By Rep. Paul Anderson
Attended a meeting last week in Albany where the topic was our struggling dairy industry. Hosted by KASM radio, the meeting featured a panel discussion with representatives from several dairy cooperatives taking part, along with the presidents of the state’s two largest farm organizations, Farm Bureau and the Farmers Union. Also on the panel was Seventh District Congressman Collin Peterson, the ranking Democrat on the House Agriculture Committee.
Peterson gave an update on the federal dairy program known as MPP or, formally, the Milk Protection Program. He said it will now provide better coverage for those who produce about five million pounds of milk, which is the equivalent of approximately a 250-cow herd. Signup begins April 19 and runs through June 1. Payments will be retroactive to the beginning of the year, and because of current low prices, it has already been established there will be payments for several months.
Steve Schlangen of Albany, board chairman at AMPI, said that the dairy industry hasn’t had a good safety net these past three or four years. Brad Vold of Glenwood, representing Land O’Lakes, commented that we are in tough times right now, adding that, by working together, we can make changes to get through this. Ron Koopmeiners from the Elmdale Creamery cautioned those in attendance that getting bigger sets you up for failure. His advice was that we should just try to be more efficient in what we’re doing. And Farmers Union President Gary Werdish added that the goal should be to keep families on the farm and that more money is needed in the new farm bill.
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Anyone keeping an eye on the commodity markets last week saw first-hand what uncertainty can do to those markets. When China announced possible tariffs on American soybeans that enter their country from the United States, the market price of soybeans dropped by 54 cents in the overnight market. That’s a huge decrease that caused the cumulative value of the product to drop by hundreds of millions of dollars.
The market eventually recovered most of its losses. Then, a couple days later, more tariffs were announced, and the price of soybeans dropped precipitously again. The stock market has seen much the same reaction as both sides in this trade war have announced what they will do in reaction to what the other side said they might do. This yo-yo effect to these tit-for-tat pronouncements has potentially cost farmers – and investors alike – millions of dollars. As others have said, “no one wins in a trade war, especially one between the two largest economies in the world.”
Those involved in production agriculture don’t need this additional piece of uncertainty to add to their already long list of concerns. Commodity prices are low and have been for several years. For many of those commodities, like milk or corn, for example, the price received by farmers is below the cost of production. Many are facing their second or third year of equity burnt as they struggle to stay on the land. For some, if the income at the end of the year isn’t large enough to cover their short- and long-term debt, they are forced to refinance or pay interest only. Banks can go along with that for a time, if enough equity remains, in the hope that things will turn around and become profitable again. And that’s why this new uncertainty in agricultural markets is so concerning.
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