An overabundance of milk is one of the reasons why contracts with several area dairy farmers will not be renewed later this year.
Dean Foods has announced that, effective May 31, 2018, it will no longer buy milk from around 100 farmers nationwide. Included in that number are about 10 farmers in the East Tennessee area.
“Unfortunately, Dean Foods has made the difficult decision to end milk procurement contracts with a number of farmers in about 90 days,” Dean Foods Director of Corporate Communications Reace Smith said. “We regret this decision had to be made. Our decision was an incredibly difficult one and a step that we worked very hard to avoid.”
Smith said a variety of causes led to this decision, including too much milk being produced and put on the market.
“Many factors, including a surplus of raw milk at a time when the public already is consuming less fluid milk, and companies assertively entering or expanding their presence in the milk processing business, have exacerbated an already tenuous situation in a highly competitive market,” Smith said.
Smith explained that Americans are drinking about three gallons less per person per year since 2010 — that number increases to 11 gallons per person per year since 1975.
However, the U.S. dairy industry is producing about 350 million more gallons of milk each year than the year before, Smith noted.
“The introduction of new plants at a time when there is an industry-wide surplus of fluid milk processing capacity forced us into this position,” Smith said. “Further, competition for milk volume has increased and Dean Foods lost volume at higher levels than anticipated.”
Smith said farms in Tennessee, Indiana, Kentucky, Pennsylvania, Ohio, New York, North Carolina, and South Carolina have been notified and that Dean Foods is planning to assist these farmers.
“Our field representatives are serving as a conduit of additional resources to dairy farms during these challenging times,” Smith said. “Additionally, we will provide farmers with resources to help them connect with counselors if needed.”
He also noted that the Dean Foods plant on Ingleside Avenue in Athens “still sources 90 percent of our milk from Tennessee.”
According to Julie Walker of AgCentral Co-op, one farmer in McMinn County is affected by this along with one in Sweetwater — Josh Watson.
“It’s going to hurt us,” Watson said. “I don’t know why we were the ones chosen.”
Watson said if the move had to be made, more notice would have been helpful.
“We’ve got 90 days to do something,” he said. “I feel like it should have been more like a one-year notice.”
Watson stressed that he doesn’t see it as anybody’s fault that this happened.
“I don’t want to point fingers at anybody,” he said, adding that he feels more government regulation might have helped avoid this.
“The government should have stepped in long ago and come up with a quota system like Canada has,” he said.
Ultimately, he said, it simply comes down to the overproduction of milk over recent years.
“That’s the whole problem,” he said.
“Farmers are caught in a vicious Catch-22 of overproduction as each individual farm tries to generate enough milk to help pay bills in any given week — with depressed farmgate prices that farm needs more pounds to sell to generate enough money for income,” Walker noted. “However, that same farm butts up against a worldwide glut of inventories of skim milk powder and cheese, with countries around the world in a cutthroat pricing war to sell to the same export market.¬�It’s a squeeze chute for farms as prices are depressed due to simple supply and demand economics.¬�
“Too,” she added, “breakfast eating patterns have changed, and with cereal consumption declining, milk consumption has declined, as well.
“However, one bad drought in either South America or the United States,” Walker noted, “and the dynamics of overproduction could change.”
As far as potential solutions go, Walker said there are some ways consumers in the area can help local and regional dairy farmers.
“Drink local milk from local cows,” she said. “Either buy Mayfield or Fieldcrest. That’s the market signal Dean Foods will read. For many reasons, Dean is losing milk sales. They need to increase milk sales.”
There is a way to know if the milk and ice cream you’re buying is local, as well.
On each package of either milk or ice cream, there is a plant code stamped onto the carton that shows it came from the Athens plant — for milk the number is 47-131 and for ice cream it’s 47-225.
AgCentral is also doing its part to find a solution to the problem.
“We’re trying to be supportive of these farmers and we’re working with a number of producer groups,” Walker said. “It’s not going to be a quick fix. It’s still all in the what-can-we-do phase.”
She referred to dairy as the “culture of the community” and said AgCentral will fight to protect it.
“It’s going to be a battle and it’s going to be a challenge,” she said. “We’re going to give it an all-out effort.”