Wednesday, April 6, 2011

Creative Destruction

"Joseph Alois Schumpeter (8 February 1883 – 8 January 1950) was an Austrian-American economist and political scientist. He popularized the term "creative destruction" in economics."

For many years the concept when applied to dairy farms, meant driving the smaller family farm out of business to make room for the larger more "efficient" operations. The problem with most conventional economic thinking is a kind of mindlessness which sees humans and human communities as nothing more than cogs in a gear.

The truth is,and always shall be, "No man is an island, no man stands alone." That is to say, we will not make progress in dairy policy until we recognize the importance of the community in which dairy farms operate.


  1. John,
    Having been a milk coop board member , I was elected to the IMPCA board in the 1990's and left the board before it merged with DFA, I would like to submit that one of the greatest destructive forces in the small verses big fight is the volume premium.There has never been any legitimate reason to take money from the small guy and give it to mister big, yet coop's do that every month and the board members who support that thinking get reelected time after time. This issue needs to be addressed then maybe we can begin to talk about no man is an island.

    Jeff Burdick Sr.

  2. Jeff, could you please explain what you meant by by "coops taking money from the small guy and giving it to mister big"? How is that done and what is the coops' rationale?

    Thank you. Bruce Perine

  3. When the receipts come into the ,ilk coops office it is a gross amount of dollars. The dollars needed to pay the volume premiums is subtracted from those total dollars. and the same goes for the quality premiums and components over the average. then the pay price is established, total dollars remaining divided by total cwt of milk handled for that pay period. That gives the base pay price. then the premiums added back in to those who get them.

    So the small producer gets the base money after the volume premium has been deducted from the pool of money. There is no extra money coming into the coop to pay for those volume premiums.

    Thus the volume premiums are on the back of the small producer.

  4. Thank you for the explanation Jeff,

    Just a couple of follow up questions - to whom are the volume premiums then paid to and what are the criteria for those payments?

    Bruce P.