Higher yields, lower inputs and truthful marketing make more sense
Milk is Milk Blog by Alex Avery
Maine legislators are preparing to add a twelve cent a gallon tax to milk purportedly to help bolster the state’s ailing dairy industry, adding to a list of existing dumb Maine laws. Put aside the fact that they intend to put the milk money into the state’s General Fund which is facing a $750 million dollar deficit this year, it doesn’t take a rocket scientist to understand that increasing milk costs to consumers is going to hurt milk sales. Less milk consumption means less money for Maine dairy farmers and less affordable, nutritious food being consumed - especially by children. If anyone out there believes this milk tax money is ever going to reach struggling dairy farmers and help meet important nutritional goals for children then I’ve got a lobster farm on top of Mount Katahdin to sell you!
Let’s look at some of the facts on the milk production side. Maine is already a net importer of milk - Maine dairy farms simply are not keeping up with the State’s demand for the product. According to the U.S. Department of Agriculture, Maine has some 35,000 milk cows which individually produce an average 17,820 pounds of milk per year or about 48 pounds per cow/day, earning the State’s dairy producers some $87 million or $2,485 per milk cow. Neighboring New Hampshire - a net exporter of milk - has 16,000 cows which are producing 19,063 pounds of milk per year, 52 pounds per cow/day or about a 10% difference with Maine. New Hampshire dairy farmers bring in $42 million or $2,625 per cow, making their cows 5% more profitable.
Now 5% more profits and 10% higher productivity might not sound like much to you and me. However for dairy farmers, that kind of productivity can mean the difference between keeping the farm in the family or being able to send a kid to college. Higher productivity also means less impact per cow on the local environment–score two points for New Hampshire! Message to Maine - you’re doing something wrong.
So what’s the difference between New Hampshire and neighboring Maine? Here are two big ones:
- New Hampshire doesn’t have the $87 million dollar a year mega-dairy Oakhurst driving out small producers, dictating production practices and tainting the marketplace with misleading marketing. Oakhurst sales are roughly equal to the entire state of Maine’s dairy marketing receipts, giving them an economic stranglehold and equivalent monopoly which can dictate prices paid and practices allowed to Maine’s family dairy producers. Oakhurst demands that farmers who sell them milk not use FDA-approved productivity supplements. While Oakhurst offers a small premium to some farmers, it does not cover the cost difference to producers - but as any Maine dairy farmer will tell you, if you don’t sell to Oakhurst you’re likely to kiss your farm goodbye. One family dairy farm in Maine reportedly packed up the entire operation and moved to Indiana claiming that because of production demands by the likes of Oakhurst they just couldn’t make ends meet anymore.
- New Hampshire farmers also don’t have a Maine Quality Seal which restricts their use of productivity supplements (even though the U.S. Food and Drug Administration and federal law say you cannot make a “quality” distinction for milk based on non-use of such supplements). It shouldn’t escape our attention that these productivity supplements - which are a simple enhancement of the cow’s natural and existing body chemistry, enabling it to maintain peak milk production levels for slightly longer periods of time - increase production about 10%. Hmmm, New Hampshire cows are 10% more productive than Maine cows… might there be a connection here? Heck, Maine’s quality seal doesn’t even guarantee that the milk comes from Maine! In 2002 three local dairies challenged the Maine Quality Seal claiming it misleads consumers, but like most complaints about misleading marketing in the dairy industry this fell on deaf regulatory ears. By the way, what good is a state quality seal in marketing your milk if you are a net importer of milk? The seal apparently isn’t helping you grow your markets beyond Maine’s borders and existing internal demand.
The facts on the demand side are of equal concern and can clearly be related to production-based marketing issues. Consumers are drinking less milk and paying more for it. Adding insult to injury, the farmers’ economic share of these declining milk sales - despite steadily increasing consumer costs for milk - is nearly half what they got in 1980. According to the Economic Research Service at the U.S. Department of Agriculture Americans are drinking one-half as much milk per capita from our peak consumption in the post-war era while drinking more than 10 times more non-nutritious drinks like diet sodas, coffee and juice-like (not fruit) drinks. Why do consumers turn away from milk to soda, power juices, soy and other products? Consumer research suggests it’s because milk is now confusing and scary to them based on false and misleading labels and marketing which clearly imply some milk to be safer or of higher quality than other milk.
