'Corporate Takeover of Dairy Production'

As industrial farms take over more of the milk production, they've been recognized for their ability to leverage their size and modernize dairying so that the U.S. can continue to compete in what has become a cutthroat international marketplace.

Operators are managing around-the-clock operations, often with dozens of employees, including professional staff with college degrees in dairy science.

Every three weeks, a livestock nutritionist with a doctorate degree stops at Don Niles' farm and tweaks feed regimens to boost milk output. “I don’t get that kind of attention with my diet at home,” Niles said.

Still, industrial farms can fail environmentally, sometimes with disastrous results.

In 2018, the second-largest dairy farm in Oregon folded, leaving behind a mountain of debt and 30 million gallons of manure and wastewater.

The 13,000-cow operation south of the Columbia River, near Boardman, opened in early 2017 and at one time had a permit for 30,000 animals. In less than two years it accumulated more than 200 environmental violations and nearly $200,000 in fines, the largest amount ever issued against a CAFO by the Oregon Department of Agriculture.

State regulators sued to shut Lost Valley Farm down, saying it posed a threat to drinking water wells by allowing liquid manure to overflow from storage lagoons. Thousands of cattle and the farm were sold at auction.

“If we have anything to say about it, there won’t be a new dairy operation there at all because we're seeking a moratorium on these new big farms until we can make sure we are protecting our water, our air and our family farmers,” said Amy van Saun, an attorney for the Center for Food Safety, an environmental group in Portland.

"There was definite mismanagement. But the problem with an operation that big is, when even something small goes wrong, it can have a big impact," she said.

Most Wisconsin industrial farms are family-owned, although there are outside investors in some operations. Nationwide, it’s unclear whether corporate dairy interests have gained sufficient market strength yet to drive out the most efficient independent milk producers, said John Ikerd, professor emeritus of agricultural economics at the University of Missouri.

But dairy farmers cannot ignore the lessons of poultry and pork farms, Ikerd said, where small producers were forced out when food companies established their own operations, with thousands of chickens, turkeys and pigs.

“We are now seeing a corporate takeover of dairy production, which is the last bastion of full-time, independent family farms in animal agriculture,” he said. “Unfortunately, this is the harsh reality now confronting smaller independent dairy farmers.”

Some large retail chains are bottling their own milk and contracting directly with farmers to get it. In June 2018, Walmart opened a 250,000-square-foot processing plant near Fort Wayne, Indiana, acquiring milk from 30 farms in Indiana and Michigan. The plant was built to supply milk to hundreds of Walmart stores in Indiana, Illinois, Michigan, Ohio and Kentucky.

Walmart’s decision to build the plant was backed by millions of dollars in tax incentives from the State of Indiana and local officials seeking about 300 jobs in return.

“This new plant is a perfect example of the kinds of efficiencies Walmart seeks in our supply chain to benefit our customers,” Tony Airoso, senior vice president of sourcing strategy said in a statement.

But it left about 100 dairy farmers for Dean Foods Co. without a milk buyer when Dean lost that part of Walmart’s business, according to industry analysts. In November, citing a continued decline in milk sales, Dean filed for Chapter 11 bankruptcy protection.

Dean "had bigger, industrywide issues with the consumption of milk products. But the loss of the Walmart business was just another thing they didn’t need,” said Mark Stephenson, director of dairy policy analysis at the University of Wisconsin-Madison.

Farms Expand for Different Reasons

Ikerd spent much of his career promoting large expansions.

“I supported this process because I thought it was going to make agriculture more efficient and it would be good for farmers and rural communities," he said.

Then he changed his mind.

"It hasn't fed hungry people, it hasn't produced healthy foods and it hasn't supported independent family farms and rural communities," he added.

Scaling back the size of U.S. dairy farms isn’t the answer, said Tim Trotter, executive director of Wisconsin’s Dairy Business Association.

“Decisions to expand are often made for reasons that have nothing to do with supply or demand,” Trotter said. “For example, a child coming home and wanting to buy into the farm. How would we accommodate these kinds of expansions?

A veterinarian by training, Niles started his Kewaunee County dairy farm in 2001 with a business partner after a stint with agribusiness giant Monsanto Co. in California’s dairy-rich San Joaquin Valley.

