---April 7, 1994---


                  MAKING MILK: BASIC CHOICES



In February the Food and Drug Administration approved a new drug,
called rBGH, to inject into dairy cows, to make them produce more
milk. rBGH is a genetically-engineered hormone that stimulates
milk production.  This is not the first technology invented to
increase agricultural yield.  What effects do yield-enhancing
technologies have on the dairy business?

The demand for milk does not change much year to year.  An
economist would say the demand for milk is "inelastic."
Therefore, increasing milk production tends to lower the price of
milk, a classic case of the law of supply-and-demand.
Since 1950 U.S. dairy farmers have been producing more milk than
Americans can consume.  To prevent supply-and-demand from
bankrupting the dairy industry, the government buys up surplus
milk via a "price support" program, to help dairy farmers
survive, to assure the future of the nation's milk supply.
During 1980-1985 the government spent an average of $2.1 billion
each year buying surplus milk.  In 1985 Congress passed the Food
Security Act to try to reduce the total cost of the dairy price
support program by reducing the number of dairy herds.  During
1986-87, the government paid farmers to kill their cows and stop
dairy farming for 5 years.  Some 14,000 farmers participated in
this voluntary program, slaughtering a total of 1.55 million milk
cows.[1]  But even that drastic program did not solve the
problem. Excess milk production, which continues today, has
steadily driven down the "support price" (the price farmers
receive for milk).

Ironically, because of a web of federal and state laws and
regulations, a lower milk price on the farm does not necessarily
translate into lower milk prices in the grocery store.  In fact,
during recent years the support price paid to farmers for milk
has dropped steadily from $12.50 per hundredweight in 1986 to
$10.10 in 1990, a 19% decrease; yet the price of milk in the
grocery store during the same period rose from $1.11 per
half-gallon of whole milk to $1.49, a 29% increase.[2] Therefore,
there is no good reason to believe that increasing milk
production with rBGH will provide cheaper milk for the consumer.
Historians and economists have observed a pattern when new farm
technologies become available.  The "early adopters" of a new
technology benefit for a time.  The first farmers to adopt the
new technology get the jump on their competitors; their milk
yield rises faster than their costs and for a time their profits
increase. (Because of inelastic demand, during this period more
profitable farms drive less profitable farms out of business.)
Before long, however, increased milk yields and wider use of the
technology remove the early adopter's advantage.  As we have
noted, the consumer may never see a price decrease, but increased
yields drive down farm prices, reducing farmers' profits.  The
farmer is soon back at square one, pressed to the wall by a
cost-price squeeze, scrambling for the next competitive
advantage.  This has been dubbed the "technology treadmill."[3]

The latest treadmill technology, rBGH, will very likely repeat
this pattern.  It will benefit the early adopters and increase
milk production which, in turn, will drive down the support price
of milk. After the early adopters' competitive advantage
disappears, the net result will simply be more surplus milk that
will have to be purchased at taxpayer expense.
In the meantime, introduction of rBGH will have driven a certain
number of farms out of business--maybe as many as 30,000 or
40,000 farms--accelerating a trend that has been under way for
decades.  (Ten thousand dairy farms have gone out of business in
Minnesota alone since 1980.)

Because large farms are usually best-equipped to manage complex
technologies, and because they are best able to take and survive
financial risks, large farms tend to be the "early adopters" of a
high-tech innovation like rBGH.  Large dairy farms tend to be
located in the sunbelt.  Mid-sized farms tend to be located in
the midwest and northeast.  For example, California has 2500
large dairy herds averaging 400 cows each.  Wisconsin, on the
other hand, has 35,000 mid-sized dairy farms averaging 50 cows

According to eight studies by federal agencies and by university
researchers, rBGH will tend to favor the survival of large farms
in the sunbelt, and will tend to drive mid-sized farms out of
business in the midwest and northeast.[4]  A long and
well-established body of literature has demonstrated that the
presence of mid-sized farms is vital to the social and economic
health of many rural communities. Thus yield-enhancing
technologies, like rBGH, degrade rural community life, and drive
less-successful farmers into cities where they may become part of
the "urban problem."

If you think of agriculture as an industrial enterprise where the
aim is to grow as much as possible with as few people as
possible, without regard to environmental or social costs,
replacing family farmers with genetically-engineered drugs is a
"successful" approach.  On the other hand, if you think of a
mid-sized farm as a family occupational base, and as the backbone
of rural community life, displacing farmers by drugs is clearly
antisocial and bad public policy.

