Skimming Off the Top
There is something I just don’t get. Why do farmers always seem to forget to keep some of the cream for themselves? At at time of falling incomes and rising prices, surely holding something back makes sense, right?
Or is it that the American Farming Machine has gotten so big, that it can’t see it’s feet any more? Bulked up by big farms, big equipment, and binging on the “get big or get out” mentality, the industrial agricultural complex has outgrown it’s suit and doesn’t know how to adjust. As the economy shrinks, American agriculture has seemingly gone bulimic in an effort to slim down rapidly.
How else can you account for thousands of dairy cattle being sent to slaughter because of a collapsing milk market? As an untried, unproven, unwanted Global Economy trembles, butter, cream and milk are left to sour as people spend less and subsidized overproduction shows it’s flaws. It’s pretty clear that farmers are caught in the middle. Could it be that Farmers just don’t make good business men, especially when playing ball in the Global Marketplace?
I mean, if it takes $1.65 to produce a gallon of milk which sells on the shelf for around $3.50 but the farmer only gets $0.80, that’s either bad economics or stupid business practice. And so Dairymen are selling $2,500 highly productive dairy cattle for $1,100 as hamburger. WTF???
Now, clearly $3.50 for a gallon of milk is outrageous. Hence the shrinkage of the market. Likewise earning $0.85 less than the cost of production is unacceptable. But why does it cost do much to produce a gallon of milk? Don’t tell me that much of the difference between the $0.80 earned and the $3.50 price tag has to go toward production and marketing. The production side of things I can see. There has to be inspections, food safety, cold storage, transportation–because, hey, petroleum will last forever–but marketing? Since when do I need to see an advertisement to remind me I need to buy more dairy products? I eat cheese because I love it, similarly I can’t get enough ice cream. I use milk in my coffee and have been drinking milk since I was a child. If we need to be sold on milk, then something is wrong. If we need air time for milk, then I’ve got some advertisements for fresh air I want to sell you. . . .
So, it’s clear–to me at least–that the production model for dairy, like most modern agriculture is all wrong. If it cost me $1.65 for every gallon I squeezed out of Bridget then I’d be loosing $6.65 a day. Now certainly, it does cost me something to produce my own milk. There is the cost of the sweet girl. There is winter feed, and a place to milk her and some equipment. Figuring I’ll have the old dear for a while, spread out over 5 years, all that runs about $0.90 cents per day–before I milk her. And that doesn’t include the calves she’ll bear which help offset that cost. Even if I never sell a gallon of milk, of the almost 1000 gallons which I will milk from Bridget during a lactation, it will have only cost me around $270 to produce and will have earned me close to $3200 towards household dairy savings.
When I factor in (or should that be out?) the cream and butter we make from that milk, and any cheese we produce along the way, my savings mount up even quicker. But even if I was a licensed Grade A Raw Milk dairy selling milk to a discerning public and trying to recoup the costs of the license, the facility, and the $0.90 per day, I wouldn’t forget about skimming some cream from the top for myself.. And here is where I began this piece. Farmers always seem to forget to pay themselves from the products of their own efforts. Sure it may cost a non-business savvy farmer $1.65 to produce a gallon of milk, but how much could he be saving from his personal food budget by not ever having to buy milk, cream or butter? That’s profit in his pocket, not lost sales. But, really, why is it costing so much to produce the milk in the first place. Farmers are going to have to investigate their model of production in a hurry as consumers turn to cheaper beverages, cut back on fats, and slim down their budgets. Sending cows to slaughter is like that bulimic trying to loose weight. It sounds like it will work, but really nothing much happens. Slimming down takes more effort than just shedding surplus calories, or cows. . . .
Not in a long time has the local agricultural model seemed so good. In terms of saving the dairy industry it may be vital. Smaller herds producing locally has to be a good thing. A dairy with 900 cows can’t be a good thing. Not for the cows, not for the environment, and as they are finding out, not for the farmers. Why not cap that bovine number at 90. Sell less volume, sell a better product, sell it locally, directly for as much or more money and find a cheaper model of production so more profit is realized. With less cows, and less distance to market, a fresher product can be delivered. With less cows it should be easier to keep them on pasture. Less feed needs to be bought in, fewer costly vet bill and medical expenses because the health of the entire heard is improved. And less labor costs–fewer cows mean fewer employees, less equipment. The “get big or get out” mentality has reached saturation, it has burst and is hemorrhaging big-ag farmers quicker than it put small farmers out of business. A centralized 900 cow dairy was never going to succeed. The odds were stacked against it from the beginning. The super-inflated cost of dairy animals in the first place makes it a no-go. Why 900? why not 9 100 cow dairies, or 90, 10 cow dairies?
Economy of scale only works to a point, after which things are too big, too sprawling to manage correctly without lots too much cost or effort. Smaller dairies have worked in the past. When my father in law was growing up his father milked two cows. The cream was sent away and they drank the skim milk or fed it to the pigs. The community has actually gotten smaller here than in the 40’s, many people milking two cows could easily oversupply the market here and send the surplus away and make a profit. International trade, globalism, and the farm subsidy system geared toward overproduction have squashed the small, diversified, family farm. But with the vagaries of the economy and global market in full flux, I think the time is ripe for their return. Just so long as the farmers remember that part of what they earn is in what they keep for themselves.
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