Jas McDaniel
The author and her husband, Nels Nelson, on their family dairy farm in Wisconsin. President Trump’s handouts to farmers feeling pinched by the trade war are nice, she says, but a drop in the bucket of lost income she and other farmers face due to chronically low prices.
A newspaper reporter called the other day and asked me to describe how the trade war and tariffs were impacting my family’s dairy farm. The best I could come up with was, “it’s the crappy icing on a crappy cake.”
My husband and I farm, with his family, a 350-cow dairy in Columbia County, Wisconsin. My husband’s family has been dairy farming here for more than 100 years. The crappy cake part is the ongoing dairy price crisis, which started long before our current President started tweeting insults at our global trading partners.
The record low prices we’ve been facing began back in 2015. Farmers are used to cyclical prices: up for a couple years, down for a couple years, then up again. But the normal cycles of the last few decades have now shifted, and dairy farmers across the country (and in many parts of the world, for that matter) have been subject to a record-long period of milk prices well below the average cost of production.
“It’s the crappy icing on a crappy cake.”
We’ve seen a slight uptick in prices in the late summer months of 2019, but still, it’s treacherous to try to run a business when every bill that comes in the mail and every loan payment to the bank is a struggle to pay.
The crappy trade war “frosting” is the disruption of export markets, on which the U.S. dairy industry has become increasingly dependent. The U.S. Dairy Export Council reports 2018 dairy exports as a percentage of total U.S. production at 15.8 percent, up from around 10 percent in 2008 and around 4 percent of total production back in 1998.
I’m writing about the situation for dairy here, but most if not all U.S. crops and products grown and raised by farmers for global markets are getting hit by Trump’s trade war. USDA statistics show that in 2017 and 2018, U.S. farms exported 76 percent of the cotton crop, 50 percent of soybeans, and 46 percent of the wheat.
Trump has been handing out money to farmers to compensate for the losses they’ve suffered due to disrupted trade. The money is certainly helpful to farmers, but the payouts are not making anyone whole. For dairy, the payment was $0.20 per every hundred pounds of milk. For our farm, that’s about $1,800 a month. Nice, but considering that the low prices mean losses of $10,000 to $20,000 per month, the handout is miniscule.
But focusing too closely on the trade war distracts from the real underlying problem for dairy farmers and commodity farmers in general. There’s too much. We are overproducing and we have been for some time. We’ve been using the export markets as a dumping ground for an ever-increasing volume of products. It is a crisis of abundance—a crisis of our own making.
The situation for farmers right now is like a burning pile of surplus soybeans—perhaps a better metaphor than my crappy frosting on crappy cake analogy. There was, and perhaps still is, a pile of 650,000 bushels of flood-soaked soybeans on fire in Missouri, this summer. This was last year’s crop, already part of the oversupply in need of demand.
This is the result of our “no brakes agriculture”—or maybe it’s better to say “foot on the accelerator at all times agriculture.” When prices are high, farmers add cows and acres to make up for the money they’ve lost during times of low prices. When prices are low, farmers add cows and acres to try to eek out a living on a higher volume at a lower margin. Both of these cycles create an overabundance that sinks the price.
Fixing our eyes on the Band-Aids offered as trade aid, we take our eyes off the real transformation in agriculture that we need. What if farmers got paid a decent price and produced to the actual demand? This would cut down on the actual and metaphorical burning piles of surplus product.
Fixing our eyes on the Band-Aids offered as trade aid, we take our eyes off the real transformation in agriculture that we need.
We need agricultural pricing policy reform that includes ways to balance supply with demand. The federal government is highly involved in agricultural pricing in this country—so we need the federal government to be involved in this. For dairy, I urge people to check dairytogether.com, to tune in to the farmer-led movement for just such policies.
In addition, we’ll need to help farmers get down off of the burning pile of commodities. If you’ve built up your farm business based on this no-brakes system, you can’t just come to a screeching halt.
Instead of trade-aid bandages, let’s assist farmers in transitioning to crops and production systems that provide a higher value over the long term. And let’s redouble efforts to build up local and regional markets for farmers and consumers, making us less dependent on global markets.
I am not suggesting we disengage entirely from global markets. Let’s work on unilateral and bilateral agreements that support family farmers in all countries, rather than pitting them against each other.
Two years ago, at the outset of Donald Trump’s trade sabre-rattling, we were told that the Canadian dairy supply management system was destroying Wisconsin dairy farmers. No. It’s not. The Canadian system is protecting its family farmers.
It would be nice to have a U.S. system that did the same.