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Best Advice for US Dairy Farmers? "Sell as fast as you can"

Many of the dairy farmers in Kentucky who sold their milk to Dean Foods have yet to find anyone to buy them – and like Coombs, they may soon have to sell their cows. They are just the youngest of more than 42,000 dairy farmers out of business since 2000, victims of an outdated business model, expensive agricultural credit and pressure from corporate agriculture.

In 1970, there were nearly 650,000 dairy farms in the US, but according to the US Department of Agriculture, only 40,219 remained at the end of 2017. Cows produce more milk than ever, but they are consolidated on larger, more efficient farms. In 1987, half of American dairy farms had 80 or fewer cows; until 201

2 this number increased to 900 cows.

  The case of the small dairy
Small dairy farms disappear quickly. (The dotted line shows years with missing data for US dairy farms.)

Small dairy farmers, an aging population, were some of the last US holdouts against the pressures of agriculture to grow or die – but it's unclear how take a long time can take. Hope grew as President Donald Trump tweeted support for the dairy industry at the G-7 meeting in Canada in early June, but experts and farmers say Trump mistakenly focused his anger on trade and tariffs rather than on an American industry increasingly hostile to peasants. (19659002) Joe Schroeder receives calls from dozens of peasants every month at Farm Aid, an organization founded by musician Willie Nelson to keep family farmers on their land. Small dairy farmers make up a third to a half of those calls, Schröder said. The farmers, who often milking themselves or working with family members and working 12 to 16 hours a day, tell him about the power cuts and the lack of food. They wonder if they could explain Chapter 12 – Bankruptcy for Farmers.

"I do not see anything that would give them hope at the time," said Schröder. "The best advice I can give these people, dairy farmers, is to get out as soon as possible."

  Photo: holstein calves
Holstein calves Luke Sharrett / for NBC News

The dairy industry in crisis

At Walmart, buyers in Kentucky can buy a gallon of milk for just 78 cents, but that's far less than what the company paid for or what the farmer himself had to produce. Stores often sell milk at a loss as it is a staple and customers can also pick up more profitable items.

On average, farmers spend $ 1.92 to produce one gallon of milk and make $ 1.32 when they sell it to processors. This is the fourth year in a row that farmers' milk prices have fallen below production costs.

"We were able to buy all the gallons of groceries from the grocery store, put them in our bulk tank, dump them and sell them back to them, earning more money," said Carilynn Coombs, Curtis' wife.

  Image: Bob Klingenfus
Farmer Bob Klingenfus carrying milk bottles at Harvest Home Dairy in Crestwood, Kentucky. Luke Sharrett / for NBC News

Low milk prices set in motion a cycle in which farmers produce more milk to make sure they are getting enough money to operate, causing dairy products to flood the market and the market Prices continue to fall. But even if the milk price rises, the cycle does not stop – the farmers milk as much as possible before the price drops again. It is a never ending competition where dairy farmers are stranded.

Walmart's decision to build its own milk processing plant underscores another issue for farmers. In a trend that dates back to the 1970s but has grown significantly in the last decade, the agricultural sector is increasingly taking control of all stages of milk production, leaving small farmers with fewer outlets available, said Maury Cox, managing director of the Kentucky Dairy Development Council, an interest group. Enterprises that open dairies prefer to work with smaller dairy farms than thousands of smaller ones, Cox added.

"What do you do in this situation if you have no market for your milk?"

Cox said, asking the farmers, "What are you doing in this situation when you have no market for your milk?"

The issue is of particular concern to the dairy farmers in the southeast, where the industry is steeped in a certain regional irony.

While there is a milk surplus nationwide, Kentucky and the Southeast face an annual deficit of 41 billion pounds of milk, according to Mark Stephenson, a University of Wisconsin Dairy economist. That is, even if dairy farmers fight in these states, grocery stores import milk into refrigerated trucks from the Midwest.

Why are Kentucky dairy farmers being frozen out of the local market? Part of the answer lies with powerful dairy cooperatives, groups of farmers working together to sell their milk. Dairy Farmers of America, the nation's largest dairy cooperative, has an incentive to maintain the Southeastern milk deficit by providing a market for members of the Midwestern group.

Fourteen Kentucky Farmers Recently Attempted to Join the Cooperative Since the group saw them as competitors, the farmers told NBC News.

John Wilson, the group's senior vice president and chief fluid marketing officer, said the cooperative "recognized the dairy farmers in Kentucky who were evicted as having a difficult situation," but provided no clear reason for rejecting their membership.

"Membership decisions are handled on a regional basis and evaluated based on a number of factors, Wilson said," including farms in the region, milk volumes, supply and demand conditions, and milk quality.

How Canada Milks Differently

The struggles of American dairy farmers have not spread to their peers north of the border.Canada's government runs a supply management system that controls dairy, egg and poultry production in the country, and Canada uses the system to enforce domestic production quotas and limit its milk imports and exports, which keeps prices stable and ensures stable incomes for farmers – even though it has a bigger impact on consumers' budgets.

Canadian dairy farmers, on the other hand, have enough Money to repair buildings, buy new equipment, and even go on vacation, "says John Kalmey, 66, a small-scale farmer in Shelbyville, Kentucky, who is about to finish his family's 80-year-old dairy business

Small farmers in the US like Kalmey who earn a salary of just over $ 20,000 a year, though They can afford to give themselves one, marvel at this luxury.

"I think it's a shame we do not have this [system]," Kalmey said.

  John C. Kalmey
The Kalmey family has been active in the dairy industry for 80 years. Mariana Keller / NBC News

The inequality has also caught the attention of Trump, who blamed Canadians on the battered American dairy industry during the G-7 Quebec conference. Trump attacked Prime Minister Justin Trudeau – calling him "dishonest & weak" – for Canada's milk tariff, which keeps its farmers afloat. "Our tariffs are an answer to his milk prices of 270%!" Trump tweeted .

Kalmey and other dairy farmers, however, do not believe that ending the milk tariff would be a solution. If anything, Canada's protection would leave dairy farmers in the same boat as those in the US. Some farmers fear that Trump is more likely to cause a trade war than to open a new market for them – they fear losing the limited export market In the US, there is currently a risk that the milk price will continue to fall

And trade is not The main reason for the difficulties in the industry: Dairy exports increased by 2 percent between 2016 and 2017, according to the USDA. For 2018, the USDA forecasts growth of 7 percent.

The Loss of Historic Farms Caused Economic Waves

Gary Rock, 59 years old, lives in Hodgenville, Kentucky, an area of ​​rolling hills and loose fences, on a farm that was once handed down to his family for 300 years. After dropping his contract under Walmart's expansion, Dean Foods expects him to be the last generation to ever milk a cow on this land.

The last few years have not been easy. In 2012, Rock rebuilt his farm after being hit by a tornado that destroyed all buildings except where he milks his cows. The following year he lost his legs in a tractor accident, but he kept farming. Then, after the announcement of Dean Foods, his only employee left, so Rock started milking the cows themselves. Now he has to think about selling parts of his farm to stay afloat.

"That's not what America is about, I'll tell you now," said Rock.

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