Dozens of Wisconsin Dairy Farmers Threatened to Shut Down

Emily Udulutch

Economics

Mr. Reuter

4-18-17

Dozens of Wisconsin dairy farmers threatened to shut down

Recently dozens of dairy farmers have been rushing to find buyers for their milk after Grassland Dairy Products, a central Wisconsin producer of dairy products and ingredients, announced it would no longer buy milk from them after May 1. This decision is estimated to affect a group of 75 producers. Supply is decreasing due to new Canadian government regulations. It estimated the company would lose sales of about 1 million pounds of milk per day. The company exports about $100 million worth of ultrafiltered milk to Canada each year.

Every day, Grassland has sent more than 1 million pounds of “ultra-filtered” milk to Canada. But, the company was informed by its Canadian customers last month they were eliminating demand, due to changing consumer preferences, for the products from Grassland, which the company said left them little choice but to reduce its milk intake.

Not only does this change affect the direct producers but Dairy producers everywhere in Wisconsin are affected. Tom Oberhaus, who owns Cozy Nook Farms in Waukesha, said the decision doesn't affect his farm directly since the farm isn't a Grassland producer, However, Oberhaus noted that dairy farmers throughout the state are interconnected, and said the decision has a ripple effect on the industry. "It is predicted that milk price per pound will go down 19 cents by the end of April, so there's a ripple effect throughout the industry. April's down 16 cents, May's down 20 cents, June's down 34 cents. There's definitely a ripple effect between every farm." 19 or 20 cents per pound might not seem like a lot but it is about the equivalent to losing a dollar per hour in a high school job. With this loss of income, farmers might not be able to pay for all of the complementary goods needed to run a farm. Also, if a dairy milks more than the average number of cows, the may need to sell some in order to 1.) get extra money to compensate for lost money and 2.) remove extra cost it take to feed and care for a cow that may not produce as much milk.

As this issue will affect individual dairy producers, it will also begin to affect Wisconsin’s economy. Along with getting rid of cows, dairys with a large amount of workers will have to lay off some of them because of they can’t afford to pay them. This cyclical unemployment may cause the unemployment rate to increase. To prevent any large contractions in the business cycle politicians are formulating solutions to the issue. Here are Donald Trump's thoughts on the issue. Type and amount of effects on Wisconsin’s economy is not known yet because the change has not taken place yet, but some milk prices are expected to rise and many farmers will have trouble keeping their farms going as they try to find new buyers to sell milk to.

Works Cited

AVILA Lavila@madison.com, LARRY, and MARA BUDDE, WILDWEED HOLSTEINS & JERSEYS. "Need Milk? Dozens of Wisconsin Dairy Farmers Scrambling to Find Buyers in Saturated Market." Madison.com. 06 Apr. 2017. Web. 24 Apr. 2017.

Barrett, Rick. "Dozens of Wisconsin Dairy Farms Could Be Forced out of Business Because of Trade Dispute." Milwaukee Journal Sentinel. 05 Apr. 2017. Web. 24 Apr. 2017.

Johnson, Alec. "Lake Country Farmers Keep Wary Eye on Grassland Decision." Lake Country Now. 07 Apr. 2017. Web. 24 Apr. 2017.

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