Dairy gets squeezed by the feds

The Seattle Times ^ | 1 June, 2005 | Danny Westneat

[Radigan]

In its 85 years of existence, Smith Brothers Dairy in Kent has survived all manner of misfortune and mistakes.

There was the Depression, when milk sales plummeted. There were cow-killing floods. There were modern times, when it appeared the old-fashioned idea of fresh milk delivered to the doorstep had died.

And there was the crackdown when society realized cow manure could be as toxic to fish as anything produced at a nuclear plant.

"None of that compares to this," says Alexis Smith Koester, 60, dairy president and granddaughter of the founder, Ben Smith. "This is the biggest threat we've ever faced."

She's talking about the federal government.

The U.S. Department of Agriculture has proposed new rules that could force Smith Brothers to either give up half its business or close up shop entirely, Koester says.

What are the feds trying to stop? They're trying to keep Smith Brothers Dairy from selling its milk for less.

And we call this a capitalist country.

The dairy, which is small enough that the president answered the phone when I called, is being punished for doing too much too well.

For 75 years, milk has been heavily regulated by price and marketing controls.

People who know more about it than I do say the system works well. It protects those who own only one part of the milk business — say, a farmer with cows but no milk-processing plant — from being gouged by big agribusinesses.

But Smith Brothers has always been exempt from these regulations because it is so independent. It does it all. It is one of only 11 dairies left in the Northwest that raise and milk the cows as well as pasteurize and bottle the milk.

Its business model is so antiquated that most dairies like it long since went under.

Smith Brothers survived by discovering that what was old is new again. Home delivery of milk is hot. Especially if people know who owns the cows so there's a guarantee no growth hormones were used.

Remarkably, Smith Brothers now delivers milk to 40,000 homes in and around Seattle, the most in its history. And it is so efficient it does so at the same or lower prices you get in many stores.

Yet the feds, backed by the biggest dairy processors in the West, want to force Smith Brothers and other do-it-yourself dairies to sell through the government-regulated system. They say this will help the small farmers who already sell milk to big processors.

But Smith Brothers, no milk monopoly with just 1 percent of the market, would have to pay subsidies to its competitors that exceed the dairy's yearly profit. Or it would have to break up its business, and no longer provide its unique cow-to-carton-to-doorstep service.

So what we have is the government, prodded by large corporations, saying it is helping small family farms by destroying one of our most successful small family farms.

Come to think of it, I guess that is American-style capitalism after all.

Danny Westneat's column appears Wednesday and Friday. Reach him at 206-464-2086 or dwestneat@seattletimes.com.

[fella]

What party was in charge when these rules to help the little famers were put in place?

[eastforker]

I am not being silent, you can see the rig count is up from last year and last week. shall I get a rig count for you from say 4 years ago so you can compare?

[Paul C. Jesup]

But Smith Brothers, no milk monopoly with just 1 percent of the market, would have to pay subsidies to its competitors that exceed the dairy's yearly profit.......It's there in the article.

This doesn't pass them smell test, a good lawyer could beat this in court.

[Paul C. Jesup]

them = the

[Paul C. Jesup]

Youy believe a ocean based oil rig is cheaper than a land based oil rig. You are showing everyone here how nutty you really are.

[eastforker]

2001 rig countBaker Hughes Incorporated (ticker: BHI, exchange: New York Stock Exchange (.N)) News Release - 7-Jun-2001

---

Baker Hughes Announces May 2001 Rig Counts

HOUSTON, Jun 7, 2001 (BUSINESS WIRE) --

International Rig Count up 1% from April 2001; Up 20% from 1 year ago;
Worldwide Rig Count up 3% from April 2001; Up 34% from 1 year ago

Baker Hughes Incorporated (NYSE:BHI)(PCX:BHI)(EBS:BHI) announced today that the international rig count for May 2001 was 752, up 10 from the 742 counted in April 2001 and up 125 from the 627 counted in May 2000. The international offshore rig count for May 2001 was 230, up 11 from the 219 counted in April 2001 and up 64 from the 166 counted in May 2000.
The US rig count for May 2001 was 1,234 up 28 from the 1,206 counted in April 2001 and up 389 from the 845 counted in May 2000. The Canadian rig count for May 2001 was 238 up 21 from the 217 counted in April 2001 and up 49 from the 189 counted in May 2000.

The worldwide rig count for May 2001 was 2,224 up 59 from the 2,165 counted in April 2001 and up 563 from the 1,661 counted in May 2000.



