Yes, food prices have gone up. But no, average US milk prices are not skyrocketing – they have basically stayed the same since January.
That’s because the U.S. as a whole has an oversupply of milk, and it has worsened over the past few decades as smaller farms closed and larger farms bought up their cattle and increasingly dominated the industry.
It’s a problem that politics has grappled with for years. And it’s not clear whether Washington, DC, will address this issue, as other food prices have risen much faster as a result of the pandemic-induced supply chain breakdowns. The Biden government is committed to addressing antitrust issues in industries from technology to meat packaging. However, the dairy sector has not yet been in focus, partly because consumers are not seeing significantly higher prices due to the consolidation.
A CNN report in this week sparked a brief social media spectacle after a family reported that retail milk prices had skyrocketed (up 79 cents a gallon in just a few weeks for the Dallas area couple who was interviewed and said , her family uses 12 gallons a week). In fact, the nationwide average price for milk has remained largely constant throughout the year. according to the Ministry of Agriculture.
Overall, the US produces more milk than it can use. “Availability and delivery of milk is not a problem, it’s about getting that milk where it’s needed,” said Matt Herrick of the International Dairy Foods Association, one of the largest dairy lobby groups in the US
Certainly some cities have seen sporadic price swings in milk prices due to local supply problems and other factors – albeit not as large as the family noted on CNN. According to USDA data, a gallon of whole milk has increased 43 cents in Dallas, 32 cents in Kansas City, Missouri, and 22 cents in Miami since early 2021.
But the average retail price for whole milk in the United States has increased only 3 cents to $ 3.69 a gallon since the beginning of the year. This means that milk prices have increased by less than 1 percent, as opposed to the benchmark increasing by around 5 percent Consumer price index In the same period.
For now, the White House is paying attention to the complaints about food prices, but is focusing more on the steep rise in meat and poultry prices that has left Democrats vulnerable to Republican political attacks on inflation.
“Milk is not the problem,” said a senior White House official. “You haven’t seen a huge increase in prices, but some meat prices have increased significantly. That’s because it’s more prone to these types of spikes. “
The White House condemned giant meat packers for “pandemic profiteering” in September while Agriculture Secretary Tom Vilsack introduced several regulations to strengthen the USDA’s antitrust enforcement for the meat industry.
Small dairy farmers had hoped the Biden administration would tackle industry consolidation early on, especially after the Obama administration pledged to adopt the issue but then gave way after the dairy lobby pushed back. Vilsack, who had served as Secretary of Agriculture throughout the Obama administration, had taken on the role of head of a major dairy lobby before returning to head the USDA.
“There have been a lot of good announcements from the Biden administration, but the biggest problem is that there hasn’t been any real action yet,” said Darin Von Ruden, the president of the Wisconsin Farmers Union, who runs a small dairy farm in southwest Wisconsin.
The White House planned for President Joe Biden and Vilsack to visit a dairy farm in the Von Ruden area of Wisconsin earlier this year to address agricultural issues and its broader agenda. But when a group of Republicans boarded the bipartisan infrastructure plan just before Biden’s planned trip, White House officials moved the site to a transportation hub in a nearby city. Instead, Biden focused on how the bill would get electric buses on the streets and mentioned the rural broadband investment.
This summer, Vilsack described small, family-run dairy farms as “the giver of life for many rural communities”. But, like many in the White House, he has focused on addressing antitrust concerns in the meat packaging industry.
“We want to maintain and expand our family businesses, but if 90 percent of family businesses don’t get most of their income from farming, something has to change,” said Vilsack in July when the USDA announced $ 500 million to expand the business Meat packing capabilities in the US, especially for smaller businesses.
The federal government has tried various programs over the years to tackle the milk glut in the United States, with mixed success.
The most important tool currently available to support dairy farmers is the Department of Agriculture’s Margin Protection Program, which acts as a kind of insurance to help farmers, especially small farms, stay afloat. They pay into the program and receive payouts if their operating costs get too high compared to the prices at which they can sell milk.
Tony Hammell, who runs a 300-cow dairy farm in rural Minnesota, is one such farmer who has participated in the USDA program. But he is aware of the cost advantages that a neighboring farm a few kilometers away with several thousand cows has.
“You can start with a bare field and build a dairy with 10,000 cows. I don’t know how you can keep up, ”said Hammell, who is 66 years old. “It’s pretty much impossible I would say, just sticking out is pretty much all you can do.”
Hammell said the USDA’s program has been helpful in getting his farm, which he runs with his 32-year-old son Drew, to make ends meet. However, Hammell argues that the federal government should implement a quota program that would limit the number of dairy farms.
In the US, larger farms and much of the dairy lobby have rejected these smallholder protections. They argue that the free market should decide who stays in business and that the federal government shouldn’t dictate how much they can produce. (Canada’s government operates a “managed” program that controls milk supplies through a quota system and provides subsidies to protect their smaller farmers.)
In Europe and elsewhere, the demand for US dairy products is increasing and US producers are now relying on these strong export markets.
But the harsh reality for the US dairy industry is that Americans drink less milk per head than ever before, while consumers are also turning more to soy, almond and other dairy alternatives.
“There’s no market for that,” said Hammell of the urge for dairies to expand and produce more and more milk. “They can only do it so much cheaper than everyone else, so they can stay better than us.”