The Nation's Biggest Dairy Is Failing Despite Relentless Government Intervention

[Muda69]

https://reason.com/2019/11/30/the-nations-biggest-dairy-is-failing-despite-relentless-government-intervention/

Quote

In early November, Dean Foods, the nation's largest dairy producer, filed for bankruptcy protection. The company, which has secured nearly a billion dollars in debtor financing to keep it afloat temporarily, is looking to sell off some or all of its assets as it attempts to reorganize and survive.

The filing isn't exactly a surprise. As I explained in a column earlier this year, Dean Foods was a sinking ship. 

Many factors caused the company to fail. For one, Americans are drinking less cow milk. "Overall, dairy consumption (including fluid milk, cheese, and butter) has plummeted over the past four decades," I wrote. "Per capita, Americans are drinking nearly 100 lbs. less fluid milk than they did in 1975." In place of cow's milk, Americans are turning in small but growing numbers to cow's milk alternatives, including almond, soy, coconut, and oat milk.

Other factors, including falling cereal consumption and competition from Walmart—once one of its largest customers—have also hurt Dean Foods. Rising pension costs also ate into the company's line. Its stock lost nearly all of its value last year. What's more, decreasing demand for cow milk also comes as dairy farmers continue to break production records. Low demand and robust supply have driven dairy prices to a 50-year low.

But changing consumer preferences, overproduction, and competition from non-dairy producers only tell part of the story of the downfall of Dean Foods. The big picture has the government's messy fingerprints all over it.

For starters, the U.S. Department of Agriculture (USDA) is deeply involved in promoting dairy producers and production.

"USDA dairy marketing orders set minimum dairy prices, while the [agency's dairy] checkoff program takes money from dairy farmers to promote milk and other dairy products," I detail in my book Biting the Hands that Feed Us: How Fewer, Smarter Laws Would Make Our Food System More Sustainable. "Taxpayers have the dairy checkoff program to thank, for example, for the ubiquitous 'milk mustache' advertising campaign. If there are any benefits to be had from either program, they aren't likely to be enjoyed by your local farmer, creamery, or dairy."

The failure of Dean Foods indicates these wasteful programs didn't help larger dairy producers thrive, either. In fact, they encouraged dairy producers to ignore the signals they were receiving from consumers. All the while, many dairy producers in the United States have demanded that the government protect them from competition by forcing the makers of dairy alternatives to label their products with ridiculous and unappealing names. The government has, of course, obliged. 

The feds, I wrote, seem more than willing to go to almost any length to manipulate the market in favor of large dairy producers. To help boost dairy prices, for example, the USDA buys up surplus cheese and pays pizza giant Domino's to produce cheesier pizzas. (I detailed the bizarre Domino's saga here.)

While the USDA works really hard to make the dairy industry thrive, agency actions have produced the opposite outcome. To fix the problem, I urged the feds to get out of the way and to allow the free market alone to manage dairy production. I also cautioned that bad times will only get worse for U.S. dairy producers. The failure of Dean Foods is just more evidence of that fact. Given that neither Congress nor the USDA has seen fit to rein in or eliminate the programs that got dairy producers into this mess, this bad situation will likely only continue to worsen still.

Yep,  yet another government "solution" that only ended in failure.  Let the free market decide.  Always.

 

[Irishman]

I have avoided Dean’s for YEARS now. I am not sure what they do or don’t do to their milk, but there has always been an odor to it that is not right.....smells like cat piss, honestly. I had thought maybe just that gallon, but the few times I had bought it afterward produced the exact same result. I have bought organic for several years now, or have found some at a farmers market. 

[Impartial_Observer]

All milk stinks in my opinion. I don’t drink any of it. 

[DanteEstonia]

2 hours ago, Irishman said:

I have avoided Dean’s for YEARS now. I am not sure what they do or don’t do to their milk, but there has always been an odor to it that is not right.....smells like cat piss, honestly. I had thought maybe just that gallon, but the few times I had bought it afterward produced the exact same result. I have bought organic for several years now, or have found some at a farmers market. 

They don’t sell Dean’s in Vegas, and I drank Prarie Farms when I lived in Indiana.

[Muda69]

11 hours ago, Impartial_Observer said:

All milk stinks in my opinion. I don’t drink any of it. 

As the article states,  overall milk consumption in the United States has been dropping for decades yet the federal government keeps spending millions of taxpayer dollars propping up and promoting the dairy industry.   

[Impartial_Observer]

38 minutes ago, Muda69 said:

As the article states,  overall milk consumption in the United States has been dropping for decades yet the federal government keeps spending millions of taxpayer dollars propping up and promoting the dairy industry.   

