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Dairy Farmers May Have to Get Big to Survive, says Perdue
In a state losing two dairy farms a day, Agriculture Secretary Sonny Perdue said on Tuesday that it’s hard to make a living with a small herd of cows. The “economies of scale having happened in America — big get bigger and small go out,” Perdue said at a dairy show in Wisconsin, in comments assailed as cold-hearted.
Dairy farming, like the rest of U.S. agriculture, is consolidating into fewer farms with larger production. From 2012 to 2017, the number of dairy farms in the nation fell by 20%, to 40,336 farms, according to the latest Census of Agriculture. Some 35% of milk comes from large dairy farms, with more than 2,500 cows, and 45% comes from farms with less than 1,000 cows. California and Wisconsin are the two largest dairy states, with one-third of dairy sales.
Asked if small farms need to get larger to survive, Perdue responded, “That remains to be seen,” according to the Milwaukee Journal Sentinel. “Everyone will have to make their own decisions economically whether they can survive. I don’t think in America for any small business we have a guaranteed income or guaranteed profitability of survival. That depends on each and every farmer and dairy farmer.”
Small dairy farms, with less than 100 cows, produce 13% of America’s milk, down from 17% early this decade. Speaking at the World Dairy Expo in Madison, the state capital, Perdue said “it’s very difficult…to survive milking 40, 50, 60, or even 100 cows, and that’s what we’ve seen.”
The president of the Wisconsin Farmers Union, Darin Van Ruden, who produces organic milk, said farm policy should do more for small farmers. The AP quoted him as saying, “Do we want one company owning all the food in our country?”
“What I heard today from the secretary of agriculture was there’s no place for me,” said dairy farmer Jerry Volenec.
For the most part, U.S. farm policy is neutral on farm size, offering the same support rates to large or small producers. Perdue stated economic orthodoxy about factors, such as rising productivity and the capital-intensive nature of American agriculture, that force operators to look for economies of scale that generate revenue. Groups such as the National Farmers Union say farm subsidies should be directed toward family-size farms.
Minnesota Rep. Angie Craig, a member of the House Agriculture Committee, said Perdue’s suggestion that small farms might not survive was “unacceptable. Farms aren’t just businesses, Mr. Secretary. These are farm families and ways of life. I’ll continue to stand with my farmers every step of the way,” said Craig on social media. Another Agriculture Committee member, Chellie Pingree of Maine, tweeted that dairy farms “are the backbone of rural economies. We should be doing everything we can to preserve them.” Craig and Pingree are Democrats.
The insurance-like Dairy Margin Coverage subsidy created in the 2018 farm bill is weighted toward coverage of the first 200 cows in a herd, “giving extra assistance to smaller producers,” says the National Milk Producers Federation. The USDA has paid nearly $300 million to dairy farmers so far this year. Payments are triggered when the gap narrows between feed costs and the farm-gate sales price of milk.
“A thriving dairy industry is crucial to rural communities across the U.S. and, while consolidation is a fact of economic life, a diverse dairy industry is one of our nation’s agricultural strengths,” said Jim Mulhern, NMPF chief executive. “We will continue to fight for the interests of all dairy producers as our industry evolves.”
Nearly 700 dairy farms went out of business in Wisconsin in 2018 and the state “has still been losing more than two dairy farms a day this year” despite a recent upturn in milk prices, said the Journal Sentinel.