by Andy Szal
WisBusiness.com 6/26/10
Top Wisconsin lawmakers today asked the federal government to seek stronger
anti-trust standards and greater price transparency to help the state's
struggling dairy industry.
Gov. Jim Doyle, both the state's U.S. senators, Madison U.S. Rep. Tammy
Baldwin and state Agriculture Secretary Rod Nilsestuen each joined a
workshop held in Madison by the U.S. Departments of Agriculture and
Justice. U.S. Agriculture Secretary Tom Vilsack and Assistant Attorney
General Christine Varney hosted the event, the third of five forums held
around the country to address anti-trust issues in agriculture.
Doyle praised the state's efforts on the dairy industry during his tenure,
noting that the state is trending up in milk production while California is
falling, and that America's Dairyland remains poised to keep its national
cheese production crown for the foreseeable future.
"We are doing everything we can to get the economic incentives lined up
correctly," Doyle said, pointing out regulatory and farm siting reform as
well as the dairy modernization tax credit.
Other officials gave a much bleaker assessment.
U.S. Sen. Russ Feingold, D-Middleton, praised the Obama administration for
reversing course from the Bush administration, which he said largely
ignored anti-trust issues in favor of larger companies. But he said the gap
between market dairy prices and the pay level for farmers has only
increased since it was first brought to his attention as a state senator.
"What happens between the farm and the consumer to cause such a price
spread?" Feingold asked. "We need to make that determination, and then we
need to act on it."
His Senate colleague, Dem Herb Kohl of Milwaukee, said increased
consolidation among both producers and retailers is likely to blame for
milk prices moving from record highs to record lows during the recent
economic downturn. He added that questions of market manipulation surround
the nation's cheese exchange, which moved from Green Bay to Chicago in
1997.
Kohl said the Chicago Mercantile Exchange is the "tail that ... wags the
dog" in the dairy industry. He also asked for more frequent reporting of
prices and a more representative sample of dairy markets than the limited
participants on the Chicago exchange.
A panel of dairy farmers who testified after the lawmakers was even more
blunt. Darin Von Ruder, a Westby organic dairy farmer, said the federal
government has to step in on cheese pricing since the exhange just left the
state when Wisconsin lawmakers attempted to rein it in.
And Joel Greeno, who farms in the Monroe County town of Kenall, attributed
the increased fluctuation in dairy prices in recent years almost entirely
to the Chicago exchange, which he called a "highly leveraged, thinly traded
market with few players."
"It went from fairly stable ups and downs to looking like a heart monitor,"
Greeno said of prices over the last 60 years. "And it can't look like a
heart attack."
Baldwin said she has been taken aback by the "human toll" of the industry's
volatility, saying that farmers who've been in the business for generations
are having difficulty paying bills or getting credit to expand or even keep
their farms.
Nilsestuen added that the dairy industry, particularly in the Upper
Midwest, has largely resisted the massive consolidation that has plagued
other sectors of agriculture. But he said the future doesn't look good for
farmers unless the federal government focuses more attention on the
production of dairy rather than consumers.
"Farmers don't want guarantees, but they want predictability," Nilsestuen
said.
Vilsack said he's hearing a consistent message from dairy producers around
the country, which he said is a fairly new phenomenon. He vowed to examine
the issues brought up at the forum with other federal agencies.
"The fact that we've gone in ten years from 111,000 dairy farms in this
country to 65,000 isn't just simply because people have become more
efficient," Vilsack said. "While that may be true, I think we heard today
the difficulty that many producers both large and small have in a
marketplace that they feel is not responsive and not as balanced as it
needs to be."
