American
Dairy Farmer
Read about Jim’s and his plan and then e-mail him by clicking here
ROCKY
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Idaho Dairy Farmer gearing up for tough match
Ready to take on processors and politicians
By
Fran Alt
It's like a real life 'Rocky' story. An Idaho dairy farmer has found himself sparring with politicos and major cheese companies. You might wonder if a dairy producer can actually get in the same ring with guys who have that kind of clout? Right now this heavyweight match is in the hype stage but if Jim Wiersma has his way there will soon be a title match in the offing.
Jim's not out jogging or shadow boxing to work up for this match. He's too busy milking 1900 Holsteins on his Buhl, Idaho dairy, and at the same time, trying to get folks to pay more attention to the flaws in the industry. Jim thinks some of the major players are hitting below the belt and he's out to stop them.
Like most dairy farmers Jim is acutely aware of the financial inequities that abound. The frustration of milk pricing that gnaws at most dairyman was getting to him. So one day, he decided to sit down and take a close look at all the facts. He was going to figure out why so much was wrong with the way dairy farmers got paid.
One of the first things that came to mind was that everyone seemed focused on the price of milk, when in reality cheese establishes the price of all milk! "We need to focus on the cheese," Jim thought. " What we need to do is floor the cheese - not the milk!" Jim says he also realized that this would be a problem because cheese processors held more political clout than the dairy farmer did.
Jim, a powerful figure at 6'5" and 245 pounds, is not above using this exceptional presence to help get his point across. He doesn't have to move a muscle; he just has to be there. Stature helps when you are looking for answers to questions like - "Why did the government guarantee cheese processors a profit and a marketplace?"
According to Jim the government is storing cheese and guarantying a profit for cheese processors. There's an analogy he likes to use to explain what's going on. He says, "Imagine if a car company made too many cars and then the government bought the excess with your tax dollars and began stockpiling them in parking lots throughout the country at taxpayer's expense? Well that's what is happening with cheese!
It's Jim's contention that the government allows the processor to make as much cheese as they want with a guaranteed profit! "When the processors have support prices that high, they can encourage YOU to produce more milk . . .then you lose and they gain! Processors don't care about the price of cheese - they only care about volume. They'll encourage producer growth when there is no need for it."
Jim has a plan that will slow down cheese production and boost milk prices. He wants the government to put in make allowance for the producer. According to Jim producers and the public are getting ripped-off. "The government needs to see what they have done and then they need to fix it." As for 'fixing it', Jim wants to introduce a bill that includes a wholesale cheese floor of $1.45 lb. He says this should guarantee a Class III milk price of $12.80 cwt. He also wants processors to limit incoming milk when the price of cheese drops below the floor price says that dairymen causing the oversupply should be held responsible. If a dairyman exceeds his own production limits than he would not be allowed to ship to the processors. (The limits are set by what was produced 12 months prior.) Jim's plan also advocates replacing NASS surveys with the CME price and disallowing government bailout buys. Jim's ideas sound like a win-win situation. The price of milk to the consumer stays the same, and the dairyman finally gets to make a profit.
Grass roots actions made National news when farmers dumped milk on the Fourth of July. Jim says, "We don't need to dump milk, we just need farmers to hound their politicians."
Jim feels the processors are profiteering and the producers are being made to look like the 'bad guys'. "We need to turn that around. All the pressure needs to be on the processor. The dairyman should not be held responsible for something about which he has little knowledge."
Jim says, "Idaho is a cheese state --- 95 percent of all our milk goes into cheese. Dairymen here are going broke. Idaho is one of the states creating low milk prices and the problems here are affecting all the states. We need to stop it but we can't because the processors are too powerful."
According to Jim, Idaho dairymen are asking for $13 to cover cost-of-production and that in turn will help producers throughout the US. To explain this he uses the example that Florida's differential should bring the producers' price to over $17. He feels strongly that flooring the cheese is the way to go. To make this work, he says, "It will take phone calls, phone calls, phone calls - that's what gets things done. Call your senators and congressmen and keep on calling them! It's the only hope we have to beat the processors."
Jim believes in people power and says the only way to change things is for the dairy farmers and the public to get involved. Jim has already taken some steps in that direction by calling politicians and alerting them to the facts. Since producers are making less money now than they did in 1978, and so many are disappearing from the landscape everyone knows there are problems. It's fixing them that is the stumbling block. But Jim thinks he has the answer. He came up with a plan for a new bill and took his ideas a friend, attorney and dairy farmer Harry DeHaan. Harry helped Jim get his ideas on paper. Jim has been trying to present his bill to the Ag committees but says he's run into too many closed doors. He says it's as if Congress feels they gave dairy farmers their time allotment last year and now they don't need to do anything more.
