With dairy farms going out of business as milk prices tank, AFE student Hannah Tremblay argues for a sustainable dairy farm revival.
On a recent drive through upstate New York, once a major dairy-producing region, most farms I saw had “For Sale” signs, collapsed roofs and walls, overgrown fields, and most notably, no cows. The sight left me saddened but conflicted. Dairy farmers seem to be fighting a losing battle against inevitable market forces. We’re told that cutting out dairy from our diets will solve climate change and switching to plant-based products is better for our health. As someone who cares about both the environment and agriculture, this makes me wonder: does the industry really deserve to die? While there are legitimate reasons that dairy has floundered, there are plenty of reasons to pull it back from the brink.
Dairy in the U.S. hasn’t always had such a bleak outlook – the industry grew from 2004 to 2014, quadrupling its exports and becoming the world’s third largest dairy producer. But in 2015, the value of dairy exports dropped by nearly 30% and the number of farms selling dairy fell by 20% from 2012 to 2017. Today, milk prices continue to fall due to low demand and excess product flooding the market, while costs of production are on the rise.
The dairy industry suffers from both low profit margins and falling demand for milk. Low margins have made dairy less profitable and the industry further susceptible to price fluctuations caused by market changes in oil, corn, and soy. The demand for milk is down due to concerns about dairy’s impact on the environment, health concerns surrounding dairy, and the rise of plant-based milks. Producing dairy is more resource-intensive than producing plant-based foods– 35% of global agriculture is dedicated to producing animal feed that in turn produces dairy and meat. The dairy industry is responsible for huge amounts of greenhouse gas emissions due to feed production, land use change and the methane emitted from cows and cow manure – it accounts for 3.6% of total global emissions. This link to climate change is a legitimate reason to reduce, but not totally eliminate, our dairy consumption, and to work on lowering its environmental impact.
In addition to its environmental impact, dairy has come under scrutiny for being unhealthy. Although the almond industry would have you believe otherwise, dairy consumption is associated with lower mortality risk and a lower risk of major cardiovascular disease. Americans could stand to reduce their consumption of animal products, but dairy milk is a source of important nutrients in the American diet that plant-based milks can’t provide, such as protein and essential B-vitamins. Given that dairy is more widely available and nutritious than plant-based alternatives, completely eliminating dairy from the American diet is unrealistic and would be worse for our health.
Aside from lower demand and consumer perception, the biggest problem facing the U.S. dairy industry is consolidation. Small and mid-sized family farms are being squeezed out or bought by large farms, leading to a decrease in the overall number of operations and a massive consolidation of dairy producers. The structure of the industry exacerbates this problem – dairy production tends to be highly vertically integrated and mostly operates via contract farming, where large corporations contract out with local farms but retain control of supply chains. The result of consolidation is that smaller farms can no longer compete and are driven out of business. Extreme consolidation is a market failure, so although you could argue that unavoidable market forces are shuttering the industry, it’s clear that a lack of government regulation has played a role in dairy’s decline.
To find out what someone within the dairy industry thinks about the challenges it faces, I spoke with Kyle Thygesen, the director of milk sourcing and procurement for Stonyfield. He knows firsthand what dairy farmers are up against: he grew up on a dairy farm and ran his wife’s family’s farm before switching careers. Both farms have since been sold off. In a thick upstate New York-accent, he told me if the trend of consolidation is left unchecked, “We may see 25 families owning the majority of cows in the next decade.” In Thygesen’s opinion, dairy farmers haven’t done enough to abate consumer concerns over the environmental and health impacts of dairy and this has hurt their bottom line. The carbon footprint of dairy is 37% as large as it was in 1944, but you might not know that from all its bad press. A lack of effective advocacy hampers the dairy industry’s ability to compete with plant-based alternatives.
Dairy’s deterioration in rural communities has had unanticipated consequences. Vermont, a major dairy-producing state, has felt these effects acutely. The loss of dairy farms there and the subsequent population decline have forced school districts to consolidate. Communities that were previously economically healthy have been gutted and are now “bedroom communities,” says Thygesen.
We shouldn’t downplay the function of small dairy farms in rural economies. These family-owned farms play a “huge” role, according to Thygesen. Dairy farms have an outsized effect on these communities, anchoring other businesses such as local granaries, feed stores, creameries, and tractor suppliers. In Vermont, dairy is one of the state’s biggest job providers and every cow brings in $12,500 of economic activity annually, making it a vital industry.
Small, sustainably-run farms can also play a role in carbon sequestration and responsible land management, according to Nicole Tichenor-Blackstone, an associate professor of U.S. agricultural policy at Tufts University. Keeping land in agriculture spares it from being developed and provides ecosystem services such as wildlife habitat and carbon sequestration. Rotational grazing practices can increase soil quality and carbon uptake. Preserving small farms is also important because they are drivers of innovation in organic farming and local food systems.
New England, in particular, has a huge amount of land in dairy farms – in Vermont alone, 15% of land is covered by dairy farms or land that produces feed for dairy. As a New Englander, I can’t help but imagine a vastly different northeast landscape if those farms were lost to development.
Dairy farms that also produce beef have added environmental benefits. “Beef from dairy tends to have a lower environmental footprint compared to beef from beef breed animals,” says Tichenor-Blackstone, “As a result, we get more bang for our environmental buck by producing beef from dairy animals.” Although the environmental impact of meat and dairy consumption is indisputable, a pasture-raised beef-dairy system may offer more sustainable means of producing these foods and could be a model for dairy farms looking to improve profits while lessening their environmental impacts.
