Coalition Calls For Dairy Pricing Changes

Mar 4, 2015

Credit WAMC

Dairy farmers are contending with a drop in milk prices, and the National Family Farm Coalition wants action taken to mitigate the impact on farm families.

The coalition cites numbers from the U.S. Department of Agriculture showing that in the past five years 7,788 dairy farms have gone out of business, leaving fewer than 45,000 dairy farms operating across the country.
They use those figures to push their agenda for a new national pricing policy, creation of a supply management system and implementation of import and export controls.
During a conference call, coalition member and Pennsylvania dairy farmer Arlen Tewksbury said they will push for hearings at the U.S. Department of Agriculture to consider a new pricing formula to benefit farmers.  “The prices have gone down to dairy farmers since November by 85 cents a gallon. The pricing formula that’s used by USDA to determine the value of milk at the farm does not in any way take in consideration of the dairy farmer’s cost of production. It takes in everybody else’s cost. It takes in the processors’ costs. It takes in the hauling costs. But it does not take in the dairy farmers’ cost and this has got to change.”

Stanley, Wisconsin dairy farmer Paul Rozwadowski reports his last check for raw milk paid a base price of $15.25 per hundredweight while last year he averaged $24.67.   “Although it was a pretty good year by the time we made all the repairs that desperately needed to be made and replaced machinery,  we really didn’t come up with much of a profit.  The increase in production nationally last year was 3.5 percent and right now that’s caused more than a 30 percent drop in the price of raw milk. We were led to believe that the export market was going to be our salvation. But that market has dried up and this real small surplus is causing pretty undue hardships on dairy farmers across the nation.”

Agrimark dairy economist Bob Wellington says dairy farmers have been challenged by a 5 percent drop in exports at the same time production is up 2 to 3 percent. He says the National Family Farm Coalition is correct that there has been a drop in prices to farmers.   “2014 was a record high level for farmer income.  The end result of that depended on their cost but the amount of money they received for their milk was very high. So it’s not surprising to see this level of decline that they’re saying. Right now I’m not seeing that as much as 85 cents a gallon, but it is very substantial.  It will not be as bad as it was in 2009 and 2012, which were bad years. But it is a reduced income year for farmers.”

The Farm Bill passed in 2014 included a diary Margin Protection insurance Program, in which farmers could choose to participate. The National Family Farm Coalition’s Tewksbury claims there was only a 50 percent buy-in rate nationally.  “The insurance program only covers certain feed costs. It has nothing to do with about 50 percent of the dairy farmer’s costs. It’s a far cry from the answer for our dairy farmers.”

Agrimark economist Bob Wellington says more farmers enrolled in the Margin Protection Program in New England and eastern New York.