Emily Udulutch
Economics
Mr. Reuter
4-18-17
Dozens of Wisconsin dairy farmers threatened to shut down
Recently dozens of dairy farmers have been rushing to find buyers for their milk after Grassland Dairy Products, a central Wisconsin producer of dairy products and ingredients, announced it would no longer buy milk from them after May 1. This decision is estimated to affect a group of 75 producers. Supply is decreasing due to new Canadian government regulations. It estimated the company would lose sales of about 1 million pounds of milk per day. The company exports about $100 million worth of ultrafiltered milk to Canada each year.
Every day, Grassland has sent more than 1 million pounds of “ultra-filtered” milk to Canada. But, the company was informed by its Canadian customers last month they were eliminating demand, due to changing consumer preferences, for the products from Grassland, which the company said left them little choice but to reduce its milk intake.
Not only does this change affect the direct producers but Dairy producers everywhere in Wisconsin are affected. Tom Oberhaus, who owns Cozy Nook Farms in Waukesha, said the decision doesn't affect his farm directly since the farm isn't a Grassland producer, However, Oberhaus noted that dairy farmers throughout the state are interconnected, and said the decision has a ripple effect on the industry. "It is predicted that milk price per pound will go down 19 cents by the end of April, so there's a ripple effect throughout the industry. April's down 16 cents, May's down 20 cents, June's down 34 cents. There's definitely a ripple effect between every farm." 19 or 20 cents per pound might not seem like a lot but it is about the equivalent to losing a dollar per hour in a high school job. With this loss of income, farmers might not be able to pay for all of the complementary goods needed to run a farm. Also, if a dairy milks more than the average number of cows, the may need to sell some in order to 1.) get extra money to compensate for lost money and 2.) remove extra cost it take to feed and care for a cow that may not produce as much milk.
As this issue will affect individual dairy producers, it will also begin to affect Wisconsin’s economy. Along with getting rid of cows, dairys with a large amount of workers will have to lay off some of them because of they can’t afford to pay them. This cyclical unemployment may cause the unemployment rate to increase. To prevent any large contractions in the business cycle politicians are formulating solutions to the issue. Here are Donald Trump's thoughts on the issue. Type and amount of effects on Wisconsin’s economy is not known yet because the change has not taken place yet, but some milk prices are expected to rise and many farmers will have trouble keeping their farms going as they try to find new buyers to sell milk to.
Works Cited
AVILA Lavila@madison.com, LARRY, and MARA BUDDE, WILDWEED HOLSTEINS & JERSEYS. "Need Milk? Dozens of Wisconsin Dairy Farmers Scrambling to Find Buyers in Saturated Market." Madison.com. 06 Apr. 2017. Web. 24 Apr. 2017.
Barrett, Rick. "Dozens of Wisconsin Dairy Farms Could Be Forced out of Business Because of Trade Dispute." Milwaukee Journal Sentinel. 05 Apr. 2017. Web. 24 Apr. 2017.
Johnson, Alec. "Lake Country Farmers Keep Wary Eye on Grassland Decision." Lake Country Now. 07 Apr. 2017. Web. 24 Apr. 2017.
Wall, David. "HTTP in PHP." Multi-Tier Application Programming with PHP (2004): 21-43. Print.
There is no doubt that dairy farmers shutting down would have a negative impact on the economy. Wisconsin is known for its dairy farming, especially its cheese, and it is a staple of our economy. I predict that if these farmers were to shut down, the government would intervene, most likely providing them with subsidies to keep their farms open, as the dairy industry is a massive part of our state economy.
ReplyDeleteIt seems like the farmers would need to find a new company to supply. The one guy from Waukesha said he would't be affected, so farmers affected by this should seek whatever method he takes. If you think of it that way, its not as doom and gloom as it sounds, but it does seem unfortunate to have such a reliant company leave so many farms in such a situation.
ReplyDeleteWith the Grassland Company closing down, it majorly affects their consumers and their new consumers. By having all of this extra milk they will need to find a place for all of it to go to. Like Simon said, they should talk to other successful businesses, like the guy in Waukesha, to learn how they are keeping their company up and running.
