Milk Money: Cash, Cows, and the Death of theAmerican Dairy Farm

Milk Money: Cash, Cows, and the Death of the American Dairy Farm by Kirk Kardashian

American dairy farmers do not have it well today. The work is difficult, and the earnings are small and erratic. this book is an exposé of the underbelly of the dairy industry, while being sympathetic to the small family dairy farmer.

Dairy really took off in the northern climates of Europe. Farm animals had been milked in warmer climates. However, the milk was typically consumed in a processed fashion (such as yogurt.) In the north, the growing season was shorter and milk would be a better source of food. People also had genetic adaptations to be able to consume dairy into adulthood. This allowed more consumption of fresh milk. (It would be interesting to see how this came about. Did those with the mutation travel to the north? Or did those in the north with the mutation out-survive others?)

Dairy finances are extremely convoluted. There have been various price support and subsidy schemes in place. At one time, the government promised to buy all excess milk, leading to large storage of cheese and nonfat dry milk. There have been various export schemes. However, American milk is expensive and at is a challenge to compete internationally. Milk is a commodity, and farmers are paid by the hundredweight based on market prices. These are set by a survey, yet often just end up being the low price from the commodity exchange. 

Farmers often sell their milk to processors. They must pay to have the milk hauled away. they must pay for marketing. There are a multitude of items that end up being deducted from what they receive. Even when the are members of cooperatives, there may be factors working against their interest.

Consolidation has happened in the dairy industry. Giants, such as Dean have gobbled up many of the processors and squeezed the producers. Farmers have moved to huge CAFO operations. The health of the cow and the quality of milk are not nearly as important as the quantity produced. There are significant fixed costs involved. It is difficult to reduce production, thus there is a constant pressure to produce more. The giant producer operations can better manage economies of scale. However, they depend on labor - which is often from Mexico and central America. The environmental impact of these giant operations also tends to be much worse.

The book concludes with the "future" of dairy farming. A small scale distributor that focuses on high-quality milk. The milk is not organic, but adheres to higher quality standards. Farmers can be paid more as they focus on brand rather than commodity. This does seem like a nice solution. However, I can only see this being a niche market. Maybe that is what is left for family farmers, while the big guys can focus on the commodity market. The book is an interesting look into the economics of milk. It tries from some personalization, but doesn't succeed as well as some other similar books.