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Cash-strapped dairy farmers pin hopes to legislative action
Four years ago when Andy and Erin Nagel started their dairy farm in Allerton, they thought they were embarking on the life they always wanted.
“We wanted to live on a farm, to be close to home, to raise children in this lifestyle,” Erin Nagel said. “This was exactly what we wanted.”
Due to low milk prices, however, the Nagels and other Iowa dairy farmers are hurting.
“We didn’t know it would be this bad, or that it would stay this bad for so long,” Erin added.
The couple, who became parents 18 months ago to twins, a boy and a girl, had begun construction of a milking facility next to their home and were making plans for a house addition. The barn, which got as far as a frame and a concrete pad, now sits mostly idle except for the work that Andy does himself.
“I’m not sure what we are going to do if things don’t turn around,” Erin said. “We won’t keep milking if we can’t make money doing it, but I don’t know exactly what we will do.”
The Nagels aren’t alone. Throughout Iowa and the nation, dairy farms are feeling the crunch of low milk prices, earning the lowest prices for their products since the 1970s.
Jerry Harvey and his two sons milk 70 cows twice a day on their farm in Wayne County. His family is also feeling the squeeze and worry that they will not be able to remain in business. Last year the farm garnered a monthly milk check of about $6,500 per month. Now they receive just over $2,100.
“We aren’t making a living anymore,” Harvey said. “We aren’t even bringing in enough to pay our feed costs. Every month we are borrowing money just to stay afloat, and I don’t know how much longer we can continue.”
Milk checks paid to farmers are primarily based on three components: Protein, butter fat and other solids. The value of those components, according to Wisconsin dairy farmer Joel Greeno, are determined by formulas from the U.S. Department of Agriculture.
“For the past few months, the value for other solids has been assigned a negative value,” Greeno said. “That means that although the milk processor is taking that component and using it, I’m actually having money taken from my milk check for it. It’s worse than zero. It’s now a liability.”
U.S. Sens. Arlen Specter and Robert Casey Jr., both Democrats from Pennsylvania, have introduced a bill that dairy farmers believe would help ease decreased prices. The bill, dubbed the Federal Milk Marketing Improvement Act of 2009, would strengthen the price of milk paid to dairy farmers by requiring that all milk produced in the United States be priced using a national average cost of production. The USDA would reassess milk prices each year, ensuring that extreme price volatility is mitigated.
Tom Harkin and Chuck Grassley, Iowa’s two U.S. senators known nationally for their work on agricultural policy, are aware of the legislation proposed by Specter and Casey, but neither one is optimistic that the proposal will garner precious floor debate time in a Senate currently busy with health care and energy reform.
“We have some things already in place that can help,” Grassley said in a telephone interview with The Iowa Independent. “But I’ve got to be candid with you: It’s not going to be enough to make up the cost difference that farmers are now experiencing.”
Grassley said that for the first time in history, dairy farmers do have feed incentives based on production costs written into the farm bill.
“But, you know, it’s kinda like a pimple on an elephant, compared to what the problem is,” he added. “It is, however, the first time Congress has ever recognized that a formula for price supports ought to be adjusted because of increased costs of production.”
Harkin, who briefly addressed the dairy crisis on his weekly conference call with reporters, is as skeptical as Grassley about the Specter-Casey bill’s chances of emerging from committee and getting a vote on the floor of the Senate. But Grassley said there may still be other opportunities for reform on the federal level.
“I’ve been in Congress long enough to see, on three or four occasions, between Specter and [Vermont Sen. Patrick] Leahy, things that have gotten things done — especially to help dairy farmers — in addition to the farm program,” Grassley said. “They’ve done it through the annual agriculture appropriations bill. So the chances of doing something that way, I would guess could happen. But I doubt if it would be along the lines of the Specter-Casey bill.”
Harkin also thinks there are opportunities for Congress to help dairy farmers in lieu of the Specter-Casey bill. He is hoping that the government can increase demand for dairy products (thereby raising prices) simply by leveraging its massive purchasing power.
“I’ve called upon the government to do more in terms of purchasing dry non-fat milk solids and non-fat dry milk and to use that in our foreign feeding programs,” Harkin said. “It is a pretty good bargain right now for the government to purchase that, and it is a good, usable commodity for people in other parts of the world who are suffering from malnutrition. That’s basically about all we can do.”
In the meantime, dairy farmers from Iowa and a host of other states are making efforts to raise awareness of the economic realities they face. A group of farmers has planned a Saturday rally at the Manchester (Iowa) Livestock Exchange to call for passage of the Specter-Casey bill or similar federal legislation that could alleviate the problem.
“People believe that this is just one other unfortunate incident because of the existing economy,” Greeno said. “That is just absolutely false. The major three in each of the dairy categories — Kraft Foods being one — are turning major profits. How can that be possible when they are saying that consumption is down, production is up and product can’t be moved?”
A study, quoted by Greeno and released in March, indicates that over-production and decreased consumption are a myth.
“This is just absolutely demoralizing,” Greeno concluded. “No matter what you do, even if you give 110 percent every day on your farm from sun up to sun down, at the end of that day you will not have earned enough to pay your bills. It doesn’t get any more demoralizing than knowing that you did your job and you did it well, but someone tells you that what you just did isn’t valued enough to earn you a living. That’s just wrong when you are producing food for your country.”