DeleteIt's hard to believe that a profession that has been around for so long would have to shut down. While we may not be back in the 1900's when dairy farming was looked upon only as a profession, it seems that in this day and age technology has finally caught up to some of the oldest professions. Sadly, you hear about technology "making things better" in the news all the time. A company builds a machine that can milk 20 cows at a time, they build a machine that can distribute feed to all animals without the farmer being there, etc. What is happening to farms now in general is very sad and is really shaping our economy into a new era. Whether or not that's bad would be based off your point of view, are you the farmer? Or are you the company?
ReplyDeleteI agree, replacing the nature of things like how the farmers take care of their animals is turning into a huge mess. This is going to be bad for Wisconsin's economy. Most of the small and/or large businesses that are here and/or somewhere else depend on go produce of milk. If the government raises the prices a little bit it shouldn't hurt anyone. The demand for milk is to high just for it to be taken away, jobs and companies are running around this product.
DeleteMany people might see the decrease in milk prices as a good thing for them, allowing them to save money, but they aren’t thinking about the effect this has on the farmers. With having grandparents who have a farm, I know how hard it is to keep it running, and with this loss of income, it will become even harder.
ReplyDeleteI feel like Canada not taking our milk anymore will also affect complement products to milk, like cereal. With milk becoming cheaper, the more people will likely buy it making cereal companies have to work harder to keep up with demand. Eventually, milk prices will start to go back up and there could become a problem where there is too much of a product. Either way, I feel like our economy will be greatly affected by Canada’s action.
For consumers, the decrease in milk prices may seem like a good thing since they won't have to spend as much money, but this has a negative effect on the dairy farmers. They won't be making as much profit, so they may not be able to sustain their farm. They may have to sell some of their cows to get some extra cash, but this would cause a decrease in their milk production, further feeding into the vicious cycle. This could be devastating for Wisconsin as a whole, since we are known for our cheese and dairy in general - what happens when farmers can't find any companies to buy from them? With the price of dairy going down, demand may increase, but the farmers may not be able to keep up with this demand, causing a shortage. Overall this could have a bigger effect on our economy than we may think.
ReplyDeleteThat's pretty disappointing that there is a ripple effect on the dairy producers. Seeing that there isn't that much milk being sold is very interesting. You would think there would be a constant demand for milk. But, if you think about it though, more and more people are switching over to soy or almond milk, because it's healthier and the new trend. It's disappointing, because our body heavily relies on calcium. I wonder if there will be an effect on yogurt, ice cream, and other dairy products.
ReplyDeleteAlthough for consumer's the price of milk going down is a good thing but for many dairy farmers it will make it more difficult for them to make more profit. But at the same time many of the farmers that have cows are probably still making money from some other job like owning a different kind of livestock like chickens. Which although this will not cover the amount of money that they are losing it will help with some of the profit that they will miss out on.
ReplyDeleteI never really realized that farms are so interconnected and that with this loss of a buyer of milk, most of the farms in the state will be affected by this loss. In my Experiencing Wisconsin class we learned about the dairy industry, and it's a big driver of our state economy and Wisconsin's history of becoming the "dairy state". It's sad that people are using less and less milk because these are local farmers that are supporting our economy and we aren't supporting them back.
ReplyDeleteSince milk is already priced pretty low, an increase will not be that much of an issue. And for people who want to drink milk or use it for baking, the milk is some what inelastic, and they will probably spend that extra money to get it. However, some people might switch to soy or almond milk because regular milk companies are going to have to shut down or slow down and there will be less available.
ReplyDeleteIt is a shame to hear that Grassland's economic struggles will end up affecting local dairy producers here in Wisconsin. As a person born and raised in the dairy state, I personally have always loved all varieties of dairy, and to this day I consume a great deal of dairy products on a daily basis. Furthermore, one of my favorite post-workout activities was always to drink a nice cold glass of milk. It's disheartening to hear that the people who provide me with these great products and that delicious drink are suffering due to the current state of the economy, and I hope they can find a way to quickly get back on their feet.
ReplyDeleteA quick google search of Wisconsin dairy farms and millions of stories of the crisis and tragedy of this situation pop up. It is concerning. I think the dairy business, in general, is tough but right now it is even more challenging for these farms. Although it is nice to see the price of milk decreasing it is sad to see wholesome families that own farms struggle to keep their heads above water. After doing some further research on this topic, I have an inkling that the government might need to financially supply these struggling farms until the crisis has settled down.
ReplyDelete