Agricultural economist Richard Levins makes one thing clear: there is not room for all sizes of dairy farms. The math simply doesn’t work out. If one or two mega-dairies add 20,000 cows to the market, people are not going to consume all that extra milk.
“If I’m going to bring 20,000 cows into a market, 20,000 other cows gotta go, and that’s in the form of 200, 100-cow dairies,” says Levins. “We’re playing musical chairs on a fixed market.”
Indeed, in Wisconsin approximately 800 dairy farms — mostly small, family-run operations — went out of business in 2019; Minnesota lost 250 dairies that same year.
Levins, who is a professor emeritus in the department of applied economics at the University of Minnesota as well as a dairy policy adviser to National Farmers, spoke at a pair of recent Land Stewardship Project farm crisis forums: Following are a few insights Levins shared:
No Cows on Main Street
One argument for allowing dairies to expand without limits is that more cows in a community automatically equals more local economic activity. But research done by Levins and others has shown that, in fact, it’s the number of farmers that create a vibrant community. Levins had a graduate student who did an analysis of what happened to the Minnesota community of Green Isle when the number of farms serving a local creamery plummeted. Retail sales dropped by 81% in a 10-year period and Main Street businesses closed permanently.
“When we were doing a survey in Green Isle for the study, the hardware guy says, ‘You know, I haven’t had many cows come in here lately,’ ” said Levins.
The Home Depot Effect
Levins said that another prevalent myth is that massive dairy farms that have 10,000 cows or more are just the result of natural expansion — a smaller dairy wanting to get a little bit larger. But there’s a big difference between an 80-cow dairy expanding to 200 cows and a factory operation adding thousands more animals.
That’s why Levins prefers to call mega-operations “Big Box Dairies,” rather than farms. It’s to the benefit of agribusiness to be associated with the word “farm,” given the positive connotation, but it’s not accurate.
“It’s like saying the local small-town hardware store needs to become the next Home Depot,” said Levins. “That’s not possible. They both might sell a hammer, but they’re not the same thing.”
Bad Managers Created the Dairy Crisis
Levins started his career in the 1970s crunching numbers for farmers looking to improve their financial acumen. He said for years economists made the argument that as long as a farmer was a “top 10%” manager efficiency-wise, they would be successful. The problem is, as small and medium-size farmers chase efficiency through expansion, the goal posts keep getting moved — what is considered an “efficient size” just increases with no end in sight. Now, 5% of the largest farmers produce over half the milk.
Levins said the efficiency argument is “a way to make people who are struggling feel horrible. If you’re making a dairy work even a little bit, you’re an exceptional manager. But I know what a struggle that hardware store has when Home Depot comes in.”
Lions & Lambs
Because of the myth that what’s good for the Big Box Dairy is good for its smaller, family-sized counterpart, public agricultural policy is often of the one-size-fits-all variety.
“Too much policy is ‘Well, we have a lion and a lamb here, let’s give them equal amounts of feed,’ ” said Levins. “Maybe the lion and the lamb can stay in the same cage, but mostly you’re only going to get one coming out.”
That’s why Levins likes proposals that are based on a kind of “reverse volume premium” that provides an incentive to remain smaller.
“We need to figure out what we can do to treat the lion and the lamb differently.”