The Economics of Raw Milk

Many thinkers and writers have proposed solutions to the growing disparity between the rich and the poor, the powerful and the seemingly powerless—-a new third party, government reform, local community organizations such as co-ops and solaries, violent revolution, even rescue by angels or space aliens. But there is an easier solution for returning the power of government to the people and to local economies, of bringing sections of our economy that should be small and local—food, clothing, furniture, etc.—back into local hands. And every person can contribute to this solution, even those who don’t want to get involved in committee meetings, politics or activism. Our solution is this: Drink Raw Milk.

INCOME FOR CONVENTIONAL MILK VERSUS RAW

Let’s consider a dairy farmer named Mike, producing a white agricultural substance called milk. Let’s say Mike has thirty cows and he sells his milk to the local co-op, such as Foremost or Dairy Farmers of America. He currently receives about sixteen dollars per hundredweight for his milk, which is about equal to what dairy farmers got during World War II. In order to maximize his return, he has modern Holstein cows and he feeds them lots of grain. So, he may get 190 hundredweight per year from each cow, which works out to a total yearly income of about $90,000 in round numbers, most of which is eaten up with feed and vet bills. His wife has to work to bring in some cash and obtain health insurance, and they live just above the poverty line. If they have gone into debt and the prices drop even a little bit, or their cows produce less than expected, they lose their farm.

Let’s now look at what Mike’s income would be if he had a grass-based dairy and sold milk directly to the public. He would use Guernseys, Jerseys or some other old-fashioned breed because these cows do better on grass. He would only get about 100 hundredweight per cow per year, about half as much, but if he sells the milk at $6 per gallon, he would get at least three times as much for the milk. Actually, some farmers are getting $10 or even $15 per gallon for their raw milk, but let’s be conservative and stick to the figure of $6 per gallon. If he sells it at $6 per gallon he makes about $73 per hundredweight. At $73 per hundredweight, he grosses $7300 per cow per year. With 30 cows his gross income on the milk products alone is $219,000. If he makes cheese, yogurt, kefir or butter, his gross income will be more.

But there’s more. If Mike makes butter, cream and cheese, he will have whey and skim milk as by-products, which is free food for pigs and chickens. So, in addition to milk and milk products, he can sell eggs, chicken, turkeys, pork, bacon and lard as by-products. The male calves go to veal or beef. Depending on how hard he wants to work, he can put his manure to good use by growing vegetables or fruit. He may produce maple syrup or honey. So let’s add, for the sake of argument, another $100,000 (which is conservative) for a gross income of $250,000 for a farm with 30 dairy cows on something like 100 acres if they sell all that they are able to produce. Of course, there are capital investments and the cost of the land to consider—this is going to be about the same no matter what Mike is getting for his milk, but his operating expenses will be much lower because he is bringing in only a minimal amount of feed from the outside, his vet bills will be very low, the fertility of his animals will be high and his cows will live a long time.

What do these numbers do for local communities and local employment? If just 10 percent of the US population bought raw milk, raw butter, raw cream and raw cheese directly from farmers, as well as all the other products produced on the farm, we would need about 75,000 100-acre farms each with 30 cows. If each farm generates an annual income of $250,000, the total revenue is over $18 billion, year after year, much of which stays right in the local community. (If the whole country drank raw milk, the total would be over $1.5 trillion, or 8 percent of the current Gross National Product.)

This is real wealth and every raw milk drinker participates in creating it.

Economic Loss to Maryland from Prohibition of Raw Milk Sales

Considered from another angle, consider the loss to states that do not allow the sale of raw milk, but who purchase their milk from farmers in other states. Here’s what the numbers look like for the state of Maryland.

Population of Maryland 5,700,000
Percentage of raw milk drinkers in Maryland = 3% according to 2007 CDC survey
Number of raw milk drinkers in Maryland in 2013 180,000
Maryland $$ spent on raw milk from Pennsylvania = $5 x 50 weeks x 180,000 $ 45,000,000
Maryland $$ spent on meat, eggs, etc. from Pennsylvania raw milk farmers = $20 x 50 weeks x 180,000 $180,000,000
TOTAL $225,000,000
Total loss of economic activity= $225,000,000 x 2.7 multiplier effect $608,000,000 PER YEAR!!
 
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