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nffc, dairy prices

By Heather Thorstensen

hthorstensen@agrinews.com

WASHINGTON — Members of the National Family Farm Coalition said during a March 4 press conference that current low milk prices are the result of a broken pricing system, massive imports and corruption in dairy cooperatives. Others in the industry don’t agree.

Paul Rozwadowski, a Wisconsin dairy farmer and chairman of NFFC’s dairy subcommittee, said producers will never receive a fair price that covers cost of production if they wait for the markets to play out.

"Those ag economists and others who are falsely accusing dairy farmers of over-producing milk and stating that we have too large of a supply of dairy products as a way to justify these ruinous low prices couldn’t be more wrong," he said.

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Ken Bailey, associate professor of dairy markets and policy at Penn State University, said NFFC’s allegations are "just not true." He attributes low milk prices to supply and demand.

"From my standpoint, we saw a massive drop in demand," he said. "...You had a growing, steady supply. Farmers were reacting to high milk prices, logically, exporting was going well and all of a sudden (we had a) global recession."

The U.S. dollar was strengthening and exports slowed, so supply grew.

"You can’t take the markets only when you like them. Markets go up and markets go down," he said.

According to Bailey, prices are coming up for April and May.

"The second half of the year looks much better," he said.

Bob Lefebvre, executive director of Minnesota Milk Producers Association, has heard the state’s dairy producers are currently receiving $9 to $11 per hundredweight while cost of production in the state is $15 to $17. The pricing system isn’t perfect, he said, but pointing fingers doesn’t help.

NFFC members said increasing imports from 2007 to 2008 while milk prices fell shows that prices don’t have anything to do with market demand. Lefebvre said their missing part of the equation.

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"For the last several years, the United States — and Minnesota has been one of the states that’s benefited from this — has seen sizable increases in exports," he said.

NFFC’s allegation of dairy cooperative corruption was mainly directed at Dairy Farmers of America. The Commodity Futures Trading Commission fined DFA and some of its former executives $12 million in December for attempting price manipulation.

John Bunting, a New York dairy farmer who spoke during the press conference, said producers in his region aren’t demanding that DFA work for their best interests because they don’t have an alternative milk market.

NFFC sent a letter earlier this month to U.S. Secretary of Agriculture Tom Vilsack to ask that he implement a section of the Agricultural Marketing Agreement Act of 1937 to adjust farm milk prices in all federal orders to reflect the price of feed, available feed supplies and other economic conditions that affect market supply and demand for milk and other dairy products.

Lefebvre said any step that could help dairy producers is worth taking a look at, but a long-term solution is necessary.

"USDA has to get it in gear and get going with their MILC payments," he said. The process is being delayed because the department has to figure out a way to determine the feed cost adjuster, he said. The adjuster moves the $16.94 per hundredweight benchmark price upward depending on the cost of feed rations. Lefebvre also suggested the Dairy Price Support Program could go into effect and said dairy producers could be receiving up to 70 cents more per hundredweight overnight if USDA modernized the Commodity Credit Corporation’s purchasing standards.

He’s heard dairy producers advise each other to contact their vendors, such as veterinarians and equipment supplies dealers, to cope with low prices.

"They’re pleasantly surprised that they’re willing to work with them and willing to see them through it," said Lefebvre.

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