NORWICH – Family dairy farms in Chenango County are headed for a disaster come April, one local producer says.
That’s because milk prices have dropped significantly in just a month, while the cost of production has risen well-above what farmers are getting paid.
According to the latest figures from the U.S. Department of Agriculture, the liquid milk price for the area this month is $19.95 per hundred-weight. (As a commodity, milk is priced per hundred pounds.) That’s nearly a $3 decrease from February. When the March price is adjusted by the federal government for farm checks sent out in April, it’s likely local dairy producers will get paid even less.
Meanwhile, it’s costing farmers between $24 and $28 to produce each hundred-weight, USDA figures show. The result: Dairy producers will continue losing money, despite what some consider to be relatively high milk values.
“We’re headed for a disaster,” said South New Berlin farmer Ken Dibbell, adding that many farmers are still recovering from disastrous returns in 2005, 2006, and the first part of 2007. “Come April, the pay price will be well below $20. It’s crazy, and we can’t stop it.”
Dibbell’s argument is in stark contrast to what other local producers and economists have said.
Instead, Dibbell says it wouldn’t be a surprise to see more family farms shut-down in Chenango County – there were over 700 when he moved here 30 years ago, now there’s about 230 – and across the country in the coming months and years unless the milk pricing system, set by the federal government based on certain market factors, changes to reflect the cost of production.
What does that mean for the county as a whole? According to the state Department of Agriculture and Markets, for every $1 spent by a dairy farm, approximately $2.50 in wages and related business transactions is contributed to the local economy.
“It’s about supporting the rural economy,” said Dibbell. “And farmers spend every penny they can get their hands on, it never fails.”
Some family farm advocates, including Dibbell, blame what they call an unfair market system that favors a few large corporations that can manipulate commodity prices on exchange floors, and in effect lower prices they have to pay farmers over the long term.
In a phone conference Monday, members of the National Family Farm Coalition also blamed large cooperatives like Dairy America and Dairy Farmers of America for mis-representing price data on exports of powdered milk, which they claim negatively impacted milk prices in 2006 and cost farmers upwards of $50 million.
A call to Dairy Farmers of America Tuesday seeking comment was not returned.
USDA economist Peter Fredericks said bigger companies and cooperatives have consolidated with their smaller counterparts in the dairy industry, but that’s a trend occurring throughout the U.S. economy.
“The dairy industry has not escaped that,” he said. “Some farms have been able to survive better than others.”
As for the farm coalition’s claims about cooperatives, Fredericks said, “There was a period of time when there were errors in how they (cooperatives) were reporting that information,” adding, “that wasn’t the only factor (in low 2006 milk prices)... It was part of it.”
The USDA has since revised how those numbers are to be reported, he said.
While larger companies and cooperatives are under fire from some family farms, Fredericks said supporters of industry consolidation would likely argue that it brings efficiencies to the industry that saves farmers and consumers money when it comes to logistics premiums and volume pricing, even though it limits the options farmers have when it comes to who they sign a milk contract with.