After four years of low milk prices, dairy farmers in both California and throughout the nation are looking to ease their industry’s depressed economy by taking a cue from their neighbors up north.
The California Dairy Campaign this week welcomed dairy farmers from Canada to their annual meeting, who shared with members how they balance milk supply with profitable demand. The dairy farming sector in Canada operates under what is known as supply management, which ensures farmers receive a fair return, derived completely from the marketplace, on their capital and labor costs.
Milk prices paid to dairy farmers have been well below production costs for years now in the U.S., CDC Executive Director Lynne McBride said. Milk prices have dropped to $14 per hundredweight, compared to $25 per hundredweight in Canada.
“It’s creating a crisis not only here in California, but also across the country,” McBride said.
In the midst of a failing dairy economy, which over the past 50 years has seen California go from the home of nearly 20,000 dairies to now just under 2,000, the CDC and other farmers in major production states like Wisconsin, Minnesota and Michigan are hosting meetings with Canadian dairy farmers to see just how supply management can help the situation.
“Canadian farmers are attempting to throw us a lifeline by explaining their system and how it could offer solutions to the crisis that dairy farmers across the country are facing,” McBride said. “Some people have been aware of the Canadian system for years, but I think they’re taking a fresh look at it and what’s working up there.”
In addition to ensuring fair returns, supply management also provides processors with a stable supply of milk so that they can properly plan production, and also makes sure consumers have a consistent market of milk and milk products of the highest, safest quality at a fair price.
In order to achieve this, Canadian dairy farmers act as a unit, working together negotiate prices and adjust milk production to meet consumer demand. In doing so, supply management ensures Canadian prices remain relatively stable and less subject to the volatility of the global market.
“We see that as a model for policy changes here in the U.S.,” McBride said.
Currently, the federal government sets the minimum milk price paid to farmers based on a weekly survey of what consumers pay for dairy products like cheese and butter. This is heavily impacted by the exporting of dairy products.
“The Canadian dairy farmers told us that the U.S. has tied the fate of its dairy farmers on exports, and that’s a really volatile and unpredictable market,” McBride said. “So, we’re kind of on a roller coaster in terms of what’s happening with other countries when they make decision of whether to buy dairy products.”
Canada has ensured its primary dairy market is its domestic market, McBride added, rather than relying completely on exports.
“Exports are an important piece of the market, certainly, but we can’t afford to have the fate of dairy farmers rest on it,” she said.
The meetings with the CDC’s Canadian guests in Merced and Hanford this week were well-attended, with many dairy farmers looking for help.
“Low milk prices have caused such unprecedented loss that they either want to go out of business or they’re not sure how much longer they can hang on,” McBride said. “These are multigeneration dairy farms who have been efficient and successful, but because our pricing is all out of whack, it’s jeopardizing their future.”
Moving forward, McBride said that if dairy farmers want to implement supply management similar to Canada’s, they need to contact both lawmakers and dairy leaders about the issue. While farmers were skeptical about the method before, they now seem hopeful, she added.
“There’s profit being made and Canadian farmers have found a way to capture that profit,” McBride said. “we think we need to figure out a way to replicate that here.”