Minnesota farmers are considering ways to prevent the closure of small dairies during a sustained slump in milk prices.
Roughly 80 farmers recently gathered in Greenwald to voice concerns about the loss of small dairies, which face higher milk production costs than mega-dairies, the Star Tribune reported.
Minnesota has seen more than 1,100 dairy farmers leave the industry in the past six years. Many have reached a breaking point, as the median income at a dairy farm in the state dropped from about $43,000 in 2017 to less than $15,000 last year.
“We are going through a massive, massive structural change that I don’t think is for the better,” Dick Levins, a former economics professor at the University of Minnesota, told farmers at the meeting.
Since 2000, more than 64,000 small dairies — those with fewer than 200 cows — have shuttered across the country. Meanwhile, the number of mega-dairies —those with 1,000 or more cows — has more than doubled.
The U.S. Department of Agriculture estimates that it costs a farm with fewer than 200 cattle about $16.28 to produce a hundredweight of milk, which is the amount it takes a single cow roughly a day and a half to make. The number accounts for the costs of feed, taxes, insurance and hired labor.
The USDA estimates that producing a hundredweight of milk costs a dairy with more than 1,000 cows only about $14.61.
Levins outlined a proposal to address the “operating cost imbalance” between small and large dairies. The legislation hasn’t been written, but it would make emergency federal payments to farmers based on production costs.
Small dairies would receive more money per hundredweight of milk produced, while the largest dairies wouldn’t receive any federal funds. The plan would cost the government roughly $2.8 billion per year.
Local farmers also discussed two long-term proposals to limit large dairies’ market advantages.
The National Farmers Organization called for mandating higher prices for milk produced by smaller dairies, while the Wisconsin Farmers Union suggested imposing a “market access fee” for dairies that want to expand. The fee revenue would then go to farms that haven’t expanded.
Neither proposal has been crafted for legislation yet.