Here & Now

Holman Talks About State's Dairy Market Struggles

Frederica Freyberg:

In tonight’s look ahead, while it’s not been confirmed by state ag officials, reportedly most of the dozens of Wisconsin dairy farmers left without a buyer for their milk have now found processors. Just ahead of being cut off May 1st. It was April 1st that their processor told about 75 farmers they could no longer buy their milk blaming curtailed Canadian imports. Since then other processors have picked up contracts. But for any farmer not picked up the choices are bleak. Going out of business or dumping their milk. The farm family we spoke with earlier this month did find a processor just in time. In trying to address the situation, Governor Walker announced this week the Wisconsin Housing and Economic Development Authority will offer more favorable loan terms to dairy farmers and processors allowing them to access capital. The larger takeaway of all of this from the owner of a small farm near Stevens Point is that quote dairy farmers are simply producing too much milk. Chris Holman is also a district director for the Wisconsin Farmers Union. Thanks for being here.

Chris Holman:

Thanks for having me.

Frederica Freyberg:

These farmers just went through a very anxious time, perhaps a few will face some very difficult choices without a buyer for their milk. First tonight your response to them.

Chris Holman:

Well, it’s been kind of a raw deal for them in the sense that they got that letter out of the blue. So the only thing I can say for them is that thankfully there are a lot of people working really hard trying to find solutions for them. Hopefully they’re long-term solutions and obviously everybody is hoping the best and that they’ll all be able to keep milking.

Frederica Freyberg:

As we noted your takeaway in all of this is that Wisconsin is producing too much milk. Describe what you call the vicious cycle of over production.

Chris Holman:

Sure. Well, when the price of milk is up people often want to produce more milk so that they can take advantage of that, which makes sense. But then also when the price goes down, production will go up because you need more to cover your bases, pay your bills, things like that. In either scenario you are producing more and more milk. Now if markets are down and you flood the market, then prices also go down like we have now. It kind of exacerbates the problem.

Frederica Freyberg:

But meanwhile Wisconsin has been promoting more milk production. How so?

Chris Holman:

In 2012 the governor put the dairy 30 by 20 program in encouraging farmers to meet 30 billion pounds by the year 2020. I believe we met that last year so we’ve certainly exceeded all expectations there. However, that program also seems to have exacerbated the problem once again in the sense that despite all the volatility in milk markets year to year in the past and presumably into the future, the message from, at least that program at the state level, was to keep producing more and more despite the fact there was not a place for it to go.

Frederica Freyberg:

Who wins under that program of trying to initiate more production of milk?

Chris Holman:

Well, it’s a tough question. In a sense the people who are able to weather the storms better are generally speaking the larger farms who often can produce at lower cost of production and they tend to have more advantages with banks. They can kind of float themselves through tougher times and Wisconsin is losing over a dairy farm per day without any of this situation anyhow. That production then gets picked up by those farms.

Frederica Freyberg:

So is this just the price of progress and modernity with these larger farms?

Chris Holman:

A lot of people look at it that way. If you think of it strictly in terms of efficiency, then yeah. But then why not just have one big dairy farm somewhere in the center of the country. Realistically what we are looking for is the rural America. These farms are kind of the backbone for rural America. If they disappear so does rural America along with the infrastructure and everything that’s in place and has been dwindling somewhat over time but is something that farmers at all scales benefit from.

Frederica Freyberg:

If we could find new or growing markets for the milk it would pay off presumably. How are we doing on that score finding new markets?

Chris Holman:

That's a great question. You know, exports are up, so in terms of finding markets, there seems to be places for it to go. Though a lot of the expectations coming out of China were not met and then couple that with the European milk coming online and dropping its quota system and bans of imports through Russia. Globally you have a glut situation where there is a lot of milk and despite any sort of improvements in the American market for exports we’re still saddled with a bunch of milk being dumped. A lot of milk being processed at full capacity everywhere you go. Ultimately speaking, it’s just a situation with no end in sight.

Frederica Freyberg:

Do you think the new WHEDA loan terms the governor announced will help?

Chris Holman:

Potentially they could help some. I’m personally not a big fan of trying to find ways to loan your way into the future. If you are highly leveraged it makes you more vulnerable and in the farm crisis of the 80s that was a big deal with high interest rates. Interest rates are low right now and it’s not exactly like the 80s. If you continue to encourage people to leverage themselves, then they kind of get stuck on the treadmill of sorts, trying to pay off those bills, pay off those loans. And if there is no markets and no place for your milk to go anyway, then it’s kinda all for naught.

Frederica Freyberg:

Chris Holman, thank you very much for joining us.

Chris Holman:

Thank you, too.