The Trouble with Milk Part 2

The Trouble With Milk Part 2. I'm Greg Martin with today's Line On Agriculture. Trying to treat milk and dairy producers equally has created some of its own problems especially when it comes to major ups and downs in the prices paid. Rob Vandenheuvel, General Manager, Milk Producers Council says a major problem is that as a dairy producer you try to produce as large a supply of milk as possible. VANDENHEUVEL: That has created a chronic oversupply of milk and if you look at the dairy industry if you have an oversupply of milk it's not like factory you can shut down for a week, you have to slaughter cows. And so it's got to get so bad for so long that enough dairy men decide to slaughter their herd or slaughter part of their herds or however you get that supply down it's got to get bad. He says that over the last 10 years it has gotten progressively worse and with every down cycle more dairies are taken out. VANDENHEUVEL: We're down now to 65-thousand dairymen and it's like the clash of the titans. These are dairymen that want to be dairymen. It's a business but it's a lifestyle. They're good dairymen. They know how to efficiently run their farms and so it's got to get so bad that you start to take out some dairymen that would want to otherwise get out of the business. Today's dairies can produce a lot more milk per cow than in the past and without control over the market it really can produce these very dramatic ups and downs in the industry. VANDENHEUVEL: So what Milk Producers Council has been working on and we have been working with groups up in the northwest and what we've been trying to do is come up with a bill, a program that will send an actual signal for dairy farmers to manage their supply and so what the program does in a nutshell is it says if you want to grab a larger share of the market –that's fine but you are going to pay for one year while you are establishing your higher share of the market you are going to pay a fee. He says those fees will be used to compensate other dairies that are holding their production in line. VANDENHEUVEL: So in essence you're got an agreement between the 65-thousand dairies in the country. There will be future growth opportunities and we want to meet those opportunities but some dairies will go capture that market share in any particular year and the other dairies will hold back and then the next year it will be a whole different set of dairies and it will be a much more rational system of growth rather than having all 65-thousand dairies grow at the same time trying to capture the same market share and overwhelming our market. Tomorrow we talk about the problems in bringing this bill to light. That's today's Line On Agriculture. I'm Greg Martin on the Ag Information Network.