Did someone forward you this newsletter?
Get your own copy by subscribing here, and to share this story click here.

Photo courtesy of iStock by Getty Images

Fewer Global Dairy Corporations Drive Overproduction and Pollution, Harming Small Farmers, Report Finds

A shrinking handful of corporations and cooperatives control a growing portion of global dairy production, to the detriment of rural communities and the environment, argues a new report by the Institute for Agriculture and Trade Policy (IATP).

The report, “Milking the Planet,” found that the 13 biggest multinational dairy businesses increased milk production by 8% from 2015 to 2017, representing an estimated 11% increase in their greenhouse gas emissions. Interestingly, a large portion of this growth was driven not by new cows on the land but by mergers and acquisitions that put larger portions of global milk production – and its associated emissions – into fewer hands.

This raises questions about how much major corporations contributed to cumulative increases in industry emissions, which are rising globally, but it also reveals a deeper and equally troubling trend of corporate consolidation that has its own environmental and economic harms.

Dairy farmers, particularly in the U.S. and Europe, are stuck in a cycle of consolidation and overproduction. Fewer, more powerful buyers, paired with declining domestic demand and dismantled supply management policies, have pushed the prices paid to farmers below their cost of production. In response, farmers seek to lower their costs per gallon and survive on high volumes. But as more farms seek a larger scale, milk production continues to increase, perpetuating oversupply, low milk prices, and a reliance on export markets.

All told, the U.S. has lost 93% of its dairy farms since the 1970s, and the EU lost four out of five dairy farms between 1981 and 2013. The farms that remain are much larger. Just two decades ago, most milk in the U.S. came from farms with fewer than 150 cows, while today most milk comes from farms with 900 cows or more, and mega-dairies are growing in the EU as well.

The EU lost still more farms when it dismantled production quotas in 2015 and milk prices fell by more than one-third. Increased production by large EU farms flooded global markets with cheap milk, particularly destabilizing markets for small dairy producers in sub-Saharan Africa.

Meanwhile, dairy processors reap the benefits of low milk prices and increased exports, and they use those profits to buy up competitors and build more market power. This consolidation, as IATP noted, increased estimated greenhouse gas emissions of some major European dairy processors.

Dairy corporations counteract climate impact critiques by touting their decreasing “emission intensity,” noting that large industrial operations may generate fewer greenhouse gas emissions per gallon of milk. However, this misses the holistic economic and environmental impact of concentrating production on larger farms.

Among other hazards, growing mega-dairies concentrate large quantities of cow manure in open-air manure lagoons, which can pollute waterways and surrounding environments. Their overall climate impact is also contested, as these manure lagoons release more greenhouse gases compared to when manure is spread across pasture (as it is on smaller, grass-fed dairies). The rise of U.S. mega-dairies from 1990 to 2017 coincided with a 134% increase in greenhouse gas emissions from dairy cow manure, according to EPA analysis. That said, recent studies disagree about whether practices such as carbon sequestration through pasture-based dairy production can substantially reduce greenhouse gas emissions compared to industrial dairy systems, unless dairy consumption and total herd sizes also decrease.

Nonetheless, the report calls for policies that will support rural dairy communities, promote climate-resilient farming, and move away from low cost, high volume, export-oriented dairy production. These policies include supply management programs that would match dairy production with profitable demand. A growing number of U.S. and EU dairy organizations have also called for supply management policies to ensure fair milk prices and to support smaller dairy farms.

“There’s a continuing push for these large operations, even in the midst of a dairy crisis,” says Ben Lilliston, interim co-executive director of IATP. “It makes no rational economic sense to be expanding supply when you have oversupply, and, from a climate perspective, that’s probably the first step: Stop the growth. Then step two, transition into a different type of system that’s better for the climate, better for farmers.”

Toward this latter goal, the report calls for stronger environmental and greenhouse gas regulation, especially on large farms. This includes examining how trade deals undermine environmental protections. “Let’s get our trade policy in line, so that important public interest regulations do not get watered down because corporations want more market access,” says Shefali Sharma, director of IATP Europe and author of the report.

IATP also calls for investments to transition farms to more agroecological practices, such as pasture-based systems or integrating diverse crops and livestock. These alternative dairy models present other important environmental benefits beyond reducing emissions, Sharma argues, such as improved soil health and biodiversity, which interact with climate outcomes.

When it comes to increasing public investment in agroecological dairy production, IATP argues that governments already spend substantial tax dollars propping up the industrial system, from payments to dairy farmers operating at a loss to direct subsidies of mega-dairies.

Large industrial dairies represented less than 4% of U.S. dairy farms in 2017, but they received an estimated 54% of USDA Environmental Quality Incentive Program grants, ironically to fund things such as managing manure lagoons. Lilliston also says that some large dairies depend on financing from USDA Farm Service Agency loans.

“They really wouldn’t be constructing all these mega-dairies without these different types of supports in place – it’s not the magic of the market here,” says Lilliston. “This is a distorted market, and they’re rigging the game.”

Find and share this story originally published on Food & Power.

What We're Reading

• More than nine times as many American meatpacking workers have tested positive for COVID-19 as have meatpacking workers in Europe. What did Europe do differently? (The Food & Environment Reporting Network)

• Regional food hubs and co-ops have overcome flaws in the USDA food box program to support small farms and feed hungry people. (Civil Eats)

• Black horse riders joined protests against racism, police violence, and the death of George Floyd. During the 19th century, one-fourth of all cowboys were Black, though Black cowboys are rarely depicted in Western films or rodeo culture. (The New York Times)

About the Open Markets Institute

The Open Markets Institute promotes political, industrial, economic, and environmental resilience. We do so by documenting and clarifying the dangers of extreme consolidation, and by fostering discussions of ways to reestablish America’s political economy on a more stable and fair foundation.

Follow F&P on Twitter | Subscribe to this Newsletter | F&P Website | Contact Us