Cooperatives Working Together uses herd retirement to fix milk prices

A half-million cows were worth more dead than alive, and now we're all paying the price

"Cooperatives Working Together was created in 2003 as a self-help initiative to assist family dairy farmers and members of dairy cooperatives who were losing money producing milk," argues Tillison. "The program was designed and has always been operated in a manner fully consistent with the anti-trust laws of the United States."

Since the suit was originally filed in California, similar lawsuits have appeared in other states. If certified as a class action, the case will pit every American consumer of dairy products against more than 70 percent of the nation's production.

Because the dairy consortium and Land O'Lakes refused to be interviewed, it's impossible to know whether they plan to restart herd retirement in the future. For the moment, Cooperatives Working Together is focused on decreasing the national supply by arranging dairy exports to international markets.

Joe Sonneker was a dairy farmer his entire life, but sold all of his cows  to herd retirement in 2009
Andy Mannix
Joe Sonneker was a dairy farmer his entire life, but sold all of his cows to herd retirement in 2009
Sonneker's grandfather cleared the 160-acre lot more than 100 years ago to start the family farm
courtesy of Joe Sonneker
Sonneker's grandfather cleared the 160-acre lot more than 100 years ago to start the family farm

Arranging exports has been part of the dairy collective's plan to increase milk prices since 2003, according to company documents. From 2003 to 2010, the success of exports paled in comparison to that of herd retirement, but that could be about to change. Dairy economists say the international sales, especially the previously untapped market in Asia, have become more profitable in recent years.

Analyst Jerry Dryer, who used to be a paid speaker at dairy industry events, couldn't help but remark upon the "schizophrenic" strategy. On one hand, the consortium was slaughtering hundreds of thousands of cows to reduce the supply. Now they want to grow the market for international trade.

"I kept urging them to figure out what they wanted to be when they grow up."

The East Dublin Dairy farm in Murdock, Minnesota, is home to more than 6,600 cows and heifers, making it among the largest in the region. Since 2008, farmers at East Dublin have milked 5,280 cows twice every day. The milk ships weekly by the truckloads.

This is the way that dairy farming is heading. As the small, generational family farmers have been forced out of the business, mega-farms are moving in. Just 20 years ago, there were 8,500 small farms in Minnesota. By 2007, that number was down to 2,000.

It makes sense in the age of Walmart and Costco. Bigger farms streamline production, and can afford better equipment and feed to maximize output. Large co-ops like Land O'Lakes also encourage the trend by giving better prices for volume and offering free hauling.

"I'm not going to sit here and sugarcoat it—the economics have really changed the last 20 years," says Geiger, editor of Hoard's Dairymen. "Economies of scale kick in."

Big farms are also better equipped to weather bad years, says Land O' Lakes farmer Ron Miller, who recently upgraded from 150 to 1,600 cows. "We ran into some good prices where we were able to pay back a lot of our debt."

But bigger farms also bring bigger problems. With more cows on a smaller patch of land, environmental impacts multiply, including the risk of manure runoff into a community's watershed. Bigger farms also introduce a new potential for food contamination, says Mark Muller, program director for the Institute of Agriculture and Trade Policy.

"When there is an issue, you have millions of people who are affected by it rather than a couple thousand people affected by it," says Muller.

As farms have grown over the years, so has the volume of milk the individual cows are producing. At the same time herd retirement was slaughtering cows to decrease the milk supply, farmers were using genetics and hormones to increase production. In 1993, the average American dairy cow produced 15,722 pounds of milk per year; by 2007, output had increased to 20,204 pounds a year.

Dave Minar, the owner of Cedar Summit Farm in New Prague, has become an evangelist for a different way to think about dairy farming. In the early 1990s, Minar left a large regional co-op for a smaller local collective, and made radical changes to the way he ran his farm.

Minar's herd grazes outdoors on natural grasses seven months a year, and moves inside in the winter. The cows stay healthy and productive for 12 or more years, providing milk nearly twice as long as a typical dairy cow's entire lifespan.

Minar disagrees with the way the dairy industry treats its cows, shortening their lifespan by stuffing them with grain and selling them for slaughter when production drops. He's particularly disappointed with the herd retirements.

"Personally, on an ethical standpoint, I think it's unfortunate that they're selling their cows for slaughter," says Minar. "I don't think it's the right thing to do. It doesn't seem morally right, to me, to do that."

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