Projections & Predictions

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Projections and predictions are two different things. However,the two seem to get mixed together most of the time.

Although there is talk of the 2012 Farm Bill, and how any changes in dairy policy will have to wait until then, I say good luck , if that is what you are counting on. Most any bureaucrat and most any politician will look at some variation of the above graph and believe entirely in staying the course. Plenty of milk and the dairy cases are full in the stores - life is good.

But, the East is deficit in milk and the costs of hauling milk to the East, in 2010, is going to be about $2.17 BILLION. Therefore things may not be all that good.

If there is to be public dairy policy, the good of the public needs to be served. I would venture to say that few, if any, have given this any thought. We still hear about dairy farmers getting together. Why? Can everyone benefit from a monolithic, one-size-fits-all, public policy? I think not.

Farm Bill Thoughts

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While we are still in the early stages of thinking about the next farm bill, perhaps there might be something to be gained by reflecting upon where policy has taken us since 1929.

In 1929 grain was first taken in a binder and the thrashed. Crop yields per acre were much lower. Cows were milked mostly by hand and produced maybe, 3,000 per lactation.

So, where has all this early adoption of technology taken us? As can be seen in the above graph, there is hardly any difference, a mere 8%, between 1929 and 2009 when inflation is factored (constant dollars).

The trend on farm income is even more disturbing. Certainly, no one will stand up in congress and suggest that all the proceeds from increased productivity be handed over to those above the farmer. How then to proceed from here is a huge question.

What is Real, What is Normal?

Graphs Courtesy of Robert Shiller
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Robert Shiller is a world renowned economist from Yale University. He is particularly known for his work on the housing bubble.

In a June 2009 Project Syndicate editorial, Shiller concludes, "The sobering truth is that the current world economic crisis was substantially caused by the collapse of speculative bubbles in real estate (and stock) markets."

Every dairy farmer should understand, the world economic crisis brought about a crash in dairy farm milk price.

Essentially, what the above graphs are really showing is greed and concentrated power.

Now everybody wants to know when things will return to normal? The above graphs indicate some problem in defining normal. For dairy, what has passed for market economics is really "slash and burn" economics. There is no way what has been considered normal can continue.

This leaves us to contemplate how farm milk should be priced. Furthermore, we need to contemplate whose voices should be heard in the discussion on the future of farm milk pricing.

The political establishment takes great pains to point out the importance Of the 2012 Farm Bill. In fact, to go to Washington DC cost a minimum of $500 for most people. Few dairy farmers have the spare, multiple,$500.

Unless things change dramatically, the voice of the dairy farmer will not be a real part of the discussion for the upcoming 2012 Farm Bill.