Bigness is killing New York dairy farmers.
Big and ever-growing milk processors and retail chains are controlling the market and driving down the prices paid to farmers, but not passing on the cost savings to consumers.
That was the message of a meeting yesterday at GCC of dairy farmers and the Assistant U.S. Attorney General Christine A. Varney, who is in charge of the Antitrust Division.
From the Buffalo News:
"Our farmers are getting paid less and consumers are paying more," said Sen. Charles E. Schumer, who invited Varney to the meeting. "Someone's walking away with all the money."
Schumer said processors are making record profits at a time when farmers are on the brink of losing their family businesses. He wants the Justice Department to investigate anti-competitive practices in the dairy industry.
Consolidation among milk processors is one of the chief reasons prices paid to farmers has gone down, Varney was told. There are simply fewer outlets for farmers to sell their product to, meaning less competition, and without the competition it's easier for the buyer to set ever lower prices.
In some states, Dean Foods controls as much as 90 percent of the market, and about 70 percent in New York.
From the D&C:
Bill Cook, who milks 1,800 cows near Aurora, Cayuga County, said he used to deal with five different milk buyers who were willing to pay a premium for the high-quality milk his cows produced. Premiums can mean the difference between just paying the bills and actually making a profit.
Meanwhile, Cook said none of those buyers is still operating because they went out of business or were consolidated into larger operations, such as Dean Foods, a giant among dairy processors. Cook had to borrow $500,000 to cover his losses last year.
The Buffalo News quoted a sixth-generation Wyoming County Farmer who used USDA figures to point out that the dairy farm share of retail dollars have dropped from 37 percent to 25 percent in the past three years.
Bigger and bigger retail chains were also blamed for downward prices on milk products. Walmart's outsized pressure for lower and lower prices isn't helping farmers.
"Walmart's 'everyday low prices' applies constant downward pressure on all commodities, squeezing the supply chain while demanding more," said Ed Schoen of Shoe-Acres farm in Phelps, Ontario County. Pricing at Wegmans, on the other hand, is sensitive to the prices farmers are getting, he said.
Barbara Brown, a county legislator in Oswego County, said her district once had 26 dairy farms. Now it has three. She recently sold off her cows and closed her farm.
Varney offered the farmers hope.
"We will not let you down," she said, according to the Buffalo News. "We know the problem you're facing."
Sen. Schumer has called on the federal government to take several steps to help dairy farmers:
- Deal with the consolidation of milk processors and the lack of competition.
- A program called MILC provides aid to farmers when milk prices fall to a certain level. That target price needs to be raised.
- Raise MILC reimbursement from 45 percent of the price difference.
- Reform the milk marketing order system, which helps set commodity prices, used by the USDA. The current system doesn't adequately measure the cost of milk production in the Northeast.
- Return to a dairy compact system that helps New York farmers set prices.
- Pass a Milk Import Tariff act to ensure that milk producers and processors in other countries are playing by the same rules as the United States.