Wisconsin’s Sacrificial Cows

Antiquated federal price controls are propping up huge dairy farms in unlikely states across the US — and helping to kill off small ones in Wisconsin, ‘the dairy state.’

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Dave Meister retired last June as the last dairy farmer in Oneida County, Wisconsin — a region that 50 years ago boasted nearly 200 dairy farms.

Meister’s reason for milking his 40 cows one last time was simple. “Milk prices were falling, and the investment that you had to make wasn’t meeting what was coming in,” he says dejectedly. “I miss it. I wished I could have stayed at it.”

He’s not optimistic about the future of dairy operations in surrounding counties, either. “I see the paper now, nothing but auctions, farmers going out of business,” he says.

That’s true, says Jerry Thiel of nearby Calumet County’s Thiel & Thiel Auction Services. “It wasn’t [the farmers’] intention to get out of the dairy industry, but with the prices what they are, there’s not much choice,” he says.

Wisconsin license plates still proclaim it “The Dairy State.” But in fact, the state’s farms are going out of business to the tune of 1,500 each year. California usurped Wisconsin’s place as number one milk producer back in 1993, and upstart milk industries in Western states like Idaho and New Mexico are booming.

Much of the Wisconsin exodus stems from industry changes nationwide. In today’s corporate-dominated dairy world, the smallest farms can’t compete, and many farm kids have no desire to inherit their parents’ long hours and hard labor. But Wisconsin farmers are being felled by an additional burden: the federal government’s bizarre 60-year-old price-support system, which mandates higher prices for milk intended for drinking than for milk meant for the production of cheese, a staple of Wisconsin dairies. Especially archaic is the provision rewarding farmers with higher milk prices the farther they are from Eau Claire, Wis. Dairy farmers in Dade County, Fla., for instance, get an extra $2.60 per hundredweight for their milk compared to Upper Midwesterners — or around 25 percent more gross income.

The Eau Claire system was introduced back when the dairy industry was clustered in the Upper Midwest and before refrigerated trucks let milk zip from Vermont to Georgia without going bad. Then, lawmakers wanted to make sure the entire country had a fresh, local supply of milk — so, to encourage more dairy farms in far-off states, Congress hiked up the minimum price milk distributors must pay non-Midwest dairy farmers for their product. But now, Wisconsin lawmakers say Eastern and Southern states are milking the byzantine system for all it’s worth.

Milk producers in Texas, for example, have won a large share of the Chicago market, leaving nearby Wisconsin farmers out in the cold — and putting to rest the idea that Texas needs a special subsidy to produce enough milk for local needs. High production in high-price states, such as Vermont with its booming cheese industry, has bottomed out milk prices in Wisconsin.

If the milk pricing system were scrapped completely and left to the whim of the free market, prices would rise 47 cents per hundredweight in the Upper Midwest, according to University of Wisconsin scientist Tom Cox. That would put an extra $7,755 a year in the pocket of a farmer with a 100-cow herd. If fluid-bound and cheese-bound milk were priced at the same level, Upper Midwest farm prices would rise almost a dollar per hundredweight. All of that would have kept Dave Meister in business — that is, if his children hadn’t recently left the farm.

Wisconsin lawmakers have tried to overturn the policies many times, only to be repeatedly foiled by Congressional power brokers using the price regime in political trade-offs.

The most recent milk-price reform effort was scuttled in 1999, when Sen. Trent Lott. R-Miss., managed to delete reform language from a budget bill at the 11th hour. The Wall Street Journal castigated Lott for killing the reform bill to help his friend Sen. Jim Jeffords, R-Vt., who is up for re-election this year. Jeffords’ seat is key to Republicans — and the economic health of dairy farms is crucial to his Vermont re-election. Critics say the controversial New England Dairy Compact, which in 1997 raised minimum milk prices even higher for farmers in six lucky New England states, was the product of similar wheeling and dealing.

Both deals were “last-minute, behind-the-back gyrations” that never would have made it in an open debate, says University of Wisconsin-Madison professor Ed Jesse. “As with any system that enjoys political support, whether it’s a tax break or a corporate loophole, if it has a lot of support in congress, it ends up staying around,” adds Andy McDonald, spokesperson for Sen. Paul Wellstone, D-Minn.

The price system makes particularly little sense in light of Wisconsin’s favorable conditions for dairy farming. Cropp says Wisconsin’s natural milk affinity ranges from a climate that supports cattle comfortably to its well-kept back roads. Farmers can even grow alfalfa as feed with no more irrigation than the frequent rains. Meanwhile, many farmers are raking it in by farming on land never meant for dairy cattle, where the humidity and heat combine to dramatically lower cows’ milk production. “You have 2,000-cow operations springing up in Florida right now!” marvels a staffer for Rep. John Boehner, R-Ohio.

Certainly, times are tough for dairy farmers across the country. Competition from huge Western farms, along with a downswing in prices over the last year, has created a tremendous pressure on dairy farmers in Vermont and Wisconsin to maximize efficiency, which means making herds as large as possible.

Vermonters like Bill Rich aren’t seeing the profits if the Green Mountain State’s dairymen are, in fact, making a killing off the backs of Wisconsinites. Because of low milk prices, he must sell his 40-cow herd soon. “I’ve done [dairy farming] for 25 years. That’s what I wanted to do, but now I’ll have to find something else,” he mourned after auctioneers inspected his herd.

But there are more fundamental principles at work here, too. “It’s a hard situation. Do you subsidize the local hardware store or let the Wal-Mart move in?” asks Susan Ruland of the International Dairy Foods Association. Many see the thousand-cow herds of the Rockies as dairy’s inevitable future, whether compacts and elaborate pricing systems slow down its western migration or not.

And while the current price system may be unfair to Wisconsin, the entire industry has grown up to conform to it. For the rest of the country, a completely free market would be the last straw for family farmers in an industry already moving toward consolidation. “Few family farmers would survive that kind of price shock,” says Sanders’ spokesperson.

Hope sprang once again for Wisconsin farmers last February when Feingold and Wellstone held dairy policy hearings. Hardscrabble farmers and polished analysts spoke for both sides before the Senate Agriculture Committee, but ultimately, few expect much to change. “This hearing was a farce,” Wisconsin Governor Tommy Thompson said after addressing the committee. Rep. David Obey, D-Wisc., told his constituents that the next opportunity for change will be in a 2001 or 2002 farm bill.

Stan Gruszynski, a rural development official with the federal Department of Agriculture, takes an even more fatalistic view: “The days of Wisconsin being dominated by small dairy farms, unfortunately, are over,” he says. His suggestion to diehard ruralites: learn to craft artisan cheeses, or wool-yarn from hand-raised goats.

Even if Congress one day does scrap the pricing system, it’s an open question how many small farmers would stick with their herds. “It’s a certain kind of a living, farming is … It’s seven days a week. You don’t get vacation time or anything,” says Dave Meister, who is now learning a new trade in the touristy area’s thriving construction industry.

Still, all his colleagues are really fighting for is the chance to have the choice of whether to keep on farming.


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