By LeAnn R. Ralph
ELK MOUND — U.S. Senator Tammy Baldwin believes it is not too much to expect “fair rules and a level playing field” for Wisconsin dairy farmers when it comes to exporting milk to Canada.
Senator Baldwin visited Five Star Dairy in Elk Mound April 13 to speak with dairy farmers and representatives of the Professional Dairy Producers of Wisconsin.
“All we are asking for are fair rules and a level playing field. That’s what we think has gone awry in Canada,” Senator Baldwin said.
Earlier this month, Grassland Dairy Products of Greenwood sent a letter to 75 Wisconsin dairy farmers saying that as of May 1, Grassland would no longer buy their milk.
Grassland is canceling the contracts because the company has lost Canadian business.
At issue is the export of “ultra-filtered milk,” which has had some of the water removed so more milk solids are hauled in a load, reducing the cost of shipping, explained Mitch Breunig, vice-president of PDPW and a farmer near Sauk City.
When the milk reaches Canada, water is added back in, and the milk is used in making cheese, he said.
Five Star Dairy is owned and managed by Lee Jensen, his wife, Dr. Jean Amundson, and Jim Jensen, Lee’s cousin.
Jean is a veterinarian and manages the dairy herd. Jim manages the crops and the trucking business. Lee is the general farm manager and handles cattle nutrition and the manure digester.
Five Star Dairy milks 1,100 cows and farms 4,500 acres.
Last year, the Canadian province of Ontario started a national-ingredients policy, which has now gone nationwide, that reduces the cost for Canadian processors to purchase milk ingredients produced in Canada.
The policy, Senator Baldwin said, creates an “unfair playing field” for exporting milk to Canada.
“It is incumbent on our nation’s leadership in trade and agriculture to be fighting hard on behalf of our dairy industry in the United States,” Senator Baldwin said.
Part of the problem is, right now, the United States does not have a Secretary of Agriculture or a U.S. Trade Representative, she said.
“One of the frustrations is the new administration is not getting (those) positions filled as quickly as we would like to see,” Senator Baldwin said.
The Secretary of Agriculture and the U.S. Trade Representative “need to be sitting across the table from their Canadian counterparts and have negotiations. I believe it should be at the top level of our government. This has an impact costing millions of dollars and could grow worse. I call on them to do a tough and successful negotiation,” she said.
“Frankly, because of the transition with the new Trump administration, there’s been vacancies, and there’s been a vacuum for a period of time,” Senator Baldwin said.
Senator Baldwin met with the nominee for Secretary of Agriculture, Sonny Purdue, several months ago and told him about the situation with exporting milk to Canada.
Purdue, a former governor of Georgia and himself a veterinarian, “is somebody who I think can be an effective ag secretary. He needed to know what the top priorities were for me, as a senator from the dairy state. I think he understood the urgency,” she said.
Senator Baldwin said she expected that Purdue would be confirmed as Secretary of Agriculture the week after her visit to Five Star Dairy.
Senator Baldwin first called for a federal investigation into the Canadian trade barriers in early September of 2016.
In late March, Senator Baldwin asked President Donald Trump to include the situation in trade discussions with Canada.
“We have been pressing for an urgent response. There are other issues, but this is the emergency, this is the crisis right now,” she said.
Not our fault
The Canadians say it is not their fault that the United States has over-produced milk.
Breunig has friends in Canada with whom he communicates via Twitter.
The feedback has been, “this is not our fault. We are protecting our market. It’s not our fault that America produces too much milk,” he said.
“I flip that around. For ten years, you bought the product and didn’t seem to have a problem with it, but one day, you stopped buying it. There are still a lot of answers to be figured out,” Breunig said.
Although it might seem logical to think if the 75 dairy farmers who received letters from Grassland cannot sell their milk to that company, they can easily find another company to buy their milk.
The 120 processing plants in Wisconsin are already at capacity.
Short-term solutions to the problems faced by Wisconsin dairy farmers are not going to come from the federal government, Breunig said.
Wisconsin’s Secretary of Agriculture, Ben Brancel, has been working with the processors, he said.
“We are calling on the processing community to step up as a team in the state of Wisconsin to see if they can take some of this milk for a short period of time to give us a little more time to get an ag secretary, to get a trade representative, and to allow this process to not have a final deadline on May 1,” Breunig said.
