by Dan Looker
Successful Farming magazine Business Editor
Operators of both large and small dairy farms told a government hearing on competition in Madison, Wisconsin Friday that trading in cheese at the Chicago Mercantile Exchange is hurting prices received by producers.
The growing market power of big box retailers and imports of dairy proteins also came up, but a group of farmers from New York to the Midwest to California was nearly unanimous in criticizing a block cheese market that is thinly traded and vulnerable to manipulation.
“This volatility that is being created by the CME is the source of the problem,” said Joel Greeno, who milks 48 cows on his farm near Kendall, Wisconsin. USDA milk prices became more volatile after they were tied to trading of cheese, he said. “It went from fairly stable ups and downs to looking like a heart monitor, and it can’t look like a heart attack.”
Greeno, who uses rotational grazing and is vice president of Family Farm Defenders, was at the smaller end of the spectrum of dairy farms represented at the hearing in the University of Wisconsin student union. But his skepticism was shared by most.
Ed King, whose family milks 900 registered Holsteins near Albany, New York, listed three factors hurting milk prices: lack of market power by producers, who need the milk marketing co-ops they have, a shrinking share of the retail milk price, and lack of price transparency. The CME cheese markets does not reflect the dynamics of the national and international markets for milk, he said.
King said that his own family has started to deliver milk directly to consumers, a venture that seems to be off to a good start.
Thinly traded cheese prices came up again when Frances Horton of Las Uvas Valley Dairy in New Mexico addressed Agriculture Secretary Tom Vilsack and Christine Varney, Assistant Attorney General for Antitrust.
Horton’s family runs a 14,000-cow dairy and buys its alfalfa and hay locally. She said she doesn’t want the government running her farm or heavily involved in the dairy industry. But “I also think the government should keep the playing field level.”
The hearing was an emotional one for many.
Darin Von Ruden, an organic dairy farmer from Wisconsin, got choked up when he said he wasn’t certain if his 16-year old son and 11-year old daughter would be the fourth generation in his family to run a dairy operation.
And Jamie Bledsoe of Riverdale, California, summed up the pain of the industry when he describe the situation on his 1,200-cow dairy.
“In the last 25 years I built an equity. I lost it all in 2009,” he said.
Later at a press conference, Varney of the Justice Department said that when she returns to Washington, she’s certain her department and USDA will begin conferring with the Commodity Futures Trading Commission on what changes might be made at the CME.