Federal government offers help to local dairy farmers (with a twist)

WSBT, Indiana ^ | 7-31-2009 | Troy Kehoe

[lainie]

ELKHART COUNTY — Dairy farmers across the country are being milked dry by rising production costs and falling prices. On Friday, the federal government unveiled a new plan aimed at providing "immediate relief." But, will it work? And, what will it mean for you at the grocery store?

The U.S. Department of Agriculture plan will raise the price paid at commodity markets for milk and cheddar cheese. Administrators call it a "dairy price support program." Secretary of Agriculture Tom Vilsack says it will help the dairy industry weather "one of it's worst crises in decades."

The price paid by dairy processors to farmers is set by the USDA based on commodity markets that rise and fall with global demand. Dairies increased production when demand for U.S. milk exports soared last year, but once the global recession accelerated last fall, demand dropped and farmers were left with too much milk and too many cows.

That dropped wholesale prices like a rock.

To combat that, the USDA will increase the price it pays for powdered milk by 15%. The price paid for cheese will go up by approximately 16%.

Both price increases will last through October.

But, some say it won't be enough to solve the long term problem facing dairies right now.

"It's too little, too late," said Elkhart County dairy farmer Mike Yoder, a County Commissioner who also owns Crystal Dairy Farms. "We are losing a lot of money right now, and have been for many, many months."

In fact, Yoder's profit margins are almost non-existent, swept away by rising supply, plummeting demand and export markets down 26% so far this year. Add to that the fact that wholesale milk prices are down nearly 50% from a year ago, and his 500 cows are costing him nearly twice as much as they're earning back.

"It's costing producers $17 to $18 for every 100 pounds of milk. At the worst, they were getting about $10 back, now it's probably $11 back at wholesale. We're losing about $1,800 a day right now. This is absolutely the worst I've ever experienced it. If there's a dairy farmer making money in the United States, I'd like to know who it is," Yoder said.

"It gets to be pretty depressing. Because, I've got 30 years of work and labor into this business, and I've basically lost most of that equity in the last 12 months," he added.

But, the USDA estimates the price hikes can create $243 million in new revenue for dairy farmers.

But, Yoder says that will only solve a short term problem.

"We're losing billions, and they're throwing a few million at it. And, it's dollars that won't show up until September, maybe October. So, it's pretty meaningless," he said.

[snip]

[lainie]

So the feds are throwing millions at the dairy farmers, in a sort-of bailout. Oh, wait, I meant to say they're artificially raising the farmers' prices so that consumers can throw more money at the dairy farmers.

Sweet!

But, where will that money come from?

The answer, Hurt says, is consumers.

Experts say it's unlikely that dairy prices will go up significantly over the next few weeks. But, by late September, some predict butter prices will eclipse their all time record of $3.93 per pound. Cheddar cheese could top $5 a pound, according to the National Milk Producers Federation.

But, Yoder says that increase in prices is unlikely to mean much to producers.

"If the government would have come out with a "cash for clunker" cow deal, that would have helped us. But, this won't," he said.

The only solution left may be a reduction in supply.

What?? No! Get outta town with that crazy talk!

[Buddy B]

Secretary of Agriculture Tom Vilsack says it will help the dairy industry weather "one of it's worst crises in decades."

WEATHER

[lainie]

Paul Rozwadowski, a Wisconsin dairy farmer and Chairman of the National Family Farm Coalition Dairy subcommittee, said, "While we are heartened that Secretary Vilsack acknowledges the grave crisis dairy farmers are confronting, raising dairy support prices by these small amounts is unlikely to stop the economic devastation occurring in rural America," he said.

"We need at least an $18 emergency floor price on all manufactured milk to be able to stay in business and survive. This would be a much less costly solution than USDA simply buying up more products," he said.

link

The floor price was $8-to-$10 per hundredweight as of June 10, 2009.

[lainie]

scratching my head... isn’t it used as in #12?

Either way, I didn’t write it. If I had, the possessive “its” wouldn’t have been misspelled.

[Redbob]

Dairy farmers have sucked at the goverment teat (so to speak) for decades.
Now might be a good time to give consumers a break and end dairy price supports altogether.

What’s the worst that could happen?
Those that have no business dairy farming will quit it.
Prices would fall to their natural level.

Naw, a Dimocrat could never do that!

[Buddy B]

I know you did not write the article.

But I am a Hoosier....so read your post.

[fatnotlazy]

In Pennsylvania we have a government agency called the Milk Marketing Board that sets artificially high prices for dairy products, ostensibly to benefit the dairy farmers. But most farmers will tell you that those price supports are rather meager. Someone is making good money off this racket and it’s not the dairy farmers. I suspect the same will happen with this federal program. Most government programs do not benefit the intended beneficiaries. Meanwhile, the consumer or taxpayer pays through the nose.

[citamoixa]

Not even surprised any more. The gov is great at propping up their “chosen” sectors and leaving us to foot the bill. It’s even more pathetic that they can’t even do the bailout right.

[org.whodat]

Pretty Girl!!

[Buddy B]

Milking it: why is Indiana dairy production up so much?

Good read.....April, 2004 article. Mike Yoder name in article.

[org.whodat]

Actually they phased out the old price support, and now they have phased in the new better price support. LOL, New welfare, just buying those votes with your money!! Now where is the BS experts telling everyone that the commodities market are there to help the farmer.

[DoughtyOne]

Obama can’t resist meddling in every industry. When he’s done this nation is going to be so screwed up it will take decades to unwind.

[Texas Eagle]

"It gets to be pretty depressing. Because, I've got 30 years of work and labor into this business, and I've basically lost most of that equity in the last 12 months," he added.

Life's tough. You can't be the only person who has gone out of business.

Look at the bright side. You had a 30 year run. That's way longer than most people who start a business.

[lainie]

(I don’t get it)

[lainie]

Hey, long time no type :)

I know. I probably shouldn’t be so blah and cynical about this story but it’s just one more in a long list of totally wrong things the gov’t is doing. I’m honestly fearful about how this all ends.

[FredZarguna]

No one is making any money from agriculture in general and Dairy in particular, and the reason is that the agricultural economy is probably the most thoroughly socialized part of our system.

If you want dairy farmers to make money, you need to

• get the government out of the business of establishing price supports and over-order premiums
• get the government out of the business of subsidizing free consulting and other services to all farmers via the USDA and Extension
• let half of the Dairy farmers in the country go out of business so the folks who are good businessmen can stop 'competing' with 'farmers' who have no clue what they're doing
• get the illegal labor subsidized by tax payers out of milking parlors
• get the government out of the business of turning the #1 US grain crop into fuel, artificially inflating feed costs and
• let the milk price rise to the cost actually supported by a free market.

  Then, we can have innovation, competition, and dare I say it capitalism determine the price of milk. Until then, there is no money to be made.

[lainie]

Exactly. If the dairy farmers have been getting less than half what they got last year, the prices on the consumer end haven’t reflected this. But now that they’re looking for more price supports from Uncle Sugar, suddenly we’ll be paying more at the grocery store. What’s wrong with this picture?

[lainie]

That’s it. New gang in charge = new racketeering scheme. Meet the new boss, same as the old boss

[lainie]

applause.

[trueamerica]