In early February, I came upon an interesting article in the Wall Street Journal. It said the total numbers of farms in America will soon be under 2 million. That’s important, because we haven’t seen that number since the Louisiana Purchase in the mid-1800s.
The article detailed America’s shrinking role in global grain markets. That, coupled with a strong dollar and higher seed costs, are driving producers out of business, the piece said. In fact, planted wheat acres have fallen to the lowest number in a century.
The U.S. Department of Agriculture says farmers’ income will drop 9 percent this year, the fourth straight year of declines. At a time when the cyclical farm economy is showing its down side, having as much market access as possible grows in importance. Our grain producer members, whatever the crop, are operating their businesses in a global market. Tools like crop insurance, the ability to market together, manage risk and operate in an agriculture climate friendly to producers will be key as the next farm bill is developed.
At National Farmers national convention in Springfield, Mo., at the end of January, I spoke about agricultural prices in several sectors falling below farmers’ production costs last year. In fact, 1,400 loads of milk were disposed of in the Northeast and Mideast dairy regions because there wasn’t access to a stable market. In the first eight months of 2016, the amount tallied up to 43 million gallons of milk that was used in feed or disposed of on farms.
Dairy producers are seemingly at the mercy of the industry climate, because of consolidation and plant closures. And many of these processing plants who closed facilities had been good partners that we appreciated. At National Farmers we understand the need for healthy finances on the buy side of the marketing equation, as well. There’s a balance, to be sure.
Wisconsin Farmers Union in December released the results of its Wisconsin survey of every dairy producer in the state, which WFU conducted in the fall. Sixty-three percent of the more than 1,000 respondents said they lost money based on cost of production and prices received. Of those dairy producers, 765 said they had signed up for the Margin Protection Program. So, the solution isn’t in this particular program.
Milk producers are dealing with only a 3 percent surplus, which has created a 40 percent price drop. For farmers, that doesn’t seem commensurate. At National Farmers, we are actively pursuing new partnerships to address the situation in the Northeast. And we’re proposing a two-tier dairy price structure, a growth management program.
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For producers, remaining financially stable means a combination of things. As marketers, at National Farmers, we suggest marketing together and using risk management tools, whether you’re in the dairy, grain or livestock sector. Still, market access remains a concern for many farmers.
In the beef sector, when Tyson announced it was no longer processing Holsteins, a price decline quickly occurred, $30 live in the cash market, $45 in-the-meat regionally on a cash basis. Dairy beef is an important part of beef supply in the United States, and we stand behind our cattlemen who feed and finish Holstein steers.
I’m happy to say that our Livestock Division is continuing to work for producers’ benefit as they talk with Holstein processors to define our contract details and develop new partnerships. All of us in the cattle industry want to assist all cattlemen. Right now, it’s the Holstein producer who is facing a challenge, and we’re working to solve this market access concern.
We’re proud to serve American farmers. Together, many organizations and companies, in an agriculture-friendly setting, will be part of making 2017 a better year for American grain, livestock and dairy producers.
• Paul Riniker, of Greeley, is a cattleman and vice president of National Farmers, a membership organization which markets milk, livestock and crops, assists producers with forward contracts and futures options, and advocates for equity in policy and agricultural industry transactions.