The large farms whose survival will be favored by rBGH confine
their herds year-round in the style of a "feed lot."  The cows
spend their lives confined in a building with a concrete floor
(sometimes abrasive, sometimes slippery with urine and manure)
which gives rise to foot and joint problems.  Manure and urine
are concentrated, which creates serious environmental problems of
disposal.  Sunlight and fresh air--excellent disinfectants--are
not abundantly available; disease rates tend to be elevated in
confined herds.   Confined animals are fed a diet high in grain
with protein supplements, including meat.  Raising grain in the
modern way is an energy-intensive operation employing
heavily-polluting inorganic fertilizers, insecticides,
herbicides, and tillage practices that intensify soil erosion.
In sum, dairy factories create serious new environmental
problems, and exacerbate old ones.

To reduce their own labor and to increase profits, since 1983
many American farmers have shifted away from confined feeding to
a technique called "rotational grazing" developed first in France
and then in New Zealand where it is the dominant dairy technology.
In rotational grazing, the daily forage requirement for cattle is
met by dividing pastures into smaller paddocks and moving animals
every 12 hours to 3 days.  With a sufficient number of paddocks
in the system, each paddock will be rested between 15 and 40
days, depending on forage regrowth before regrazing.  This system
allows cattle to do much more for themselves to produce milk,
compared to confinement feeding.

A new book from the ag school at University of California at
Davis offers case studies of rotational grazing on 34 farms in
Maine, Wisconsin, Pennsylvania, and Vermont.[5]  The farms vary
in size from 40 cows on 12 acres to 800 cows on 2000 acres.
With remarkable consistency, these case studies reveal the
following consequences of rotational grazing compared to
confinement feeding:[7]

1) Substantially reduced feed costs.  Feed is a major cost of
dairying. "It costs up to six times less to feed animals on
pasture than to feed them in confinement, because of savings in
feed, machinery use and repair, fuel, labor and veterinary costs
due to improved herd health."[6]

2) Decreased energy costs (for example, reducing fuel use 23 to
26 percent in crop production);

3) Increase in the grazing season by up to 100 days;

4) Increased milk protein (as a percentage of the milk);

5) Reduced labor for feeding hay, spreading manure, and putting
up forage as hay or green chop;

6) Increased value of pasture land;

7) Improved herd health and thus improved profitability.  The two
greatest causes of economic loss to dairy farmers are mastitis
(inflamation of the udder, caused by infection), and reproductive
problems.  "Pasture feeding offers a practical, low-input method
of reducing labor and increasing profit by minimizing
contamination of teats and udders to improve milk quality, reduce
mastitis, and decrease the use of teat sanitizers and
antibiotics...." says University of Vermont agrono-mist William
M. Murphy.  Furthermore, he points out, cows in pasture show
improved reproductive performance and therefore more

8) Reduced soil erosion on the farm 24 to 31 percent.

9) Less work and therefore improved family farm lifestyle,
allowing farmers to spend more time with their families and in
community activities;

10) Preservation of existing community jobs;

11) Farm children encouraged to continue in farming because it's
enjoyable and profitable again;

12) The community becomes more self-reliant, using existing human
and natural resources rather than purchased inputs that drain
capital from the community.

Two ways of making milk.  Two visions of our future:

** One dominated by chemical corporations, corrupt government
officials, and indentured savants in the nation's agricultural
colleges, scheming together to prevent consumers from making
informed choices in the marketplace, promoting unnecessary and
unsustainable technologies that wreak havoc across the rural
countryside, blind to the ensuing environmental blight and social

** The other vision dominated by sustainable, profitable
mid-sized family farms offering consumers free choice in the
marketplace, wholesome food and milk at affordable prices grown
by environmentally beneficial and socially equitable techniques.
Two visions.  Two realistic choices.  Which will it be?

    --Peter Montague

INDUSTRY (Mount Vernon, N.Y.: Consumers Union/Consumer Policy
Institute, 1990), pg. 3.
[2] Hansen, cited above in note 1, pg. 5, Figure 1.
(Minneapolis, Mn.: University of Minnesota Press, 1965), pg. 66.
Minneapolis, Mn.: University of Minnesota Press, 1958.
[4] David Campbell, "The Economic and Social Viability of Rural
Communities: BGH vs. Rotational Grazing," in William C.
University of California Sustainable Agriculture Research and
Education Program, 1993), pg. 291.
[5] William C. Liebhardt, "Farmer Experience with Rotational
Grazing: A Case Study Approach," in Liebhardt, cited above in
note 4, pgs. 132-188.
[6] William M. Murphy and John R. Kunkel, "Sustainable
Agriculture: Controlled Grazing vs. Confinement Feeding of Dairy
Cows," in Liebhardt, cited above in note 4, pg. 117.
Descriptor terms: bgh; cows; dairy farming; farming; agriculture;
price support programs; fda; usda; milk; technology;
technological innovation; cattle; feed lots; confined feeding;
fertilizer; pesticides; insecticides; herbicides; water
pollution; animal health; soil erosion; monsanto; agricultural
research; studies; consultants;


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