Jim, who farms with his wife Patty and son Russell, puts every bit of pressure he can on the politicians in Idaho and hopes to encourage dairymen and women nationwide to do the same thing. He suggests producers call their congressman and senators. Another tactic to bring attention to your plight is to write letters to your local papers. Letters to editor will help make the general public aware of what is happening and "that major cheese producers have their profits insured and protected by the CCC!"
In this match Jim isn't looking for a split decision or a TKO. He wants this 'Rocky' story to end with a knockout punch that will make all dairyman winners.
JIM WEIRSMA'S BASIC PLAN
The wholesale price of cheese will be established with a floor of $1.45 per pound. After a 'Make Allowance' to the cheese plant, this would leave a 'Make Allowance' to producers of about $12.80 for their milk. This would allow a modest profit and also allow the market to swing in a reasonable range.
If the supply becomes such that it would drive the price below $1.45 the cheese plant would restrict the amount of milk that they would accept from the Producers causing the oversupply, i.e. Producers who expanded within the previous twelve mouths. The producer could ship the amount of milk he shipped twelve months prior; if he chose to expand, he would take the risk of a percentage of that expansion not being accepted in times of surplus. Since milk is an inelastic commodity, a relatively small - i.e. 1% to 3% reduction in supply would result in a 15% to 20% increase in the market value.
Therefore, the producer who expanded and contributed to the oversupply situation would be exposed to losing part of his production. But because of the inelastic supply/demand curve on milk his reduction, as a percentage of the milk supplied, would be much less than the reduction in price received by all dairy farmers if the oversupply situation continued.
The NASS survey price would be replaced by the CME price. The Chicago Mercantile Exchange is a fair and open option system for setting the market price and should replace the survey of reported prices which has too great an opportunity for inaccurate survey results.
This proposal would leave alone the increases and deductions available for component variations; as well as, milk quality variations to be set "as is" by the Federal Milk Marketing Order.
ADVANTAGES
The Government will not have to but cheese or store cheese. The Government will not have to vote emergency bailouts whenever the oversupply causes a crash in the market.
This really extends "Make Allowance" from cheese manufactures to the producers, who need it just as badly.
The "Make Allowance" setup is easy to understand and well accepted in the industry, and a simple extension would be well accepted.
This places the burden .of oversupply on the individuals that create it and would curtail oversupply with a minimum impact on both the non-expanding and the expanding operations.
Conclusion: This is a simple, easy to understand and cheap solution for the Government
Answers to basic questions
1. How will it work?
Every dairy will have a history from prior 12 months. If his production is currently at that figure, he is exempt from all cutbacks. If he's over, he is exposed to the cut back needed to correct the over-production in his area. A 30-day notice will give him time to do what it takes to lower production.
Examples:
A. Dry extra cows; Beef extra cows; Change feed mix, etc.
2. How will I know when to grow?
The monthly settlement check will, have this information: Your 12-month history,
Your current production and the plant or organization's percent of production needs
3. What about haul charges?
Dairymen will no longer be charged for hauling -- this will eliminate undercutting the market place by bigger dairymen who, can absorb extra haul charges to ship milk from saturated areas. The processor will be made responsible for the cost of milk delivered and that cost will be passed on to the consumer.
4. How to get Congress to agree?
We will show that there will be no more need for direct payments. They can take these funds allocated to dairies to help: Needy schools in nation; Fix Social Security and pay down the national debt.
The only thing we would want the Government to do would be to audit all milk in and all products out to assure no undercutting of price to producers.
5. What happens if 1 want to sell out?
If a producer sells his dairy with the cows, the new owner takes over the history.
If a producer sell his cows off the dairy to another dairyman, the history is terminated.
If a producer rents his dairy and sells the cows, the new producer must stay on the rented dairy no less than 5 years to earn that history.
6. How does a person get started?
A new producer starting on an empty dairy or new facility would be exempt from cutting back if there was a problem in an area. A cap of 20,000 lbs.-a-day for one year will allow the new producer to establish a history. This would prevent irresponsible.
POINTS TO REMEMBER
A. Cheese must be floored at $1.45 to ensure a $13.00 Class 111.
B. Butter must be floored at $2.00 which will enable N.F.D.M. to be sold for $.72, thus enabling N.F.D.M. to be sold on world market. This combination will ensure a $13.00 Class IV.
C. The numbers used are on today's cost of production. It should be noted, that these figures be reviewed once a year to see if cost of production has risen. The cheese and butter prices should also be reviewed once a year.
D. For this to be a national policy, the milk paid these prices will be at 3.5 B.F. only. No protein or S.N.F. will be in pricing. No deducts for S.S.C. under 750,000. If a processor wants a certain level of any of the above, he can pay a premium to producer for producer's extra effort. (Meant for Jersey Producers.)
E. This is Supply and Demand in its simplest form. If producer and processor are both made to be responsible, this will benefit all, especially the consumer and the government.
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