In a letter dated May 15, the Dairy Farmers of America informed independent dairy owners who market their milk through the organization that they have six months to find a new market for their milk or must join the DFA to continue selling to their current market.
Presently, dairymen and women who are not DFA members can market their milk through Dairy Marketing Services, provided through DFA. But that will change for the approximately 85 Indiana farms and 225 total independent farms affected in the Mideast area come Nov. 30 when the service will be terminated for them. The change will not affect organic dairy producers, however.
The decision comes following unfavorable and unbalanced market conditions, DFA said.
"Our region has experienced unprecedented growth in our milk supply over the past several years," said Kim O'Brien, a DFA representative. "Supply is growing ahead of the national average, which is resulting in a supply-demand imbalance that has placed the entire milk marketing system in the eastern United States under severe stress."
Because of that condition, DFA said marketing costs and profits cannot be shared equally among all producers.
"There is no practical method available under Federal Order regulations to share the marketing costs and revenue fairly and equitably among all producers in the marketplace, DMS independents and DFA Cooperative members alike," O'Brien said. "As a result, we are unable to continue marketing DMS independent milk under the current arrangement."
Dairy producers in northern Indiana, including independent farmer Harry Stutzman Jr. of Shipshewana, were surprised by the news.
"They asked me to find another marketplace," Stutzman said. "As soon as I got the letter, I immediately called to see if I could find a market in non-GMO milk, because I know there is a market for that, but they said they would not even accept a two-cow dairy now."
Stutzman does not believe there is a difference between GMO and non-GMO milk, but finding a new market is the only option other than joining the DFA. He said he could find a market in selling raw milk, were it not prohibited by law. Selling raw milk in shares would leave him without a place to sell the rest of the milk.
"I have not decided yet whether to join DFA or not," Stutzman said. "It seems forced, as no company is going to buy milk right now."
Joining the DFA for producers would usually mean paying equity, but the organization is waiving that fee for those who decide to become members by Nov. 30.
"Independent producers who do not wish to or who are unable to find alternative markets are welcome to join DFA under two special terms," O'Brien explained. "During their first 12 months of membership, producers have the option to not pay capital retain (equity) and may terminate their membership at any time with a 30-day prior written notice."
Joining the DFA for producers will mean sharing additional marketing costs.
"Ultimately, in joining DFA, independent producers will share balancing costs, including marketing and transportation, as well as profits across the marketplace," O'Brien said.
The letter sent earlier this month, signed by Bill Cummings, DFA's chief operating officer, also mentioned that farmers joining the DFA will receive membership benefits such as "access to all member programs and services including insurance, buying/farm inputs, risk management and lending programs."
"These programs are designed to bring value to you by helping you operate your dairy more economically and efficiently," Cummings said in the letter.
DFA is one of nine cooperatives that serve producers in the Mideast Federal Order.