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Milk oversupply strains market in Wisconsin

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MADISON  — Some Wisconsin dairy experts say farmers should take a closer look at their contracts as an oversupply of milk is straining the market.

Agriculture attorney Troy Schneider told Wisconsin Public Radio that contracts between dairy farmers and milk buyers are usually informal. He says farmers have not had to worry about producing too much milk because buyers were easy to find.

However, an oversupply of milk has changed the market and local producers don’t have flexibility.

More than 50 farmers in the state struggled to find new buyers earlier this year after being dropped by Grassland Dairy Products. Schneider said Grassland was the biggest example of how milk oversupply is affecting the relationship between producers and processors.

“Milk plants and milk cooperatives trying to get a control on the overproduction right now and the oversupply, that’s commonplace,” Schneider said. “The mechanism that Grassland used to do so probably was the thing that got more attention, but the problem is universal through all milk purchasers right now.”

Shelly Mayer is the executive director of the group Professional Dairy Producers. She said the situation was a wakeup call for dairy farmers.

Schneider advises that contracts should include an amount farmers expect to produce to ensure their milk has a market.

“Farmers can deal with change, but that change has to be more gradual than sudden,” Schneider said. “There has to be some supply management occurring but the methodology used has to be well-thought-through.”

However, Mayer disagreed and said managing milk production is the best way to address oversupply. She also said more communication between farmers and their buyers can help.

“It’s even more important in these difficult economic times for dairy farmers so that you know what your processor’s needs are, your customers up the chain, what their expectations are,” Mayer said. “But also that dairy farm families know that they can count on these partners in their business.”

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