? Etienne left out some of the story. I didn’t sign on then and would not now.

Vermont is a major dairy state with minor farms. The state defines a “large farm” as more than 600 cows; the median farm here now milks 120 head. Wisconsin, California, and even Nebraska dairy farms often milk 1,500, 2,000, or more. Many more. In 1991, a Vermont cow on one of our 2,381 farms produced about 15,000 pounds of milk per year. By 2000, average annual production per cow had risen to almost 17,500 pounds per year. (There were 11,019 farms here at the middle of the 20th Century.) Farmers measure milk production in “hundredweight” rather than gallons. About 12 gallons of milk weighs one hundred pounds.

Dairy farming here is unique because dairy farmers cannot set the price of milk and cannot pass along increases in operating costs. Neither Etienne Chasseur nor Wisconsin dairy farmer Paul Rozwadowski knows how much his milk sold for until the “milk check” comes in the mail. A month later.

Canada and the EU have a two-tiered system that offer farmers a (fixed) high price for “quota” milk, but a very low price for milk that is more than the quota for each farm. I’ve talked to some dairy farmers in Quebec. One compared his 150 cows to a 1,500 head herd in Wisconsin. Over the last dozen years, he made more total profit on 150 cows than the Wisconsin farm did on 1,500 for nine of those years.

The latest debate over dairy supply management began in 2007 and has picked up again.

The current milk pricing system is “inadequate, unfair and devastating family farms across the country,” Mr. Rozwadowski told the St. Albans Messenger. His last milk check brought in $13.80 per hundredweight for milk that he said cost $18/cwt to produce.

That price is based on dairy commodity sales. The USDA Federal Milk Marketing Order Office monitor the price of butter, dry milk powder, whey powder, and cheddar cheese sold on the Chicago Mercantile Exchange. The feds jinker with the numbers to come up with the mailbox price, or the price that the farmer actually receives.

So. What have we learned?

• The government sets the price farmers sell for
• Some farmers want to “level the playing field” by having the government also limit how much they can sell.

Where else could this plan this work? (1) Since the Obamanation owns General Motors, can we expect to see car sales limited to, say, 4 million units annually for all sellers and no more than 50,000 Chevy Volts sold prix fixe $65,000? If GM wants to sell more, the remainder must sell for $3,000 each. (2) Perhaps the feds should limit the oil companies to 15,680,000 barrels/day (about 5 million per day below current consumption) and fix the price at $180/barrel. Any production over the 15 million must be sold for $10/barrel. (3) Next, all manufacturers of men’s knit shirts will be held to 686 million units next year and the price set at $21 each wholesale. Anything over 686 million units must be wholesaled out for $6.

Did any of that really make sense to you?

Things that should be simple seldom are:
Try reading the Federal Tax Code

Got milk? Maybe, just maybe, farmers should look for a better way to price their milk instead of beseeching the feds for yet another set of regulations to hamper them.

Posted in What? Are They Nuts?, Marketing, Politics & News, Random Access | 3 Comments »