CHENANGO COUNTY – The disappearance of the family dairy farm, like small business, is a fact of life in America’s economy, said a federal agriculture official in a July correspondence with a local farmer.
Responding to a letter questioning milk pricing policies sent by former South New Berlin farmer Ken Dibbell, a representative from the U.S. Department of Agriculture said stabilizing milk prices won’t keep small dairy operations in business.
“Consolidation and larger-sized operations are a constant in our economy – not only in agriculture but in business in general – as producers expand to capture economies of scale,” wrote economic analyst Joy Harwood in a July 20 response sent on behalf of USDA Secretary Mike Johanns. “Producer exits from dairying have been occurring for at least 60 years and would not likely be stopped, or slowed significantly, even with somewhat higher milk prices.”
“That’s outrageous,” said Dibbell in a telephone interview Monday. “We’re killing the country – first the rural communities and then the counties, where rural milk dollars go a long way – we’re killing rural economies like Chenango County’s and people like Joy Harwood think that’s OK. What’s happening here is a real problem.”
According to the New York State Department of Agriculture and Markets, for every job created on a dairy farm, 1.24 jobs are created locally and for every dollar of output from a dairy farm, $.83 is spent in the community.
Record low milk prices in 2006, bad weather, high fuel and feed costs, and increased debt, however, have pushed many local farms to the brink of folding, several area farm organizations contend. According to figures from the USDA, 460 dairy farms closed in New York state last year alone.
Dibbell claims greed has knocked dairy families off a level playing field in the industry, arguing they should be paid for their milk based on what it cost to produce – which means figuring in feed, energy and equipment costs.
The money paid to farmers is currently set by the federal government, and at times during 2006 and 2007 has only been around half of what the cost of production was, according USDA figures. Milk prices are currently situated at around $22 per every hundred pounds, while the cost of production has been hovering at $24 per hundredweight.
“Money is the only thing that matters, that’s part of the problem,” said Dibbell, explaining that large processors are getting market values for milk that farmers aren’t even breaking-even on. “Competition should be at the market place.”
The Chenango County Board of Supervisors, along with Dibbell, has endorsed a bill sponsored by Arlen Specter (R-PA) that would create a nationally-averaged milk price based on production costs. The legislation has been introduced separately from the 2007 U.S. Farm Bill, which fails to address pricing policies adequately, some local dairy experts say.
“The farm bill, as it is, isn’t in the best interest of dairy farmers,” said Afton Supervisor Robert Briggs. “This bill (Senator Specter’s) brings some stability to the prices and keeps supply and demand where it needs to be.”
Aside from basing the price on cost of production, Specter’s bill calls for a for supply management program and would eliminate hauling charges levied on farmers.
“That’s always been unfair,” said Briggs, referring to hauling charges. “Once the milk is on their truck, it’s theirs, they own it. They should have to pay for it.”
The 2007 Farm Bill, which does not yet have a version in the Senate, does not call for cost-based pricing, rather, it endorses the Milk Income Loss Contract (MILC) program, which uses tax dollars to subsidize farmers when prices fall below a certain level. The bill does call for a review of the federal system to make sure competitiveness and costs of production are being considered.
Briggs and Dibbell say the market, rather than MILC, is the answer to solving price issues.
Briggs isn’t sure if Specter’s bill will pass, considering the wide-support for the current farm bill in West and Midwest.
“But you’ve got to do something,” said Briggs. “Nothing will change, nothing will get better if we don’t try to do something.”
Harwood said a higher, nationally averaged milk price would be “problematic” because it would encourage overproduction from farmers trying to take advantage of the higher pay out.
“That’s an easy answer for someone who doesn’t know what’s going on,” Dibbell said, pointing to a farmer funded inventory control program in the Specter bill that would pay a lower price to producers when milk supplies exceed a certain limit.
New York State Ag & Markets statistics say New York produces 12 billion pounds of milk per year, and is the third largest dairy state in the U.S. However, New York dairy farms have decreased from 19,000 to 6,000 in less than 30 years.