Brancel had met with processors again the day before Senator Baldwin’s visit to Five Star, but “as of this moment, no one has stuck their hand up and said, ‘we have room for extra milk.’ But they’re still working on it. The farmers are, as a group, trying to figure this out,” he said.
“The door went shut fairly fast,” said Marty Hallock, president of PDPW and a farmer from Mondovi.
“If you are looking at exports going back and forth, you can still talk about it, until somebody closes the door, it’s still just discussion. And I think the door closed fairly fast,” he said.
“The plants are running full. Can each plant pick up a little? I don’t see anybody stepped forward and taking the whole thing, but we hope and pray the processors will be able to figure that out, or we can open the doors back up for exports. These are real people. They’re good people,” he said.
Dairy farming is an enterprise that is not built overnight.
“The clock is ticking. It takes a lifetime to get (to where you are now), and then all of a sudden, there’s no market for your milk,” said Jensen, the co-owner of Five Star Dairy.
Jensen ships his milk to Associated Milk Producers Incorporated (AMPI) and says he has been assured that AMPI will continue to be able to process the milk from their existing producers.
“Farmers do not get into this willy-nilly. We’ve been planning a lifetime and growing our businesses,” Breunig said.
In 2004, the United States exported abut 3 percent of the milk and milk products produced.
Today, “we’ve grown that to 15 percent by all of the great work of the trade people … we hope 75 (dairy farms) is it. We don’t want 75 more somewhere else,” he said.
“As a state, can we do something? Is there some money available to help the processors to process some of this milk in a short-term window to make sure it’s getting moved to process?” Breunig said.
The size of the farms affected by Grassland canceling their contracts ranges from 12 cows to 3,200 cows, Breunig said.
“Are these farmers going to have to sell their cows and stop farming at their family farms?” he asked.
The impacts, however, will not only be confined to farmers.
“It’s planting season. If you’re a dairy farmer, you’ve already purchased your corn, you’ve purchased your alfalfa, you’ve purchased your soybeans, and you’re planning on going out to the field tomorrow to plant your crops, but you don’t know if you’re going to have cows … on May 2, if my bulk tank is running over, I don’t have a market. That’s the real challenge, Breunig said.
“And it gets even bigger. Because now it’s the veterinarian community. It’s the feed dealer. It’s the corn market. If we retire these cows, there’s going to be a need for less corn, less beans,” he said.
Under normal circumstances, if a farmer has a sale and sells off his dairy herd, other dairy farmers would probably buy those cows, and they would continue to produce milk.
Breunig said he is concerned that after this, dairy farmers will be limited in the amount of milk they can produce.
“The real issue that I think we are going to have is, are the processors going to say to individual farmers, ‘this is now much milk you can produce. If you produce more than that, we are not going to guarantee that we’ll be able to buy it.’ Never in my lifetime has that been a reality, not only in the United States but also in Wisconsin,” he said.
Another reason the cancelled contracts with Grassland are so disconcerting is related to a balancing act in the processing market.
“We have 120 different, individual manufacturing plants that are able to buy this milk in balance. We’ve never had a situation where one of them said, ‘wait a minute, we lost a million pounds per day,’” Breunig said.
“Grassland is unique to Wisconsin. They are the largest single plant in Wisconsin, and a lot of other people use Grassland as the balancer,” he said.
For example, if one company has the capacity to process 40 loads of milk per day but ends up with 44 loads, “Grassland was there to say, ‘you know what, we’ll take it. Maybe we’ll take it at a discount, but we’ve got room for it.’ … When you remove a million pounds of balancer that made Wisconsin unique and made it work, that’s the damage that’s been done,” Breunig said.
And the damage goes beyond the 75 farmers who received a letter in the mail.
“It’s all of us … We just hope more people don’t get a letter because the situation is so dire,” Breunig said.
Mexico buys 40 percent of the milk exports coming from the United States, Breunig noted.
Recent rhetoric has been that Mexico is “not a fair trading partner,” he said.
“In the dairy world, Mexico has been really good to us. It’s been Canada that’s been more of a challenge,” Breunig said.
“I think there’s a possibility we could have more trade (with Mexico). Free and open trade is so important. It’s been the basis of all our agricultural commodities,” he said.