SALEM, Ohio – Proactivity is the name of the milk-price game at National Milk Producers Federation.
Instead of continuing to watch milk prices slump, the federation decided to take the market into its own hands and create a voluntary national program to generate higher milk prices.
Possible diversion. Plans are still sketchy, but the staff is looking at three concepts focused on manipulating the supply side of milk production, according to federation spokesman Chris Galen.
* a product removal program where finished milk products would be moved out of the U.S. market.
* a diversion plan where producers would be paid an incentive to curb future milk production.
* removing cows from farms to decrease the overall dairy herd.
Galen says no final decisions have been made; these are just concepts they are considering.
Although they’re now examining possibilities with the supply end, it doesn’t rule out the eventuality of working with national and local dairy checkoffs, Galen said.
The federation’s board voted unanimously March 13 to move forward with plans for the program, called Cooperatives Working Together, and let the staff develop the blueprints. The board will meet again this month to review the finished plan.
The board represents 70 percent to 75 percent of milk producers, Galen said.
Time is of the essence, and Galen said the federation hopes a plan will be in place by May, June at the latest.
Skepticism. But Penn State ag economist Ken Bailey says not so quick. He’s seen ideas like this before, and they don’t work.
For example, he said, if finished milk products are moved out of the U.S. market, it will “infuriate trading partners.” For this, he points to MPCs (milk protein concentrates), an import that has recently caused controversy among farmers.
In addition, producing less milk with an incentive or because there are less dairy cows won’t work either.
To make his case, he says if farmers in Pennsylvania are producing less milk than normal, a farmer in California will see this as an opportunity to expand.
“Somewhere, someone else is going to make up for the loss,” he said.
Spinning wheels? Rather than being a solution, Bailey said this kind of program just makes producers feel like they’re getting something done since they’re going to meetings and setting up programs.
Instead, he said farmers need to use the futures market and make good business plans to prepare for the bad years.
“We wait until we’re at the bottom of the market and try to find a solution then,” he said. “The way to be ahead is to look ahead – like a business.”
Agreement. Even though a dairy expert isn’t keen on the idea, groups like National Farmers Union and Dairy Farmers of America stand behind the program’s concept.
National Farmers Union’s position has always been to promote production restraints and getting at the supply end, said Tracy Beckman, government relations representative.
On the same note, Dairy Farmers of America pushed this idea to the federation, said Connie Finton, Mideast representative.
One organization can’t do something like this alone, the Tuscarawas County milk producer said.
Instead, she says, the federation is the best way because the majority of co-ops are associated with it.
“It’s important for people to understand that it’s the industry stepping out to solve industry’s problems,” Finton said. “The dairy industry is solving dairy’s problem.”