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‘Market adjustments’ leave some farm operations in peril

By Glen Liford 5/1/2018


Dean Foods notified 11 Tennessee dairies in early March that the company would no longer be buying milk from them. Those operations were among some 100 farms nationwide that received similar notices.
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Tennessee agriculture took a one-two punch this spring with devastating news concerning markets for two of the industry’s most prominent products.

In early March, Alliance One Tobacco announced it would no longer purchase tobacco grown in the U.S. That move will primarily impact tobacco growers in Macon, Trousdale, and Smith counties. Tennessee Department of Agriculture (TDA) officials estimate more than 200 growers will be affected. TDA says the move will represent a loss of more than 3,000 acres of burley tobacco worth approximately $14 million.

The announcement came on the heels of news that Dean Foods, the company that owns Mayfield Milk, Purity, and TruMoo among other brands, had notified 11 dairies in East Tennessee that the company would no longer be purchasing their milk as of May 31. Some 100 or so dairies throughout the country received similar notices.

Dean Foods cited a number of factors for the company’s decision, including decreased demand for milk among consumers, excess production by the country’s dairy farmers, and competitors’ moves that include a new processing plant. However, company officials stress they are still purchasing significant amounts of Tennessee milk.

“Several factors are influencing these changes,” said Tennessee Commissioner of Agriculture Jai Templeton in a TDA release. “Economic pressures, supply and demand, weak commodity prices, and competition can combine to create a perfect storm in the ag industry. That’s no secret to the producers who work tirelessly to tend their crops and livestock, knowing that every day in agriculture is a risk. They take on that risk not only because we all need to eat, but also because they truly believe in and love what they do.”

“The tobacco market is difficult,” says Dr. Eric Walker, University of Tennessee Extension tobacco specialist. “Alliance is not to blame. The move was not entirely unexpected, but it certainly came at a difficult time, leaving farmers with little time to develop alternative markets or choose alternative crops.”

When Alliance One made the announcement, some tobacco growers were initially defiant and stressed their determination to carry on in spite of the circumstances, says Dr. Walker.

“Some producers mentioned tomatoes or strawberries as alternatives but both of those [crops] have their own set of challenges,” he says. “And there has been talk of industrial hemp as an option. But in reality, it will take much fewer acres to produce enough hemp to meet current demand.”

Similar dilemmas face dairy farmers who likewise have limited market choices for their product.

The moves will certainly have a ripple effect throughout the state, says John Walker, AgCentral Farmers Cooperative chief executive officer.

“It’s definitely going to impact these farm families, and it will also affect their communities, including the local businesses like the Co-op where a large portion of their inputs are purchased.”

Commissioner Templeton assured farmers that TDA officials were working tirelessly to find ways to help. As examples, he cited a number of efforts that TDA has taken in the past year to further strengthen agriculture and assist farmers coping with a changing marketplace and continuing to build a strong agribusiness environment.

 “Agriculture is seeing many adjustments at this time,” he wrote. “Some changes, like the new Tyson Foods poultry production complex in West Tennessee, are great for our farmers. However, the challenges are also very real, and many families are now facing difficult decisions.

“We have revamped our Agricultural Advancement division and changed not only the titles, but the direction of our employees. Our Agribusiness Development Consultants are dedicated to bringing opportunities to our state. I like to think of our efforts as being the five pillars of Agricultural Advancement with services directed toward international exports, meat processing, on-farm sales, forestry, and food manufacturing.”

Programs like the Tennessee Agricultural Enhancement Program (TAEP), AgLaunch, which promotes agriculture innovation and entrepreneurship, and the Agriculture Enterprise Fund, which assists agribusinesses seeking to add to farm and forest production, are helping Tennessee farmers make improvements to their business, he said.

“The entire TDA team comes to work every day committed to the tasks we are mandated to accomplish by law or challenged to do in order to best serve our constituents,” said Templeton. “We also show up for work thinking about ways we can increase the value of farm and forest products. That extra value puts dollars in the wallets of the landowner, farmer, and forester, and it creates jobs.”

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