To: Board of Directors, Dairy Farmers of America

From: Gary Genske, Shawnee Dairy, LLC, producer/member

I have received several items of correspondence from DFA recently discussing the imbalance between milk production and milk consumption as a result of the COVID-19 pandemic (and nothing regarding the trade imbalance) and for the immediate need for 10% production reduction. If we producers are to cut production by 10% in addition to accepting the current/future low milk prices for the milk we produce, and to help our co-op survive through this pandemic, I suggest two things:

1. If we producers are forced to continue receiving milk prices that are far below our cost of production for less milk produced, co-op and co-op affiliates’ management should also share in this pain and accept a 30% cut in wages and benefits. No one in our industry (producers) should solely have to bear the brunt of these trying times.
2. Since all businesses, including tax exempt organizations have become qualified for the forgivable SBA Payroll Protection Loans (in the millions), all trade associations with whom DFA supports, should reimburse membership dues to DFA. Receipt of SBA forgivable loans made to NMPF, IDFA, DMI, DEC, and all of the many other trade groups are not to become unjustly enriched because of these loans. This is free money to these groups! Additionally, for DFA’s continuing support of these groups, the management of these groups should also accept a 30% pay cut, and share the pain we producers feel.

Please insist that these two suggestions are implemented immediately. Thank you.

Gary Genske
NDPO Board Member
Shawnee Dairy, LLC
Dexter, New Mexico
May 6, 2020

Most remaining U.S. dairy farmers are at a crossroads.

To blindly continue taking direction from THEIR existing co-op management and strive to make the maximum quantity of milk possible and continue receiving a milk price less than the cost to make the milk, OR see what actually really is and what should be done.

Truth means agreement with reality.

The truth NDPO speaks is not dependent upon anyone’s agreement nor diminished by anyone’s rejection.

It simply is true marketplace reality.

It takes courage to see reality and what should be done.

Life punishes those who come too late, said Gorbachev.

Dairy farmers are at a crossroads and it is not enough for them to continue to take direction from THEIR existing hired co-op management — they must see their reality and do what has to be done and do it NOW.

The loss of U.S. dairy farm families can be reduced and most remaining dairy farmers can survive and receive a fair and profitable milk price from the marketplace IF they choose to change THEIR co-op management personnel and/or policies to those that will continuously balance co-op milk intake with profitable demand for member milk by implementing NDPO’s co-op management policies.

Constant awareness and adjustment of supply to changing marketplace profitable demand is required and is done by all successful product making businesses on an on-going, continuous basis.

The implementation of NDPO co-op management policies will help dairy farmers continuously balance the milk supply they make with both domestic and global profitable demand and thereby receive a fair, profitable milk price from the marketplace.

Mike Eby
NDPO Board Member

“This mark matters – DFA”, so says the DFA management slogan.

IT CERTAINLY DOES MATTER!

The management of DFA continuous to destroy U.S. family dairy farms, our safe and secure national milk producing infrastructure and rural communities in it’s pursuit of the maximum quantity of the cheapest milk possible.

DFA is the largest U.S. dairy farmer member owned co-op based on revenues and assets.

Per Rabobank, of the top 20 dairy companies in the world in 2018, DFA was number 6 in sales.

In 2018, DFA grew milk production by 2.5 billion pounds while LOSING 532 family member dairy farms. (Hoard’s Dairyman, Oct. 10, 2019 issue)

The loss of U.S. licensed dairy farms between 2009-2019 was 20,745 (Progressive Dairy, April 19, 2020 issue) with DFA losing the most of all U.S. co-ops.

Yet, Rick Smith, DFA CEO writes on Nov. 12, 2019 that “We remain committed .. to preserving the family farm for generations.” REALLY?

DFA dairy farmer co-op members are some of the most poorly paid U.S. dairy farmers. Nearly all DFA co-op “profit” goes to DFA management and/or DFA joint venture partners, NOT dairy farmer co-op members.

According to Genske, Mulder & Co., LLP, CPA, DFA has earned a 10 year average 18% profit for it’s management and 75+ joint venture partners, much of which has come from “below cost” raw milk prices paid to DFA dairy farmer members.

DFA management see their job ONLY as getting, filling and shipping the maximum orders for milk and/or milk products for management benefit by any means possible, sacrificing dairy farmer member’s milk price to do so.

DFA management has failed tragically to perform it’s fiduciary duties and responsibilities to benefit and preserve co-op dairy farmer membership with a fair, sustainable, profitable milk price.

If DFA is to preserve the family farm for generations, as stated by Smith above, DFA dairy farmer owner members need to change THEIR DFA management personnel and/or policies and adopt NDPO’s co-op
management policies which requires all DFA members to work “cooperatively” and share in a pro-rata, across-the-board, proportional milk reduction, as required, to continuously balance DFA’s milk intake with profitable demand for member milk, yielding a sustainable profitable milk price from the marketplace for most members and thereby preserve as many of the remaining DFA family farms as possible.

Mike Eby
NDPO Board Member

COVID 19 has not repealed marketplace supply/demand economics — the virus just made complying therewith very difficult.

Assume milk demand has now decreased by 40% at a time when the milk supply already exceeded profitable demand by 10% (March 2020 milk production for the top 24 states was up 2.4% over the previous year).

Under the assumed facts, marketplace supply/demand economics requires a 50% reduction in the milk supply to be balanced with the reduced demand in order for the marketplace to generate a profitable milk price.

Without significant milk supply reduction, even with significant government action of financial support, a profitable milk price will not be achieved.

The required milk supply reduction WILL be accomplished either by the continued culling of dairy farm families OR the remaining dairy farmers sharing in the culling of some cows and balancing the milk supply with whatever profitable marketplace demand exists or is created going forward.

It is a dairy farmer choice.

Mike Eby
NDPO Board Member

The goal of USDEC is to increase the volume of U.S. dairy exports from equivalent of 15% of U.S. milk solids to 20%.

Because dairy farmers are not paid a profitable price for the milk used in the exported products, this USDEC goal is to increase the dumping of unprofitable U.S. made milk onto the global market to 20% — and dairy farmers are paying to achieve this goal!

A better goal for dairy farmers would be to just reduce the milk supply and balance the milk supply with profitable demand.

Bob Krucker
NDPO Board Member