Sunday, June 17, 2018

Trump Destroying Dairy Industry and free market driven Wisconsin Farm Bureau Federation not held accountable for losing family Dairy Farms on their watch!!!

The dairy industry in the U.S. is in trouble, but not because of what Trump claims are outrageous Canadian tariffs. It's because the "free market" milk glut is so large, that even an open market with Canada won't come close to solving the problem. But Trump's whining about it appears to be working for rural farmers (a tactic also adopted by Gov. Scott Walker), and I can't explain why.


Canada's Milk Cartel: Canadian farmers run a milk cartel, fixing milk production and prices, avoiding any handouts by the government via price supports. But milk there is priced one to three dollars higher:
Canada's dairy industry is run like a cartel, where the farmers fix prices and limit supply while the government sets strict limits on imported milk, all with the goal of keeping the Canadian dairy industry profitable.
While Walker never made an attempt to lead or solve the dairy states biggest problem, Trump's impulsive trade-by-the-seat-of-his-pants style of "negotiating" made matters worse, and America's Dairyland farmers should angry.
Experts say Canada milk cartel would have probably collapsed under the multinational trade deal called the Trans-Pacific Partnership – but then Trump pulled out of that trade deal, prompting Canada to revert to its half-century tradition of treating its dairy farmers like sacred cows.
I personally believe the U.S. dairy industry could adopt similar controls, a minimum price, a supply management system, with surpluses purchased by the government to feed the poor, and a campaign similar to "gluten-free" where lactose-free milk is the go-to basic family purchase. Go ahead, laugh, but anyone got any better ideas? Love to hear from farmers who know a lot more than me about possible solutions. Here's what recently took place:
(April) More than 50 groups from across the country — including the Wisconsin Farmers Union, Family Farm Defenders and the National Family Farm Coalition —  want the government to set a minimum price that farmers would get for their milk — at a break-even point of $20 per hundred pounds, or about 11 gallons, compared with $13 paid in some months of the downturn.

They’re seeking a milk supply management system to stabilize volatile markets. And they’re asking the government to purchase surplus milk for use by emergency food providers, such as food pantries.

Some of the solutions may seem extreme, but so is the crisis that’s rapidly eroding America’s rural economy and threatening families, according to the farm groups. “In the last few months, dairy marketing cooperatives have provided suicide hotline information to members along with milk checks,” the groups said in their letter to members of Congress and the U.S. Department of Agriculture.
Technology and massive dairy farms (CAFOS) dramatically increase milk supplies, destroying the smaller family farms in the process, both in the U.S. and Canada.
The number of CAFOs in Wisconsin grew 400 percent from 50 in 2000 to 252 in 2016, state figures showed, and the megasize farms drove increases in milk production. At this point, Merrill farmer James Juedes said, something like a minimum farm-milk price would only work if it’s coupled with supply management. Otherwise, “the big farms would just smile and add more cows,” he said.

Juedes blames the demise of small dairy farms on the rapid rise of big operations that have flooded the marketplace with milk and are supported by taxpayer subsidies and pro-growth policies. "They're just waiting to see how many of us small farms go under so they can come in and grab our land," he said.
While Canada took a not-so-free-market path to saving dairy farms, the U.S. made the problem worse by handing it over to insurance companies, just to save tax dollars:
Congress voted in 2014 to modernize the way it tries to help dairy farmers ... with a program whereby farmers could buy insurance that supposedly would cover them when milk prices tank. The new Market Protection Program hasn't worked ... Its payouts are so low that many farmers don't even bother buying the insurance ... It now usually costs dairy farmers more to produce milk than they get when they sell it, driving some of them out of the business ... "...a federally designed formula, and that formula does not include the costs of actually producing milk."
Put another way...
Gordon Speirs, a former Canadian dairy farmer who now milks about 2,000 cows in Brillion, sympathizes with farmers’ complaints about the U.S. government’s Dairy Margin Protection Program.

“It’s like a safety net that is hanging five feet above the ground when you are jumping off the Sears Tower. It’s not going to save you,” he said.
Trump's simpleminded attack on Canadain tariffs breaks down this way:
(Canada) sets quotas limiting imports to a tiny share of the dairy market. Once the quotas are met, imported dairy products get hit with gigantic tariffs: 241 percent for fluid milk, for example, 245.5 percent for cheese and a whopping 298.5 percent for butter.

In spite of those limits, American dairy farmers still manage to sell more dairy products in Canada than their Canadian counterparts do in the United States because Canadian processors need that extra milk to turn into cheese and other products for export to third countries.
The U.S. dairy farmers saw that extra milk cut when Dairy Farmers of Canada allowed farmers to sell their milk below the higher "propped-up" prices ... "essentially pushing American milk producers out of a sliver of the Canadian market in which they had long been able to compete."

But like most short-term Republican plans, not only would an open border put Canadian dairy farmers out of business, but it wouldn't solve the problem...:
Dairy industry pros realize, too, that further opening Canada's milk market would only do so much good. After all, Wisconsin alone produces more milk than all of Canada, and America's share of a worldwide milk glut is way too big for Canada to ever absorb"I think it would be fantastic for Canada to open up its market, but I don't think there's a dairy farmer in America who's looking for Canada to bail out the U.S. industry," said John Newton, director of market intelligence for the American Farm Bureau Federation.
Trump's ability to quickly turn his back on anyone who disagrees with him, destroyed his credibility as a negotiator on the world stage, because who can trust him:
"Canadian dairy farmers and their families are concerned by the sustained attacks by President Trump with an aim to wiping out dairy farmers here at home, "said the group's president, Pierre Lampron, in a statement. “President Trump isn’t going after the system of supply management as much as looking to dump surplus subsidized U.S. dairy products on the Canadian market,” Lampron said.
Protectionism Big for U.S. Too: The list is a long one, but here's just a quick sample:
But it should be noted that many otherwise free-trading nations go weird when it comes to food. Japanese rice tariffs have been as high as 1,000%. To protect its meat industry, France has passed a law banning the use of labels such as "soy sausage" or "mushroom burger" on vegetarian products. And in the United States, Big Sugar cynically props up a nakedly protectionist law that guarantees a minimum price that's a quantum leap beyond the amount customers would pay on the global market
As one conservative columnist wrote at Business Insider:
But the G-7 changed everything — at least, until Trump's next change of mood. As Nathaniel Taplin wrote this week in the Wall Street Journal: "It finally happened: US President Donald Trump picked a fight with the nicest people on earth." And with everyone from French President Emmanuel Macron to Ontario's incoming populist premier Doug Ford (a supposed Trump clone) explicitly backing Trudeau, Canada's prime minister has no reason to back away from his popular (but economically perverse and self-defeating) claim that "we will always defend our supply management system."

History shows that all politicians have a mixture of good and bad ideas. But rare is the public figure whose approach is to toxic, so off-putting, that he manages to poison even the most impeccable public-policy positions merely by dint of advocating them. And while American dairy producers have trouble getting their product into Canada, Trump's poisonous influence wafts freely across borders.