Monday, July 12, 2010

Supply Management

I can see that there are arguments on either side of supply management. However, what I find very interesting is the big processors and their spokespeople are scared-to-death of the idea.

Obviously, there is an advantage to some to claim there is an over supply of milk. Those in the industry set up an independent, audited, open, transparent supply management, if they don't like the government involvement.

Here is IDFA's position:

Guest Columnist
Industry Issues

Opportunity counts

Connie Tipton

Connie Tipton is president and CEO of the International Dairy Foods Association. She contributes this column exclusively for Cheese Market News®.

“In the middle of difficulty lies opportunity.” — Albert Einstein

Obstacles challenge us on our path through life, but opportunity keeps us going. Our freedoms and opportunities in this country are immense and unique. Yet this is so fundamental for most Americans that we forget how important it is.

In the U.S. dairy industry there have been many challenges, but we can see growing opportunities as our economy and economies around the globe rebound. Credible research done by top-notch organizations outside the dairy industry shows the U.S. dairy industry is unique in its ability to capture growing new markets and to be the dairy production platform for people around the world.

Frankly, if you had told me 10 years ago that we would have commercial exports of 10 percent or more of our milk supply without subsidies, I wouldn’t have believed it. But as the world has changed, we have found more and more world market opportunities for U.S. milk. This is indeed an exciting opportunity for U.S. dairy and an opportunity we can’t afford to squander.

This is why I feel so strongly that our policies must be designed to best position us for a future that will unleash this opportunity for the entire U.S. dairy industry, so that we can create jobs and play our part getting our nation out from under our current economic problems.

The health of the U.S. dairy industry depends on the financial viability of our milk producers and processors. A margin insurance program, coupled with new risk management tools to better manage price swings, will go a long way to allow the U.S. dairy industry to remain competitive, both with dairy ingredients in the domestic market and the growing world dairy trade. But if those policies include supply management, we will surely lose the opportunity that is so close at hand.

Supply management is being touted as a way for farmers to control their own destiny, but nothing could be further from the truth. Control is turned over to the bureaucrats in Washington who will decide how much supply is enough and what penalty must be exacted on those who don’t comply with the government decision. Forget freedom to produce and grow as you think is best for your farm. And forget the prosperity that is nearly in the palm of our hands with growing market opportunities.

Bluntly put, I believe supply management will destroy our dairy industry’s opportunity for the future.

I have personally witnessed the move by Canadian dairy manufacturing companies into the U.S. market because we have a growing milk supply and they are stymied on growth in Canada by their decades-old supply management system. If we go the same route as Canada, we will witness not only Canadian companies leaving the United States for a better milk market, but probably some of our own U.S. companies looking elsewhere for their expansion. That’s a recipe that dooms our future as a growing industry.

Supply management will stop U.S. dairy exports at a time when emerging markets are crying out for more dairy products. It will make our dairy industry less competitive and will result in food manufacturers finding ways to reformulate and replace dairy ingredients with lower cost options. Our products and ingredients will be passed by for alternatives where they exist. In some cases we’ll have to rely on more imports and products manufactured elsewhere instead of here in the United States.

Supply management will not impact everyone the same. Many states like Washington, Minnesota and Wisconsin have been growing much faster than average, and they will be forced to slow down. Supply management policies will pit producers against producers and states against states. This is NOT the direction to take.

These will be real consequences of supply management and we must not let this be the future for the U.S. dairy industry.

As Harry Truman reminded us, progress occurs when courageous, skillful leaders seize the opportunity to change things for the better. We are forming a coalition to fight for freedom of choice for dairy farmers and for opportunity and growth for the U.S. dairy industry. I invite you to join us.


The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.


  1. It sounds so wonderful doesn't it. Then let's remember all the experts who tell the dairy farmers we got ourselves in our current position by overproducing. We know its not true, but it's a convenient excuse. If we are so important to the processors you think they would be smart enough to share a little of the profit with us, wouldn't you. Greed rules instead. Not one of our milk checks contained a bonus for the terrific year we gave the processors. Connie, we are suffering because your industry will not voluntary take care of us. End of story. And by the way, your margin insurance isn't affordable for us. Stop the plundering.

  2. Harry Truman was right. We must seize this opportunity to take back our industry from the hands of greedy processors and administrators who bleed our finances like leaches. Dairymen unite and fight for survival through a true supply management program.

  3. John,
    First of all, Pete's news is excellent news for us all. Let us all be thankful.
    This op-ed of Connie Tipton is a blatent piece of self-serving nonsense. She cynically pulls out all the stops; freedom of choice, patriotism,the greater good of all... what bullshit! She's gotta believe U.S. dairy farmers are dumber than a box of doorknobs.
    Looking at history what good have dairy exports brought to U.S. dairymen? And those poor Canadian dairy farmers: how do those unfortunate bastards get by on pay prices double lucky "free-trading" U.S. cow milkers?Why are Canadian firms coming to the U.S.? Because they're pirates at heart, and like their U.S. counterparts they want in on the plunder! If they weren't making a profit in Canada they would have no money to invest in the U.S.!
    "There will be real consequences..." damn right Tipton... U.S. dairymen might just recieve the return they earn and deserve; a decient profit on their labor, risk and investment... and what the hell is wrong with THAT picture?
    Nate Wilson

  4. Oh, and how much did poor old Connie take in last year???

  5. If there is an assumed over supply they can use that to hold prices down. When have we seen them make these broad comments when it was in the best interest of farmers? Her speech brought a patriotic tear to my eye but my eyes are cynical so the tear wasn't for her intended purpose. Nate uses the proper word for all the speechmaking IDFA and NMPF make to "help" the poor farmer and that is BS. Thanks for the post John.

  6. I would encourage everyone to go to the IDFA website and look at the Boards & Committees under the tab "About IDFA". ALL the officers and advisory committe members are high level excutives of big processors (such as Kraft and Deans), dairy cooperatives and other dairy food type companies.

    I think it's a fair guess when I say that most of these these "suits" have never milked a cow in their life but they certainly know how to "milk the dairy processors".

    The power and influence that organizations, like IDFA, exert in this industry is astonishing!

    I pray that dairy processors can someday form an organization that will have the financial resources and expertise to go toe-to-toe with dairy clubs like IDFA.


  7. Nice to see Jerome and Schreiber represented on IDFA's board Huh?

  8. The "us against them" mentality of producers against processors and cheesemakers, in the end, will not serve the dairy farmer well. One of the reasons why the US is so well-positioned to be a world market supplier of dairy is because US dairy farmers are smart, efficient, low-cost quality producers of milk. We are incredibly competitive on the world market. However, if any form of supply managment is put in place it will stifle innovation and increase the milk price, causing the American dairy farmer to be unable to sell his product overseas at a competitive price. In other words, other parts of the world, like Oceania, will step in to sell to and profit from growing markets if the US doesn't. In fact the huge percentage increase in dairy exports this year has helped increase the milk price producers are receiving. Domestic demand is flat to down across most dairy products. Although it is a nice fairytale to tell producers that supply management will give them a good milk price, in reality, it will not. Inefficient dairy operations will continue to exit the industry, even with supply management, and quite likely, opportunities to profit from growing markets for dairy will be lost.