Dear Editor,

Gone are the days of local town creameries competing with each other and selling a commodity product such as cheddar cheese or butter. With consolidation of the dairy industry, there are fewer places for farmers to sell their milk.

Recently two international firms, Saputo and Agropur of Canada, acquired dairy companies in Wisconsin. Saputo purchased Alto Dairy and Agropur bought Trega Foods. Last year, Saputo also purchased a large cheese plant in Tulare, Calif. from Land O Lakes.

In the past 10 years, cooperatives and corporations have been merging and changing from regional companies to national companies. Two dairy companies of note are Dean Foods and DFA. With mergers and acquisitions come plant closures and new plants constructed in areas of the country that have not been traditional dairy areas, such as New Mexico and Texas.

Plants have been built that are very modern, with large capacity and are fueled by cheap raw milk. Nowadays, mergers and acquisitions are being made by more international firms.
During the past several years, premiums paid for raw milk have fallen along with quality, volume and trucking incentives; more costs are being pushed back down to the milk producers. Dairy plants are also getting the price squeeze from large retailers like Wal-Mart, and again these actions are pushed back to the producer in the form lower prices.

Dairy producers have had a good year as far as price levels go, 2007 showed an All Milk Price of $18.04 compared to the 2006 all milk price of $12.90. Predictions for 2008 are coming in at the $17.20 level.

But this price will make it hard to cash flow with higher feed, fuel and fertilizer costs.

How can milk producers fight this trend of inadequate income?
Well, organizing together allows producers to speak with one voice and bargain for higher prices with giant firms that are trying to buy milk as cheaply as they can. And, producers need to cull more cows to tighten supply.

Let’s work together to make 2008 a year that strengthens milk producers’ voice and bargaining power.

Sincerely,

Nick Nerheim
Milk Sales Coordinator
National Farmers Organization