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In 2004, Tony, who milks 4000 cows on his family farm in Indiana, paid a milker $93/day.
Today, he pays his milkers $150/day. He pays well and a milker can earn up to $50,000 a year. But surprisingly even at these wages the biggest challenge he faces is labour.
He says that the increase in pay has been driven by competition for workers from other industries along with fewer immigrants.
He employs 34 people in total and believes that even if he doubles wages again he will not get Americans to work up to 11 hours/day to milk his cows. He believes the problem is more on the attitude of the young US population rather than on economics and his many attempts to hire locals have failed.
He says it is not about the hours.
“Americans simply don’t want to do this type of work anymore, roll up their sleeves and be surrounded by muck and manure.”
He now depends on Latino workers, most of them members of extended families from Mexico.
Like many dairy farmers, he did not want his full name or his farm's name used because he was concerned that immigration officials would target his business. This raises another question of how many were actually legal and the true cost of milk production in the US.
Tony is a Trump and Pence supporter, and like the majority of US farmers votes Republican. He works in an industry, where 14% of almost 100bn litres is exported annually. This is up from less than 5% 20 years ago.
Ironically, last November he voted for Trump, who on his campaign trail had been opposed to new trade agreements such as TTIP and TPP, globalisation and immigrant workers, all factors that would undermine his business.
This sums up exactly where the US dairy is today. Dairy farmers like Tony in the mid west are in a quandary as they battle to find the reliable, year-round labour that 24/7 milking operations require.
Simply put, the US dairy industry cannot survive without imigrants
But Tony is not alone depending on a large migrant workforce. A recent study by the National Milk Producers Federation found that half of all workers (out of 150,000) on US dairy farms are immigrants. And it’s estimated that more than 40% are Latino, and some 90% of those come from Mexico.
The study found that immigrant labour was considered a major contributor to the economic sustainability of more than a third of US dairy farms and the damage from losing those workers would extend far beyond the farms, nearly doubling retail milk prices and costing the total US economy more than $32bn.
It also found that the number of immigrants working on dairy farms has increased by 35%, or nearly 20,000 in six years. It concluded that eliminating immigrant labour would reduce the US dairy herd by 2m cows, milk production by more than 21bn litres or about 25% of total production.
Simply put, the US dairy industry cannot survive without imigrants.
Listen to "Eoin Lowry in the US on Donald Trump's election" on Spreaker.
One option is to move toward robotic milking to avoid the labour problem. Yet Tony does not see robots as the answer. He installed one barn two years ago milking 700 cows with eight robots. While labour numbers halved, it was replaced by a higher capital cost where each machine can cost about $250,000.
But he says there is much more management time from his part and he now must hire more skilled workers to run this barn.
Trump and farming
So, US agriculture tends to depend on immigrant labour, and tends to benefit from and support free trade.
Yet, Trump who received strong support from the agricultural community was staunchly opposed to the TPP trade agreement which was expected to boost direct US agricultural exports by $5.3bn/year when it was fully implemented.
It was estimated that this would increase net farm incomes by $4.4bn/annum.
Farmers are betting big on Trump. While the infamous wall might never be built, his stand on immigrants, global trade and exports should worry the US dairy industry.
Farmers also expect the new administration to offer strong support to the sector to help reduce the impact of falling net farm incomes, which have declined for three straight years now- down from $120bn in 2013 to an estimated $67bn last year.
Trump has said that environmental regulations are “undermining our incredible farmers.”
Therefore many farmers are also expecting him to cut environmental and conservation programs that were implemented under the Obama era.
Having finally selected former Georgia governor Sonny Perdue as Agriculture Secretary this week, the industry awaits with baited breath.
In his typical bold statements, Trump said that “from growing up on a farm to being governor of a big agriculture state, he is going to deliver big results for all Americans who earn their living off the land.”
Despite Trumps views, Perdue is expected to know the farm sector needs to export products, for the good of the economy and should be an advocate for global trade.
The USDA, which Perdue will oversee, has an annual budget of $155bn along with an extremely wide brief, from crop insurance programs, supports for the ethanol industry, to school lunches and food stamps.
With a new farm bill due in 2018, the issue of agricultural spending seems certain to be top of his agenda.
Furthermore, given that former US Agriculture Secretary, Tom Vilsack has taken over as president and CEO of the US Dairy Export Council whose sole aim is to grow US dairy exports, it would naïve to think that a Trump presidency will be global against agricultural trade.
What could be much more likely given that his first meeting with a leader of a foreign country next week is with Theresa May, he could fast-track a free trade agreement with the UK to ensure he makes America and its farmers great again.
This wouldsolve the UK’s food deficit while Ireland watches on the fringes of the EU both physically and metaphorically.
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