Just to refresh the topic, in case you didn’t read Simon’s commentary, the case was instigated by the animal advocacy organization Compassion Over Killing, which claims that between 2003 and 2010 more than 500,000 cows were slaughtered under a “dairy herd retirement” program.  The group also alleges that the program “bought out smaller farmers and instructed them to kill their entire dairy herds, unfairly increasing the profits of agribusiness giants.”

I want to clear up some claims that the commentary appears to represent in false light about the dairy industry, as well as the “dairy herd retirement” programs.  A more thorough look at the dairy industry as a whole, the Federal Milk Marketing Order system, and the defendants involved will explain more as to what is actually going on with the retirement of herds.

Cooperatives Working Together: A Clearer View

Ninety-nine percent of all dairies in the United States are family-owned. Cooperatives Working Together (CWT) is a program designed exclusively by America’s dairy farmers for the benefit of America’s dairy farmers. It is a voluntary, producer-funded national program developed by the National Milk Producers Federation (NMPF) to strengthen and stabilize milk prices.

First, as you can see, because the CWT is designed by and for America’s dairy farmers and the majority of America’s dairy farms are family-owned, the term “Big Dairy” holds little to no weight.  “Big Dairy” may be a term that describes the size of a dairy (i.e. how many cows are being milked on a facility) but not to claim that the CWT is actually a huge agribusiness-based entity.

Second, why stabilize milk prices you ask? The dairy industry is a high fixed cost industry, so if milk prices are extremely low, even if consumers are supporting the dairy market, dairy farmers will find it difficult, if not impossible, to pay for their operation, overhead, feed, equipment, loan costs and the like. When those facilities are lost, the dairy farmers do not have the production and a shortage develops, those facilities and equipment need to be replaced — not easy considering how much they cost.  All the characteristics of dairy farms and the milk they produce conspire to create marketing conditions that are unique and inherently unstable.

In “Dairy Industry Making a Killing, by Killing Cows?”  Simon further alleges that CWTs “herd retirement” program generated a profit.  In 2009, for example, she claims that CWT membership generated $219 million for the organization, while the group spent $217 million on herd reductions. Even if this is true, the driving force behind the program is to support its members.

When milk prices dropped in 1985 and again in 2009, dairy farmers were bleeding from losses and in emotional turmoil, fearing that family farms that had been around for, in some cases, hundreds of years might cease to exist.  The all-milk price fell abruptly from $17.10 per cwt (100 pounds of milk) in November 2008 to $11.60 in February 2009. It then stayed below $12 until beginning to rise in August 2009.  This was far below the cost of production and dairymen were losing about $1,000 a cow per day. See “Dairy Farmers Hit Harder by Recession” a story published by NPR in 2009 that profiles a dairyman who faced bankruptcy due to low milk prices.

The main goal of the CWT is not to make money.  Its goal is to keep dairy farmers from bleeding out and going into bankruptcy and to keep our country, and our exports, from becoming nonexistent.

USDA Manages Milk Supply to Ensure a Safe and Abundant Milk Supply

Primarily, the dairy industry does not terminate herds to increase milk prices.  The bottom line for the program is keep dairymen out of bankruptcy court, as well as to help those who are barely hanging on in business.  Furthermore, dairy price support systems do not take a PhD degree to understand.  For a brief and clear explanation of all the programs, see Dairy Market and Policy Issues by Dennis A. Shields, an analyst in Agriculture Policy.

Milk is not a normal demand and supply item like corn, for example, but this has nothing to do with whether the dairy industry is “agribusiness.”  The reason milk is treated this way is because demand for dairy products does not normally match the milk production of the cows supplying a market. Consumer demand for milk and dairy products changes from day to day, week to week and season to season. Milk production likewise varies across the seasons. In fact, at the beginning of the school year, when the amount of milk is seasonally at a low point, demand for milk is at its greatest. As you can see, it is not normal that supply equals demand.

Thus, without government programs and pricing systems, milk production would not be able to exist at the national level or export level.  The pricing systems are simply SUPPORT programs with no intention or possibility of bolstering milk prices artificially.  Just consider the cost of producing a gallon of milk.

The Antitrust Class Action: What is Really Going On?

Cooperatives Working Together has responded to the antitrust claims, denying all allegations.  “Dairy Industry Making a Killing, by Killing Cows?” simply picks fun at the fact that CWT calls  Compassion for Killing a “west coast animal group” instead of correctly stating it is located in Washington, D.C.  How dare CWT get that one wrong?  Come on, can you be serious?

What really is going on here is that Compassion for Killing is rather mad at the dairy industry for slaughtering cows. The antitrust claim does not appear to hold any weight, but I guess we will see how the litigation plays out.

Lastly, the dairy industry cares deeply about the treatment and health of the dairy cow. Cow comfort is not only important but it is also imperative for milk production. Dairy cows live in better conditions than poverty-stricken children in rural Arkansas. Dairy cattle have nutritionists and veterinarians who are constantly looking out for their health.  See Cow Comfort Checklist by Ralph Bruno of Texas A&M.

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Ashley Newhall-Caballero graduated this year from Texas Tech University School of Law and is now in the LLM program in Agriculture and Food Law at the University of Arkansas.