“People ask, ‘Why did they let the CAFOs in?’ ” Niles said. “In people’s minds, they think there was a migration of large farms from California or somewhere that came here and took over our dairy industry.”

Instead, some farmers opted to grow to “keep their kids in the business, not milk cows twice a day for 40 years and take some vacations,” he said.

His partner was John Pagel, owner of 5,000-cow Pagel’s Ponderosa who died in a private plane crash in February 2018 in Indiana with his son-in-law and the pilot.

“Best friend I ever had,” Niles said.

When they first met in 1987, Pagel had 74 cows. Today, his family-run dairy churns out a line of cheeses and owns a farm-to-fork restaurant in downtown Green Bay.

Disheartening Message

In the 1970s, Agriculture Secretary Earl Butz famously told farmers to "get big or get out" and plant "fence row to fence row." He championed industrial farming.

This fall at World Dairy Expo in Madison, U.S. Agriculture Secretary Sonny Perdue drew sharp criticism for essentially reprising that message specifically to dairy farmers.

“Now what we see, obviously, is economies of scale having happened in America — big get bigger and small go out,” Perdue said. "With the capital needs and all the environmental regulations and everything else today, to survive milking 40, 50, 60 or even 100 cows — and that's what we've seen."

The message disheartened some family farmers.

“I went to Madison feeling financially scared and emotionally depressed, but hopeful," said Paul Adams, who has a 500-cow organic dairy farm near Eleva in Trempealeau County. "I came home feeling financially scared, emotionally depressed, unwanted and unneeded."

Brittany Olson left her Barron County farm at 3 a.m. to make it to Madison for the speech.

“To go through the effort to see the USDA secretary, only for him to say that small farms like ours likely have no future, made me feel like little more than a peasant in a system of modern-day feudalism,” Olson said.

The mindset that’s been pushed on farmers — to continually grow — is one reason for the overproduction that’s suppressed milk prices and forced people out of business, said Darin Von Ruden, a dairy farmer from Westby in Vernon County and president of Wisconsin Farmers Union.

“We need to look at something that will benefit all of rural America, not just corporate rural America,” he said.

No 'One-Size-Fits-All Way to Farm'

Perdue's message in part reflected the growing political voice that owners of larger farms have cultivated.

On Nov. 5, the Wisconsin Senate effectively fired Brad Pfaff, the agriculture secretary under Democratic Gov. Tony Evers — a move with no precedent in at least the last half-century. Although Pfaff was personally popular with many farm groups, the agriculture department had proposed rules that could have placed limits on farm expansions.

The Wisconsin Farmers Union backed the changes.

“We felt very strongly that these modifications were long overdue after the tremendous changes we’ve seen in the agricultural industry and lots of concerns that have been expressed by people in rural communities,” said Kara O’Connor, the government relations director for the Wisconsin Farmers Union.

“We have farms in Wisconsin now that are larger than anyone had ever contemplated in 2006 when this rule was first passed,” she said.

But representatives of CAFOs fiercely opposed the changes.

Cynthia Leitner, president of Wisconsin Dairy Alliance, said it's not fair to demonize big farms. The organization was formed in 2018 to represent CAFOs.

"There is no one-way, one-size-fits-all way to farm," she said.

Leitner acknowledged that a glut of milk in the last five years has been brutal on dairy farmers.

But at the same time, Wisconsin cheese plants have brought in milk from other states because it was cheaper, even with transportation costs. Those plants could be looking for new suppliers when a $500 million processing facility under construction in St. Johns, Michigan, comes on line in late 2020. It is expected to siphon off much of the milk that has been coming to Wisconsin.

"The double-edge sword in this case is what happens if we cannot produce enough milk" to make up for the loss, Leitner said. Her fear is that those Wisconsin processors will expand elsewhere.

"The fight should not be about big and small (farms). It should be about keeping Wisconsin dairy for future generations," she said.

Organic dairy farmer and Republican state Rep. Travis Tranel of Cuba City said he understands why CAFOs draw different reactions.

"At the end of the day, they can put a product on the shelf that is just as safe, just as nutritiously sound as anybody, if not more so, at a cheaper price," Tranel said.

He defended industrial farms' overall environmental track record but acknowledged there are unintended economic consequences. As small farms disappear, and local agribusinesses are consolidated, it's "not good for our rural schools, it's not good for our rural churches, it's not good for our rural communities."