Wisconsin’s dairy future: The Walmart impact

Published: Jul. 6, 2018 at 11:19 AM CDT
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An agricultural business expert says Wisconsin’s cheese production would likely act as a buffer if the milk processing model Walmart started using this summer ever expanded to impact America's Dairyland.

"It should be remembered for Wisconsin, 85 to 90 percent of our milk goes to cheese manufacturing," University of Wisconsin – Madison College of Agriculture & Life Sciences Renk Professor of Agribusiness Brian Gould said.

“For Wisconsin, beverage milk is not that important. For individual farms it is if they happen to supply to a plant. But for the industry as a whole, very minor share of our milk production goes to fluid milk,” Gould added.

Walmart’s milk processing plant

In June, Walmart officially went into the milk processing business, creating 200 new jobs at their new Indiana plant. One-hundred additional contract jobs, including truck drivers, were also added.

"To be able to supply five states with our area farmers, this is a big deal," Gov. Eric Holcomb, R-Ind., said.

Thirty dairy farms and co-ops, within an average 140 mile radius of the Fort Wayne, Ind. location have also received Walmart contracts. They supply the plant local milk. Then it is sent to nearly 500 Walmart stores in Indiana, Illinois, Michigan, Ohio and Kentucky.

"This is the reason we are dairy farmers, to continue this into the next generation,” said Tina Dickerson, one of the Indiana dairy farmers who signed a Walmart contract. “We have eight children, five of them being boys. They all want to continue in the farming industry. This will allow that opportunity for them."

However, that ‘opportunity’ also cost farmers their milk contracts. Dean Foods losing some business, so Walmart could process their own milk, trickled down to more than 100 dairy farms in eight states: Indiana, Kentucky, New York, North Carolina, Ohio, Pennsylvania, South Carolina and Tennessee.

"They're really up in the air. They don't know what they're going to do," said Kentucky dairy farmer Carl Chaney, who worried about family members who lost their Dean contract.

"It'll be kind of rough for a little bit if they don't find another milk plant to take you," Pennsylvania dairy farmer Bob Nickerson, who lost his Dean contact, added.

"People don't know whether they're shipping milk today, tomorrow, next week. Or if they're done tomorrow morning," Ohio dairy farmer Betsy Musser, who also lost her Dean contract, said. "In 90 days they won't have a market for their milk."

Wisconsin’s dairy crisis

The Walmart model comes at a time when Wisconsin finds itself losing hundreds of dairy farms every year.

Jim Bunkelman and his wife Carol know they are one of the lucky ones. Times are steady on their Athens dairy farm.

"Altogether we probably got about 70 cows, with the dry cows, right now. Milk about 65 cows right now," Jim said.

“The cows get milked in the stalls,” Carol added with pride in her voice.

But the Bunkelmans, like everyone working in Wisconsin’s dairy industry, also know the reality of the times.

“It's tough,” Jim said. “It's tough for some people, on the farm."

Tough times mean in the last decade thousands of their fellow Wisconsin dairy farmers did not make it.

A WSAW analysis of United States Dept. of Agriculture numbers show in June 2008 Wisconsin had 13,740 milk cow herds. By last month that number had dropped to 8,517. Overall, in the last decade, the state lost 38 percent of their dairy farms.

From 2008-2018, on average, 41 dairy farms were disappearing every month. However, in June of 2018, that number was 78 – meaning almost twice as many as the decade’s average were lost. If the 2018 average of losing more than 47 farms every month continues through December, Wisconsin is on track to lose 564 dairy farms by the end of the year.

Wisconsin's bigger, ongoing problem, UW-Madison’s Gould said, continues to be local farmers trying to compete with too much milk for sale around the world.

At the same China, the biggest country to purchase outside milk, is buying less. That has lead to decreasing prices here at home.

"If the price goes down, then the price being able to be paid to dairy farmers is going to go down as well," Gould said.

The dairy breakfast

The dwindling dairy farm numbers have convinced the Bunkelmans it is more important than ever for them to be one of the more than 70 families across Wisconsin to host a five decade old June tradition: the dairy breakfast.

Not only does the $2-$6 breakfast offer fresh local foods such as eggs, bacon and milk, but hands on experiences of what happens on local farms to produce the foods that eventually make it to forks and glasses.

"You have to get people to see what a farm is like," Jim said. "How everything's done."

That is what Marathon dairy farmer TJ Draeger hopes his children got out of the experience. But he could not help but worry about his children, who are supposed to be their 600 cow dairy farm's fourth generation.

“It's scary. I don't know another industry where you make a product today. And don't know what you're going to get paid next week," Draeger said. "For every gallon of milk you buy, the farm gets about 17 cents."

Milk prices are relatively the same as they were in the 1990s. At the same time there are more worldwide milk producers. Competition means small dairy farmers have less income to buy things that are continually more expensive, such as land, tractors, fuel and feed.

While farmers like Draeger are well aware of crisis numbers impacting Badger state dairy farms, multiple dairy farmers WSAW talked with are, like him, also worried about what just happened in Indiana.

"It's becoming a monopoly,” Draeger added. “When Walmart gets into the dairy industry so they don't have to lower prices, they're taking money from someone else."

The lingering question for those surviving Wisconsin dairy farmers like Jim and Carol Bunkelman, will lower prices allow them to keep on making it for the next generation.

"Maybe not even…10 years coming down the road?” Jim wondered about the Walmart model. “Will it impact the local farmers?"

Wisconsin Dairy Task Force 2.0

In June, Gov. Scott Walker announced Wisconsin Dairy Task Force 2.0.

Members, the governor says, will eventually recommend what is needed to keep the state's dairies successful and profitable.

WSAW asked Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) Communications Director Bill Cosh for a task force update. He released the following statement:

DATCP has collected member recommendations for the Wisconsin Dairy Task Force 2.0 that include dairy farmers, milk processors and allied organizations. From the recommendations received, we will work to create a membership that is both geographically and industry diverse. In the next several weeks, members will be selected and announced. DATCP will work with Dr. Mark Stephenson, Director of Dairy Policy Analysis at UW-Madison who will chair the Wisconsin Dairy Task Force 2.0, to schedule the first meeting, likely later this summer.