I believe that the future of dairy farming is more dependent today upon the satisfactory solution of the problems of regaining and holding the public support and confidence than upon almost any other factor.
One well known dairy market economist in Wisconsin summarizes the three principal avenues to higher milk prices: market forces, government market intervention, and private market intervention. The last two, government market intervention, and private market intervention, are already taking place in the form a recent temporary increase in the prices the government pays for excess product like cheese and non fat dry milk, also know as the Dairy Price Support Program. Another is USDA's MILC program, which compensates dairy producers a nominal amount when Class I fluid milk prices drops below a certain level.
Cooperatives Working Together, better known as CWT, is an example of private market intervention. This year, it is essentially a cow buyout program funded by dairy farmers themselves -- no government money here. CWT has already conducted three buyouts in 2009, all with the goal of eliminating cows and ultimately reducing the flow of milk into the marketplace. Earlier years has seen CWT take milk products and sold them overseas, but today's world economy and a slightly stronger dollar doesn't offer much promise there -- at least not now.
The first solution, market forces, is the one that industry leaders, dairy market academics, and other influential people say holds the most hope. An improved economy both here and abroad will entice consumers back to restaurants, and bring them back to organic milk purchases, for instance. On the word's stage, an economic recovery would help the U.S. sell more product overseas.
But, in the meantime, how long can our dairy farmers hold on with the way things are now? In my opinion, that's the biggest question of all.
Karen Baase is the extension issue leader for CCE-Madison.