October 25, 2010 | By Louis P. Longo (Hoard's Dairyman)
Are Mega Operations a Threat To Family Farms?
ONE of the enjoyable things about retirement is that it gives me time to visit area dairy farms and chat with the owners regarding their operations and the dairy economy in general. Because, on occasion, I write articles for Hoard's Dairyman, they supply me with a lot of information and personal opinions, that otherwise might not be obtainable. They spare no words in expressing their opinion, good and bad, regarding my writings and other articles in Hoard's.
The price of milk and its cause always is a sore subject. Not realizing it, they are providing me much food for thought and writing. One issue in particular is the future of the so-called "family farm."In my conversations with the smaller dairy operations (250 cows or less), the subject of the large mega dairy operations nearly always come up. Most argue that these large operations are a threat to "family farms" and are the prime cause for surplus milk supplies and the low prices. As I view them, their arguments are not entirely based on fact. They argue that the family farm expands because of need while the mega farm operation expands because of greed, I do not agree.
The demise of the "family farm" over the past two or three decades was self-imposed ... not brought on by others. There have been great changes in farming technology such as free stall housing, milking parlors, computers, value-added markets, and so forth. All of these changes came up gradually, and some families did not adapt accordingly. Therefore, they could not survive the ever-changing dairy economy. The gradual changes in dairy farming technology bring up an old adage: "If you were to throw a frog into a pot of hot water, his reflexes are so great that he would jump out unharmed. However, if you were to take the same frog and place him in a kettle of cold water, and gradually increase the heat to a scalding point, you will kill the frog." So it was with the smaller operations. They found themselves in hot water when it was too late. Of course, high land values also played a big part.
What's a family farm?
In my conversations with these smaller farmers, they continually talked about the "family farm . . . the. family farm." How do you define a family farm? Is there a true definition of such an operation? Is it the size of the operation? Is it a farm that was handed down from generation to generation?
As I see it, there is no relation between size and a family farm operation. I know of a number of dairy operations that milk more than 1,000 cows that are, in effect, family operations. One in particular has well over 1,000 cows with four family members involved in the operation and ownership. They did not expand because of greed, they expanded as the family_ grew and came into the operation. The third generation now is the operators. Rightfully, they call themselves a "family farm," although they do have eight employees. I visited a ISO-cow operation which is run by father and son with two part-time helpers. They also regard their operation as a "family farm."
The label "family farm" in some ways gives a false impression to the nonfarm community. Consumers may visualize the family farm as a sacred operation where only family members do all the work. The "title" musters much compassion and sympathy from our city cousins when anyone threatens its well-being. The label "mega dairy farm" gives the impression of an existing monster, ready to eat up all family operations when, in effect, it itself is a family operation and not an individual milk price killer or small-farm destroyer.
Who can we blame when the price of milk is too low? Government programs? Mega farm operations? It is and always has been the economics of supply and demand. It is the same for any marketable product.
Contrary to what some may want to believe, the "mega farm" is not the only culprit, it's all milk producers in general. When commercial airlines have low consumer demand, what do they do? They reduce their flights. When the price of milk drops, what do many dairy farmers do? They add cows in trying to have adequate cash flow to the business. I did that when I was farming, and my operation was considered by all who visited as a family farm.
Finger pointing never has solved an economic problem. It only builds animosity and fosters lack of unity among our own people. Total cooperation among all dairy farmers is what is needed to balance supply with demand. Cooperative ownership of the surplus milk is by far the best way to balance supply with demand, and it cannot be accomplished with this "finger pointing" separatism that seems to exist.
As I pointed out in a previous article (March 10, 2010, page 188), the Yankee Milk Cooperative (now Agri-Mark) in 1973 owned partially all the surplus in the New England market and was successful in obtaining substantial over-order premiums. They amounted to more than $30 million to dairy farmers within 22 months. There was no finger pointing at that time ... it was a total unified accomplishment.
Getting back to the family farm ... I have my own definition. It is a farm, no matter how large or how small, where all ownership and a substantial amount of management is supplied by family members. I consider this a politically acceptable definition.
This type of farm is a very economically competitive entity with no fear of possible threats from large mega farm operations. Why? Because the cow is an individual creature that produces best when catered to. Most of these farms have a very low cull rate, relatively short calving intervals, and low calf mortality rates giving them the possibility for selling bred heifers. If drastic drops in milk prices were ever to occur, and the possibility does exist, the mega farm operations stand to lose more or even collapse whereas the family farm as I have described it will be more likely to survive under the worst economical condition. Here's why.
When a good bit of labor is family, the labor cost is actual income to the farm whereas the nonfamily farm's labor cost, workmen's compensation deduction, health, and other insurances are out-of-pocket costs. As I see it, those farms hold within themselves cost items for self destruction when a time of lasting economic disaster ever occurs. Family farms by far are the most competitive entities in farming.
The surplus milk problem must be dealt with by all, big and small alike. Total cooperation will be needed to be successful in balancing milk supplies. As I see it, dairy farmers are like the proverbial frog in the pot of cold water, and surplus milk is the fire that is gradually heating. The more the surplus, the greater the heat. Are you going to sit still and be ~ scalded or do something about put ting the fire out? The easy thing is to blame the big guys who are sitting in the kettle with you.
