Both tart cherries and milk have been in the news lately, as oversupplies have caused farmers to dump both products. This is another example of the extreme complexity of the U.S. food system. The practice of dumping (sometimes overseen by federal boards and approved by commodity processors themselves) is a way to stabilize or increase prices but could disrupt provision of food supplies needed for emergencies.
The Wall Street Journal reports dairy farmers have dumped 43 million gallons of milk because there isn’t enough spare capacity on trucks to haul the milk to processing facilities. The oversupply has depressed milk prices, with the USDA reporting that dairy farmers’ earnings have fallen by some 35 percent over the past two years. At the same time, a record tart cherry crop in Michigan has caused farmers to dump millions of pounds of cherries to rot in the fields.
USDA attributes the decline in milk prices to rising domestic production, falling exports, and growing imports. Consumers paid about 16 percent less for a gallon of whole milk and 3 percent less per pound of Cheddar cheese in spring 2016 than in fall 2014. Dairy farmers increased milk production after record farm-level milk prices in 2014, and because dairy farmers have to make long-term investments in livestock the oversupply will continue. At the same time, milk and milk product exports were down (partly because of a strong dollar) and imports were up, both for a number of reasons according to USDA’s Economic Research Service.
Over the summer, Michigan cherry farmers dumped millions of pounds of tart cherries because of an estimated surplus of 101 million pounds of cherries. According to the Michigan Farm Bureau, cherry prices are notoriously volatile, and if all those cherries went on the market the price would drop below the cost to produce cherries.
As a result, a “cherry marketing order” administered by the Cherry Industry Administrative Board this year required processors to keep 29 percent of the bumper crop off the usual North American markets (pies, sweetened desserts, etc.) to stabilize both prices and supply. The Farm Bureau stressed that the market order is a product of and approved by farmers themselves.
Milk is also subject to market orders that establish certain provisions under which dairy processors purchase fresh milk from dairy farmers supplying a specific marketing area, but at this point dairy farmers are still making money. There’s just too much milk to process; processing plants are full and milk is perishable, the vice president of a 1,200-dairy cooperative in New England told Bloomberg News.
At this point, USDA is trying to help out farmers and shore up the market by purchasing more dairy products. The agency has announced it would buy $20 million worth of cheddar cheese from producers, on top of another $20 million purchase of cheddar back in August. The cheese will go to food pantries and other nutrition assistance programs. Buying the cheese does enable it to be placed in government stores in case needed later.