The Maximum Leader’s link to the Louisiana small farmers who began marketing their own milk is a good example of what farmers ought to be doing.
Farmers have had a problem - ever since tobacco prices fell in the Eighteenth century - of trying to compensate for falling prices by increasing production.
I’ll pause while you recall your high school economics course.
The process continues today with the “get big or get out” mentality of most mainstream farmers. These are the same folks who, with farms encompassing square miles of land, cry that they need government subsidies.
But those two Lousiana farmers said, “Screw this! We’ll stay small but become profitable by cutting out the price-setting middleman.” Milk processors are a damned oppresive pseudo-monopoly. Three firms control 90% of the milk processing in the United States and they purposefully keep milk prices down. Farmers today get the same amount for their milk that they got in 1970 yet the price of milk keeps rising. Most farmers react by buying more cows, producing more milk, and selling to the same collectives at the same 1970 price.
But those Louisiana farmers said, let’s just pasteurize the milk ourselves and find our own customers. Milk processors are giving abour 22 cents per pound - around 16 cents once trucking and advertising contributions are subtracted. That’s about $1.20 a gallon gross milk check. Start subtracting the cost of feeding the cows, raising replacements, and equipment loans, it is not a winning proposition.
But if you pasture feed your cows, stay small, avoid building gargantuan kilometer-long barns and multi-million dollar manure lagoons, you still get $1.20 per gallon. Sure, you’ll actually produce less milk without grain supplements, but your healthier cows will last longer, you can sell more heifers to the “sheep” farmers who get “big” (and bankrupt), and you won’t have the debt to service. You’ll make more b producing less. If you are smart like the Louisiana farmers and find your own market, you can jump your price to $3.00 or more per gallon (I would get $6 in Albemarle). That is a winning proposition.
Kudos to the enlightened state of Lousiana (who thought I’d ever write that phrase!) which has allowed agripreneurs to seize the market for themselves and make small farms profitable. Virginia’s requirements for a pasteurization system are so huge as to be an impenatrable barrier to entry for the small farmer. One farm in Timberville, Virginia did borrow a couple of million dollars to set up an approved pasteurization facility. They pulled in money hand over fist - but couldn’t keep up with the banknote (though they also seemed to suffer from the “get big” syndrome). I wonder who that barrier to entry protects? Could it be the consumer? Or the politically connected milk processors?
Government regulation that squelches intitiative, consumer options, and favors powerful business over the little guy makes me want to join the Libertarian party.
At any rate, I was saddened to see that the potential sustainability of two small Lousiana dairy farms has been compromised by poor inter-familial relationships. Can’t we all just get along?