Bartholomew, Jackson, Scott counties used to have a large number of dairy farms. Thompson Dairy which was headquartered in Columbus bought all the milk. Thompson's had facilities in Columbus and Seymour and still offered home delivery as late as the mid-70's. Thompson's was a regional dairy supplying milk and ice cream to a good part of of south central Indiana. The Thompsons sold out around the mid-80's to Prairie Farms, giving Prairie Farms a pretty good strong hold in south central Indiana. I'm not sure about the Columbus facility, but all production ceased at Seymour. Prairie Farms did maintain a small distribution hub in Seymour for several years. There has been a pretty steady decrease of dairy farms in the area since. Dairy farms are hard work, cows have to be milked twice a day 365 days a year, they don't get sick and they don't take vacations. As with so much in the farming industry large corporate facilities began dominating the landscape. C'mon Muda, follow the money. 

And to be clear, I'm a Gen Xer, I have never drank milk. The thought of sitting down with a big glass of milk is repulsive to me. My wife goes thru 2-3 gallons a week. But she drinks 1% which is really just water lying about being milk. 

[Muda69]

3 minutes ago, Impartial_Observer said:

Bartholomew, Jackson, Scott counties used to have a large number of dairy farms. Thompson Dairy which was headquartered in Columbus bought all the milk. Thompson's had facilities in Columbus and Seymour and still offered home delivery as late as the mid-70's. Thompson's was a regional dairy supplying milk and ice cream to a good part of of south central Indiana. The Thompsons sold out around the mid-80's to Prairie Farms, giving Prairie Farms a pretty good strong hold in south central Indiana. I'm not sure about the Columbus facility, but all production ceased at Seymour. Prairie Farms did maintain a small distribution hub in Seymour for several years. There has been a pretty steady decrease of dairy farms in the area since. Dairy farms are hard work, cows have to be milked twice a day 365 days a year, they don't get sick and they don't take vacations. As with so much in the farming industry large corporate facilities began dominating the landscape. C'mon Muda, follow the money. 

And to be clear, I'm a Gen Xer, I have never drank milk. The thought of sitting down with a big glass of milk is repulsive to me. My wife goes thru 2-3 gallons a week. But she drinks 1% which is really just water lying about being milk. 

I understand the consolidation in the dairy industry,  it has happened just like the farming industry.   My spouses uncle ran a small dairy farm for decades before he gave up.   

What I disagree with again is federal taxpayer dollars going to prop up and promote the dairy industry. Shouldn't they be allowed to succeed or fail wholly on their on merits?

 

 

[Impartial_Observer]

1 minute ago, Muda69 said:

I understand the consolidation in the dairy industry,  it has happened just like the farming industry.   My spouses uncle ran a small dairy farm for decades before he gave up.   

What I disagree with again is federal taxpayer dollars going to prop up and promote the dairy industry. Shouldn't they be allowed to succeed or fail wholly on their on merits?

 

 

Follow the money.

[Muda69]

6 minutes ago, Impartial_Observer said:

Follow the money.

I don't understand you statement.  I have followed the money.  Do you support the government propping up the dairy industry on the backs of taxpayers?

 

[Muda69]

Another large dairy files for bankruptcy:  https://www.cnn.com/2020/01/06/business/borden-dairy-bankruptcy/index.html

Quote

Borden Dairy Co., one of America's oldest and largest dairy companies, on Monday became the second major milk producer to file for bankruptcy in the last two months.

Tumbling milk consumption combined with the rising price of milk have crippled the dairy industry with debt. Dean Foods, America's largest milk producer, filed for bankruptcy November 12.

Borden said it filed for bankruptcy because it cannot afford its debt load and its pension obligations. It has 3,300 employees, 22% of whom are covered by a collective bargaining agreement.

The company said it also has been hurt by broader industry trends, including a 6% drop in overall US milk consumption since 2015. Borden noted that more than 2,700 family dairy farms went out of business last year, and 94,000 have stopped producing milk since 1992. With the wholesale cost of milk rising due to fewer suppliers and retail milk prices weaker due to lower consumption, the margins for milk processors like Borden have suffered, the company said in its filing.

"Despite our numerous achievements during the past 18 months, the company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry," said CEO Tony Sarsam in a statement.

He said the company has discussed "a range of potential strategic plans" with its lenders. But it had been unable to reach an agreement with them as to what to do next.

Borden's filing only says it plans stay in business during the bankruptcy process, and does not spell out whether it intends to stay in business longer term or liquidate. But Borden said in a statement it intends to use the bankruptcy process to shed debt and position itself for "long-term success."

....

 

 

[swordfish]

Was at the grocery last weekend......SF wonders.....how do you milk an almond?

[Irishman]

9 minutes ago, swordfish said:

Was at the grocery last weekend......SF wonders.....how do you milk an almond?

With a VERY strong grip. 

[gonzoron]

57 minutes ago, swordfish said:

Was at the grocery last weekend......SF wonders.....how do you milk an almond?