The last post discussed this article touting the salvation of the Crudaros (Dairy farmers) in Uruguay, by stimulus money. We will discuss where that money is coming from in the next edition and who is gaining control by loaning the money. But first, we need to understand that this issue is not a single issue that will ruin a country. I’m not making the case, that the sky is falling in Uruguay because the dairy farmers are getting government money. After all the dairy farmers in America have been getting government money for years and we are doing fine; right, Dean Foods? Seriously, I suspect in the near term there will be quite the opposite feeling for everyone involved. the farmers are poor enough that any money will be accepted, and after all it will take more than just the dairy industry to crash a nation. But, what I hope to point out, using this situation as an example is the difference in this international economy that we all currently live under and an agrarian economy this author longs for.
My second response to this article, after I got past the fact that they are moving away from the healthy benefits of raw milk, was how could a country with all that natural wealth, specifically the cattle, have poor dairymen? I always understood cattle to have value and dairy cows that produce to be worth something of even more value, and this country has more cattle per capita than any nation on earth according to the article.
Subsistence dairy farming dates back centuries in Uruguay, the country with the highest number of cattle per capita in the world: 3.8. There are approximately 10 million cattle and more than 15 million sheep in this country, which has a total population of 3.3 million, 93 percent of which is urban.
So then what happened to make these farmers poor? Two things are mentioned in the articles itself. One is an economic system that has a larger is better emphasis and two, the economy began to change and export it’s wealth to other nations.
“The problem is when you’re too small, just too small,” says Claudia Pérez, a small-scale dairy farmer in Uruguay, glancing to her left, where her pasture ends just 50 metres from her modest rural home.”…
In Uruguay, where the economy is driven by agriculture, tourism and banking, beef and wool are leading exports. But until it began to transition into a prosperous export industry 15 years ago, the dairy sector focused on supplying the domestic market.
In other words, when the economy shifted to export, the business model also shifted from a local supply and demand model to large scale production to meet the new higher demand. Like in the US it was, and is, get big or get out. Those that did not have the economy of scale or the desire to produce enough volume to compete with large export corporations now suppling the growing export market were forced to accept the new lower prices brought about the changes in the production model.
Now, some would argue that low prices is the primary goal in food production and I don’t believe low prices are bad. However, what the corporate model misses when the focus is low price and high profits is manifold. But two things come immediately to mind. One is a way of life and two is a quality product. I’ll touch on these briefly.
First read the story and look at the way of life for these families and specifically the community relationships. The Crudaros, life required them each day to come in contact with their neighbors they served. I’m certain some days, perhaps most days, that was monotonous. But at the same time, you know those people, or at least you were in a position to know them and to be part of their lives as they could be part of yours. Think about the social ramifications that one aspect has in relation to building a strong community. Knowing people and being part of a community produces an environment where a family name means something. It puts social pressure on people to perform and “be on their best behavior” because there are connected with everyone around them.
Next think about how those relationships and your standing in the community effect the pride in the quality product you are providing them. That is, at least in a system that puts a value in quality and relationships. In the article we see them watering down the product to try to stretch it and get enough volume to compete and feed their families at the lower prices. We also see them traveling into the city to find enough poor people that are willing to pay a cheaper price for a lesser product.
My position on this, is that when an economic system puts a value on price alone, which corporations always do, you remove the driving factors for quality. When you remove the face to face interaction with the customer, you remove the thread that weaves the complexity of community relationships together.
Lastly the article passes over these driving factors and goes to the fact that the government is going to help these poor farmers. The solution will provide much needed money for these dairy families, but in the process it furthers the destruction of their community and makes them a slave on a subsidized plantation instead of a freeman on their own land. In short, the system, either by design or greed, drives the prices down so the independent family farmer can not compete and then offers the shackles of debt to help him.
It would be easy to point to the Uruguay government as the one’s to blame, and I’m certain they hold their share of the responsibility. But in the next piece I want to look at who holds the notes and ultimately who benefits from this world economy.