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WisBusiness: State officials look to feds for dairy industry support
6/26/2010

By Andy Szal
WisBusiness.com

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."

Listen to Vilsack and Varney following the panel discussion here.
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