Are Dairy Farmers Facing the Year 2009 Again?

Guest Editorial by Arden Tewksbury, Manager, Pro Ag

With dairy farmers’ prices plummeting $9.50 per cwt. (hundred weight) from the high point of $26.16 in September 2014 down to the present level of $16.66, it makes one wonder if the net result will come close to the 2009 massacre. The high point of 2008 was $21.11 per cwt. in Federal Order #1. The low point in 2009 was $11.56. This means the dairy farmers’ price dropped $9.55 per cwt. from the high point of 2008 down to the low point of 2009. Isn’t this a sad coincidence? In 2009 the decline was $9.55 per cwt. and now in 2015, the decline is $9.50 per cwt. (Only a nickel difference!) What an unbelievable sad situation.

Remember what happens in Order #1 also takes place in all Federal Orders.

As I explained some of these figures to a dairy farmer’s wife last Sunday in Towanda, she said, “This is horrible. Our costs are much higher now then in 2009.”   She continued by saying, “We just found out that in the Margin Insurance Program, the USDA is only using alfalfa hay, corn and soybeans as the feed cost.” I’ve been trying to tell you people for four years of the shortcomings of the Margin Insurance Program. I said, “What about the other ingredients in your feed? What about the mixing cost in the feed mill and the delivery cost to your farm?”

After the Secretary of Agriculture extended the sign-up period many Agriculture officials claimed that thousands more dairy farmers signed into the dairy program because they had a better understanding of the program. Phooey! The majority of the dairy farmers that signed up during the last period were because nearly everyone was forecasting extremely low milk prices for 2015. So the majority of the dairy farmers became extremely concerned about future milk prices. Eventually, hundreds of dairy farmers went into the program at the last moment. What a shame, this is the best that could be done for the average dairy farmer?

COMMENT PERIOD

Pro-Ag and the NFFC (National Family Farm Coalition) are submitting comments to the Secretary of Agriculture concerning the Federal Milk Marketing Orders (April 13 is the deadline:  http://www.regulations.gov/#!submitComment;D=AMS-DA-09-0065-0001). We are strongly endorsing the ten Federal Milk Marketing Orders across the country. However, we are suggesting a few strong recommendations concerning the Orders.

1) We want a new pricing mechanism to determine the value of milk at the farm level. We strongly urge this formula should be based on the dairy farmers’ cost of production.

2) We suggest a milk supply management program that mandates any excess milk produced above the needs of the marketplace be paid for by the dairy farmers that produce over their established base. The program would not tell the dairy farmer how much milk he could produce, but if there is too much milk, then whoever produces the excess milk would have to pay the fiddler.

3) We believe the cooperative payment provision that was contained in former Federal Order #2, should be established in all Federal Orders. I firmly believe this could help out with the dairy farmers who lose their markets and help out with any distressed milk.

4) Another strong recommendation we have is: We feel that all milk used for manufacturing dairy products should be consolidated together and used as Class II milk.

During 2014, the three classes of milk used for manufacturing had a simple average of $22.59 per cwt. Our suggestion is needed and is very defensible. It’s time for dairy farmers to receive a fair, stable price for their milk. It’s time for processors that use this milk to know what they are paying for to purchase this milk, not a month later. If we could have our suggestions become part of the Federal Orders, you know who would really love us? Yes, the American consumer!

Don’t forget to support the efforts of author Nina Teicholz as she is encouraging everyone to use whole milk, butter, etc.

Pro-Ag can be reached at 570-833-5776.