America’s Dairy Industry Facing Difficulties from Long-Running Structural Changes

The themes addressed in these papers are topical. The U.S. dairy industry has recently attracted national attention. The country as a whole lost over 10,000 licensed dairy farms in 2017. It is common to read news of dairy farms having to sell their milk cows and dealing with the consequences of losing their livelihood and tradition of lifestyle. In the recent much-publicized renegotiation of the NAFTA trade agreement with Canada and Mexico, President Trump called dairy “a deal breaker.” The newly re-drafted NAFTA (renamed USMCA) will, if approved by Congress, allow the American dairy industry somewhat easier access to the Canadian market. As with the sorts of problems regarding U.S. milk marketing arrangements that several of the papers in this theme discuss, the devil is in the details. It pertained to interactions between regulations and a technologically advanced product form, namely ultrafilter separation, which can reduce milk transportation and storage costs while enhancing processability and better meeting consumers’ taste preferences.In one way or another, the papers in this theme address capital investments and their consequences. Feng and coauthors survey Great Lakes dairy farmers about changes in herd size, capital investment, and labor input over the last few years and their future intentions in these regards. Their findings reveal that investments emphasize the replacement of labor; herd consolidation is likely to continue, with larger herds generally at the forefront; and smaller farmers in particular are pessimistic about the sector’s market conditions. Because installed assets have few alternative uses, low prices are likely to persist when expansion depresses prices. This begs questions about coping strategies to survive until profitable conditions return.Using a 10-year panel dataset of Minnesota dairy farmers, Mahnken and Hadrich address how individual farmers can cope with tight dairy margins through alternative income-management strategies intended to stabilize enterprise profits. These strategies vary from income diversification through the feed make-or-buy decision, insurance choices, and government support programs. Their research and the data-collection system that supports it point to the merits of a two-way, data-driven extension programs.