If one dairy product claims to have “no toxic pesticides” (like Horizon brand) or “no artificial hormones” (like Oakhurst brand) or “no yucky stuff” (like Stonyfield brand) then consumers believe the other milk must have toxic pesticides, hormones and yucky stuff. Simple milk (which as you know from reading this column is all the same regardless of these bogus claims) becomes complicated and confusing. Add to this confusion the fact that the products making these implied quality claims are usually fifty to one-hundred percent more expensive. As a result, confused consumers turn to alternative and cheaper products. Want to watch them turn even faster? Make milk even more expensive by adding new taxes!
Connecting the dots is simple: Maine dairy farmers must comply with the corporate behemoth Oakhurst’s demands that they not use modern productivity tools like supplemental somatotropin (rbST) - which increases the amount of milk produced by a cow while lowering inputs and associated environmental impacts (which sounds like a plus for farmers, consumers AND the environment to me); their hands are further tied if they also want to use the Maine Quality Seal (which certainly implies that milk without this seal somehow lacks quality making it a tough sell in the dairy case without the seal); and finally the combination of this state marketing seal and Oakhurst’s labeling, advertising and other marketing campaigns both of which promote their labeled milk as different confuses consumers at the dairy case and damages overall consumer confidence in milk resulting in a corresponding lowered consumption.
In a paper dissecting Maine’s dairy economics published in the March 2003 University of Maine “Issues in Maine’s Natural Resources Industries” newsletter by Dr. Martin Stokes, Professor and Dr. David Marcinkowski, Extension Dairy Specialist, includes the following key points:
- Rate of decline in Maine dairy farms is increasing significantly
- Major cause is lack of profitability
- Major cause of lack of profitability is high production costs against low sales price
- Leading issue for production costs are lack of adoption of technological advancements - specifically use of productivity supplements
The new recommended food guideline pyramid suggests that most average people should drink about 3 glasses of milk per day. Yet we’re not coming close to this. According to the USDA we’re drinking only a tiny fraction (less than a ½ cup per day each) of the recommended amount of milk. At the same time we are consuming more than 80 gallons a year each of alternative beverages (not including alcohol - which is another 23 gallons) or more than 12 cups of beverages like soda and coffee a week which have ZERO recommended daily allowance compared with less than 4 cups of milk per week. To help dairy farmers in Maine and elsewhere we need to encourage people to drink more safe, nutritious and affordable milk.
New England consumers deserve abundant, affordable and safe dairy products, products produced in fair partnership with local family dairy farmers. These dairy farmers rely on safe and approved productivity and animal health products to remain economically competitive. Removing these choices for questionable marketing purposes hurts farmers, puts our environment at risk and harms consumer confidence in the quality and safety of dairy products in general. The Boston Globe reported that dairy consumers in New England are victims of “marketing campaigns based more on fear than facts,” adding that “for consumers, the dairy case is becoming more and more confusing.” The Globe article indicates that some retailers are feeling competitive pressure to join in fear-based marketing. Ending practices that the Globe characterizes as more fear than fact, such as a “quality seal” and dictatorial and predatory practices from Oakhurst would be a much smarter step in Maine than adding a tax to milk.
As for the rest of New England, Maine’s problems may not be far behind as Oakhurst expands its greedy reach into neighboring states. According to Dairy Profit Weekly, Massachusetts Commissioner of Agriculture Douglas Gillespie urged his state health agency to require “corrective action” against Oakhurst Dairy of Maine for misleading labels and marketing to protect Massachusetts dairy farmers. But for Maine farmers and consumers, taxing milk is not the answer. The answer is simple: Stop misleading marketing which scares consumers away from the dairy case and end restrictive practices which increase farmers’ costs while lowering productivity. Milk is milk.