Because of the benefits that small farms provide, policy should be created to prevent the industry from declining further. The government has historically played an important role in supporting U.S. dairy – it aids the industry via federal check-off programs, which are federal efforts to expand consumer demand for commodity products. These programs create demand for a product where there isn’t any – the “Got Milk?” and “Milk Mustache” campaigns are two examples of check-off programs. Until 2014, the federal government also bought surplus milk and required that milk be provided through feeding programs like the National School Lunch program. These policies are problematic for several reasons: they act as subsidies for private sector-interests, lead to food waste, and are in conflict with the Dietary Guidelines for Americans, which recommend limiting dairy consumption.
So, what should the government do instead to help the dairy industry? In the face of a steep decline in dairy revenues, some are pushing to implement a supply management system. Many people look to Canada as an alternative model for managing the dairy industry. The Canadian government uses a supply management system rather than subsidies to support dairy farmers. The system works by setting quotas for milk production (in order to prevent large milk supplies from flooding the market) and allowing quotas to be bought and traded. Canada also sets a higher minimum price than the U.S., arguing that other markets are paying artificially low prices for milk. Finally, Canada imposes tariffs on foreign products – a policy the Trump administration argues hurts American dairy farmers.
Dairy producers are divided as to whether or not this type of policy is the best approach. Thygesen is a fan of the Canadian model, though he doubts it would be implemented here. As someone who has experience wading through bureaucracy, he thinks “the government will just mess things up.” But the 3% excess in product currently responsible for the loss of U.S. dairy revenue could be fixed by controlling production in a Canada-esque quota system.
Quota systems in the U.S. are historically unpopular. In the past, farmers scorned limits on production and considered them a waste of America’s production potential. For example, in the 1980s, the U.S. had a whole-herd buyout program, intended to limit the amount of milk produced by dairy farms. The program unintentionally caused farmers who remained in the industry to increase their outputs, negating the lower number of total herds. Other less-direct programs have been more popular, including the Conservation Reserve Program, which pays farmers to take land out of agricultural production. I’m in favor of this type of regulation because it incentivizes sustainability while acting as a means of limiting production.
The solution to the dairy industry’s woes will lie in creating policies that encourage sustainable milk production, as well as in investing in technologies to improve profits. Though demand has dropped for large-scale conventional dairy, it has increased for organic, grass-fed, and ethically-produced dairy. This type of product currently makes up a small percentage of the industry but is increasingly popular among consumers. Developments in milking technology and forage crops allow farmers to increase operational efficiency and yields while requiring fewer inputs. This technology can have compounding benefits – as Thygesen pointed out to me, farmers with higher revenues are more likely to have the ability to adopt sustainable and humane practices.
Many of those dairy farms I passed in New York will never be operational again and we’ve already lost many acres of agricultural land forever. But it’s not too late to save farms that are still afloat. The way forward will be to prevent further consolidation, create policies that protect smaller farms, and to focus on the market for sustainable and transparently-produced dairy. As Thygesen put it, people want to be able to see the cows that produce their milk “taking a ‘number two’ in the middle of the pasture.”
 Capper, J.L., Cady, R.A., and D.E. Bauman. “The environmental impact of dairy production: 1944 compared with 2007.” Journal of Animal Science, vol. 87, no. 6, pp. 2160-2167, 2009, https://academic.oup.com/jas/article/87/6/2160/4731307
 Cessna, Jerry, et al. “Growth of U.S. Dairy Exports.” United States Department of Agriculture Economic Research Service. 2016, https://www.ers.usda.gov/webdocs/publications/81255/ldpm-270-01.pdf?v=0. Accessed April 15, 2019.
 Dehghan, Mahshid et al. “Association of dairy intake with cardiovascular disease and mortality in 21 countries from five continents (PURE): a prospective cohort study.” The Lancet, vol. 392, no. 10161, pp. 2288-2297, 2018, https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(18)31812-9/fulltext. Accessed April 27, 2019.
 Foley, Jonathan A. et al. “Solutions for a cultivated planet.” Nature, vol 478, 2011, pp. 337-342. https://cloudfront.escholarship.org/dist/prd/content/qt6xw5g085/qt6xw5g085.pdf. Accessed April 15, 2019.
 Harwatt, Helen. “Including animal to plant protein shifts in climate change mitigation policy: a proposed three-step strategy.” Climate Policy, vol. 19, no. 5, 2019, https://www.tandfonline.com/doi/full/10.1080/14693062.2018.1528965?af=R&. Accessed April 14, 2019.
 Manley, J.T., et al. “Rangeland soil carbon and nitrogen responses to grazing.” Journal of Soil and Water Conservation, vol. 50, no. 3, pp. 294-298, 1995, http://www.jswconline.org/content/50/3/294.short. Accessed April 12, 2019.
,  “Milk Matters: The Role of Dairy in Vermont.” Vermont Dairy Promotion Council. 2015, https://vermontdairy.com/wp-content/uploads/2015/12/VTD_MilkMatters-Brochure_OUT-pages.pdf. Accessed April 20, 2019.
 Tasker, John Paul. “How Canada’s supply management system works.” CBC News, 2018, https://www.cbc.ca/news/politics/canada-supply-management-explainer-1.4708341. Accessed April 12, 2019.
 United States Department of Agriculture National Agricultural Statistics Service “Market Value of Agricultural Products Sold Including Landlord’s Share, Food Marketing Practices, and Value-Added Products.” 2017, https://www.nass.usda.gov/Quick_Stats/CDQT/chapter/1/table/2/state/US. Accessed April 20, 2019.
Hannah Tremblay is a second-year MS student at Friedman in the Agriculture, Food, and the Environment Program. Her interests lie in improving the sustainability of agricultural systems and almost all things food-related.