Southtown farmer claims there's a flaw in the milk pricing system
SOUTH NEW BERLIN – Currently in New York state, the cost for dairy farmers to produce milk is nearly double the amount they are receiving for the product. According to South New Berlin farmer Ken Dibbell, it’s not a market trend – it’s a fundamental flaw.
Liquid milk prices are guided by the United States Department of Agriculture, under the federal milk order, but Dibbell contends that dairy cooperatives and mis-guided government policies are keeping farmers from getting fair, market-based returns on their milk.
“Cooperatives are not working for the farmers like they should,” Dibbell said, arguing that the disparity between what farmers are getting paid by processors, and what consumers are paying for milk, is a three-fold difference that is essentially unaccounted for. He believes the cooperatives – brokers who sell product to dairy processors on behalf of the farmers – are either not advocating enough for small dairy farmers, or they’re exploiting them.
“There is a lot of frustration right now,” said Ed Gallagher, a vice president with Dairylea, a cooperative representing farms in New York state as part of joint venture with Dairy Farmers of America, a nation-wide cooperative from Kansas City. “Low milk prices, high energy related costs of production, rising interest rates and two weather situations, the flooding and the heat wave, are all adding to the stress ... this has maybe been the most difficult year in decades.”
But difficulties in the dairy industry have been prevalent prior to 2006. According to statistics provided by New York State Department of Agriculture and Markets, there are currently just over 6,000 dairy farmers in the state, down from over 9,000 in 1995. Dibbell adds that in 1980, there were over 19,000 milk producers.
“We recognize that,” Gallagher said. “We’ve been working hard to put more money in the bank for farmers.” Gallagher denied that Dairylea is withholding money from farmers or providing unfair amounts for dairy processors inside and outside the state. He added that Dairylea is working to institute a state-level milk pricing system that would create a fixed floor price to protect farmers from incurring extremely low numbers.
Dibbell claims that if the decline in farms continues, now aided by the low milk prices, devastating June floods, and high energy costs, the impact on rural communities and economies will be larger than people may understand.
“This is a natural disaster for the local community, nothing else,” said Dibbell, who owns and operates the Twin Pond Farm in South New Berlin. “Dairy farms support a lot of jobs in New York state that are going to be lost if we do not step outside the box and do something. A working farm will pay more in taxes to support the social programs than a non-working one.”
U.S. Department of Agriculture statistics list the production cost of milk in the state between January and October of 2006 at around $22 per hundred weight of milk, but producers on average only received $12 per hundred weight – with liquid milk being sold in stores at prices that add up to about $40-44 per hundred weight, according to Dibbell.
Gallagher said the retail price should typically be double the production cost.
“Someone is making a lot of money on milk while the producer is getting $12 per hundred weight to try to cover the cost of $22 per hundred weight,” Dibbell states in a letter dated Nov. 21, 2006. “Does this make any sense?”
Dibbell said that milk order pricing needs to be set at between $18 and $20 per hundred weight, arguing that local consumers will pay a higher price for local milk if they know the money is going to the farmers, and staying in the local economy. “They’ll pay the price if it’s going to farms,” he said. “The money needs to come from the market place. Let the competition begin at the retail level.”
Gallagher said milk prices are predicted to rise in July.
According to New York state Department of Agriculture and Markets’ website, in 2005, 11.7 billion pounds of dairy products were produced in the state at a preliminary value of $1.91 billion. Also, New York state is the nation’s 3rd leading dairy producer.
Liquid milk prices are guided by the United States Department of Agriculture, under the federal milk order, but Dibbell contends that dairy cooperatives and mis-guided government policies are keeping farmers from getting fair, market-based returns on their milk.
“Cooperatives are not working for the farmers like they should,” Dibbell said, arguing that the disparity between what farmers are getting paid by processors, and what consumers are paying for milk, is a three-fold difference that is essentially unaccounted for. He believes the cooperatives – brokers who sell product to dairy processors on behalf of the farmers – are either not advocating enough for small dairy farmers, or they’re exploiting them.
“There is a lot of frustration right now,” said Ed Gallagher, a vice president with Dairylea, a cooperative representing farms in New York state as part of joint venture with Dairy Farmers of America, a nation-wide cooperative from Kansas City. “Low milk prices, high energy related costs of production, rising interest rates and two weather situations, the flooding and the heat wave, are all adding to the stress ... this has maybe been the most difficult year in decades.”
But difficulties in the dairy industry have been prevalent prior to 2006. According to statistics provided by New York State Department of Agriculture and Markets, there are currently just over 6,000 dairy farmers in the state, down from over 9,000 in 1995. Dibbell adds that in 1980, there were over 19,000 milk producers.
“We recognize that,” Gallagher said. “We’ve been working hard to put more money in the bank for farmers.” Gallagher denied that Dairylea is withholding money from farmers or providing unfair amounts for dairy processors inside and outside the state. He added that Dairylea is working to institute a state-level milk pricing system that would create a fixed floor price to protect farmers from incurring extremely low numbers.
Dibbell claims that if the decline in farms continues, now aided by the low milk prices, devastating June floods, and high energy costs, the impact on rural communities and economies will be larger than people may understand.
“This is a natural disaster for the local community, nothing else,” said Dibbell, who owns and operates the Twin Pond Farm in South New Berlin. “Dairy farms support a lot of jobs in New York state that are going to be lost if we do not step outside the box and do something. A working farm will pay more in taxes to support the social programs than a non-working one.”
U.S. Department of Agriculture statistics list the production cost of milk in the state between January and October of 2006 at around $22 per hundred weight of milk, but producers on average only received $12 per hundred weight – with liquid milk being sold in stores at prices that add up to about $40-44 per hundred weight, according to Dibbell.
Gallagher said the retail price should typically be double the production cost.
“Someone is making a lot of money on milk while the producer is getting $12 per hundred weight to try to cover the cost of $22 per hundred weight,” Dibbell states in a letter dated Nov. 21, 2006. “Does this make any sense?”
Dibbell said that milk order pricing needs to be set at between $18 and $20 per hundred weight, arguing that local consumers will pay a higher price for local milk if they know the money is going to the farmers, and staying in the local economy. “They’ll pay the price if it’s going to farms,” he said. “The money needs to come from the market place. Let the competition begin at the retail level.”
Gallagher said milk prices are predicted to rise in July.
According to New York state Department of Agriculture and Markets’ website, in 2005, 11.7 billion pounds of dairy products were produced in the state at a preliminary value of $1.91 billion. Also, New York state is the nation’s 3rd leading dairy producer.
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