Americans love dairy products, but right now the current agricultural market prices do not. Amid declining prices and instability from farmers, many are being forced to dump tens of thousands of gallons of fresh milk as reported by the Milwaukee Journal-Sentinel.
About 7 o’clock Tuesday night, Golden E Dairy got the call that any dairy farmer would dread. They were being asked to dump 25,000 gallons of fresh milk a day because there was no place for it to go as the marketplace for dairy products has been gutted by the closure of restaurants, schools, hotels and food-service businesses.
An hour later, the family-run farm near West Bend opened the spigot and started flushing its milk into a wastewater lagoon — 220,000 pounds a day through next Monday.
It was surreal, said Ryan Elbe, whose parents, Chris and Tracey Elbe, started the farm in 1991 with about 80 cows and grew it into an operation that today milks 2,400.
“We thought this would never happen,” Elbe said. “Everybody’s rushing to the grocery store to get food, and we have food that’s literally being dumped down the drain.” (source)
A similar thing happened with fruit and grain during the great depression. In the early years, there was the mass destruction of crops because of rapidly declining prices. When one adds to that how these farmers are likely being forced to destroy because they sign contract with purchasers that if they do not destroy them they will be taken to court and lose for a breach of contract.
It does not matter if the milk could be repurposed and sold to stores or not. The issue is (a) breach of contracts and (b) due to the flucuations caused by market prices because of COVID-19, the price may be too low to make a profit- retail buyers will not pay the price asked by middlemen, but demand reductions because of market value, and if the middlemen (wholesalers) cannot earn a profit, they will force the destruction of reserves.
Even if there was a farmer who wanted to turn the milk into cheese, aside from contract issues, there are certain heath standards- many of them overzealous- for the processing of milk into cheese. This requires expensive equipment, let alone getting the product to market.
No matter what happens, the farmer loses and so does the public.
In a similar comparison, this dumping of milk is paralleled in Russia right now with the US suppressing the price of oil to such a point that it is more expensive to transport the oil than it is to sell it. No profit can be made, and so oil rigs are being forced to be shut down.
A similar pattern happened in 1794 in the US with the Whiskey Rebellion. The price of corn for farmers in western Pennsylvania as well as the conditions required to bring it to market was such that farmers could not make money selling corn, because the price would be too low to justify the costs. So instead of destroying the corn, they started fermenting it into whiskey. The government responsded by saying that the farmers had to pay an additional tax just for whiskey that was very high. The farmers became very angry, and accused the government of favoring large distilleries and suppressing their efforts to care for themselves by destroying the farmer’s ability to live. This was how the whiskey rebellion started, and the same thing is happening today, except it is dairy farmers instead of corn growers.
Farmer suicides are a major, major trend, especially amid as many are working 14 to 16 hours a day for salaries close to minimum wage.
The market crisis is only going to worsen the situation of the farmers.