May 2001 Rotary Rig Counts

May 2001 April 2001 May 2000

---

---

---

Land OS Total Var Land OS Total Land OS Total

---

Europe 37 61 98 9 39 50 89 38 38 76
Middle East 145 29 174 5 141 28 169 135 21 156
Africa 31 24 55 (5) 32 28 60 25 21 46
Latin America 219 49 268 (2) 218 52 270 182 33 215
Asia Pacific 90 67 157 3 93 61 154 81 53 134
International 522 230 752 10 523 219 742 461 166 627
US 1,064 170 1,234 28 1,037 169 1,206 707 138 845
Canada 235 3 238 21 211 6 217 185 4 189
N. America 1,299 173 1,472 49 1,248 175 1,423 892 142 1,034

---

Worldwide 1,821 403 2,224 59 1,771 394 2,165 1,353 308 1,661

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May 2001 Workover Rig Counts

May 2001 Var. April 2001 May 2000

---

US 1,267 51 1,216 1,041
Canada 290 25 265 279

---

North America 1,557 76 1,481 1,320

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About the Baker Hughes Rig Counts

The Baker Hughes Rotary Rig Counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the United States, Canada and international markets. Baker Hughes has issued the rotary rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of US and Canadian drilling activity. Hughes initiated the monthly international rig count in 1975. In 1987 the Baker Oil Tools began its monthly workover rig count.
North American rig count data is scheduled to be released at noon central time on the last working day of each week. The international rig count and North American workover rig counts are scheduled to be released on the 5th working day of the month. Additional detailed information on the Baker Hughes rig counts are available from our Web site at http://www.bakerhughes.com/investor/rig.

Baker Hughes is a leading provider of drilling, formation evaluation, completion and production products and services to the worldwide oil and gas industry.



NOT INTENDED FOR BENEFICIAL HOLDERS

CONTACT: Baker Hughes Incorporated, Houston
Gary R. Flaharty, 713/439-8039
gary.flaharty@bakerhughes.com
or
Kyle J. Leak, 713/439-8042
kyle.leak@bakerhughes.com

[eastforker]

2005 rig count

[eastforker]

Baker Hughes Incorporated (ticker: BHI, exchange: New York Stock Exchange (.N)) News Release - 7-Apr-2005

---

Baker Hughes Announces March 2005 Rig Counts

International Rig Count Up 2% From February 2005; Up 12% From One Year Ago Worldwide Rig Count Down 5% From February 2005; Up 9% From One Year Ago
HOUSTON, April 7, 2005 /PRNewswire-FirstCall via COMTEX/ -- Baker Hughes Incorporated (NYSE: BHI) announced today that the international rig count for March 2005 was 891, up 15 from the 876 counted in February 2005, and up 92 from the 799 counted in March 2004. The international offshore rig count for March 2005 was 254, up 1 from the 253 counted in February 2005 and up 18 from the 236 counted in March 2004.

The US rig count for March 2005 was 1,306, up 30 from the 1,276 counted in February 2005 and up 170 from the 1,136 counted in March 2004. The Canadian rig count for March 2005 was 420, down 173 from the 593 counted in February 2005 and down 42 from the 462 counted in March 2004.

The worldwide rig count for March 2005 was 2,617, down 128 from the 2,745 counted in February 2005 and up 220 from the 2,397 counted in March 2004.

March 2005 Rotary Rig Counts

March 2005 February 2005 March 2004

---

---

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Land OS Total Var. Land OS Total Land OS Total

---

Europe 25 46 71 17 24 30 54 31 48 79
Middle East 213 33 246 14 204 28 232 186 32 218
Africa 37 14 51 -2 36 17 53 30 11 41
Latin America 256 58 314 -3 249 68 317 210 68 278
Asia Pacific 106 103 209 -11 110 110 220 106 77 183
International 637 254 891 15 623 253 876 563 236 799
United
States 1,210 96 1,306 30 1,172 104 1,276 1,042 94 1,136
Canada 418 2 420 -173 590 3 593 458 4 462
North America 1,628 98 1,726 -143 1,762 107 1,869 1,500 98 1,598

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Worldwide 2,265 352 2,617 -128 2,385 360 2,745 2,063 334 2,397

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March 2005 Workover Rig Counts

March 2005 Var. February 2005 March 2004

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United States 1,259 -2 1,261 1,238
Canada 718 -102 820 449

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North America 1,977 -104 2,081 1,687

---

About the Baker Hughes Rig Counts

The Baker Hughes Rotary Rig Counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the United States, Canada and international markets. Baker Hughes has issued the rotary rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of US and Canadian drilling activity. Hughes initiated the monthly international rig count in 1975. In 1987, Baker Oil Tools began its monthly workover rig count.

North American rig count data is scheduled to be released at noon central time on the last working day of each week. The international rig count and North American workover rig counts are scheduled to be released on the 5th working day of the month. Additional detailed information on the Baker Hughes rig counts is available from our website at http://www.bakerhughes.com/investor/rig .

Baker Hughes is a leading provider of drilling, formation evaluation, completion and production products and services to the worldwide oil and gas industry.

NOT INTENDED FOR BENEFICIAL HOLDERS

Contacts:
Gary R. Flaharty (713) 439-8039
H. Gene Shiels (713) 439-8822

SOURCE Baker Hughes Incorporated

[Moonman62]

The cost of oil today is because it is not subsidised and the free open market dictates the price.

In the long run that's true and the price has gone down over time. However, in the short run, oil, since so much is imported, is subject to manipulation of the foreign exchange rate of the dollar, which for the most part is controlled by the White House. The government is everywhere. See my tag line.

[CDHart]

I am financial manager for a rural 60-bed skilled nursing facility. Medicaid pays us less per day than what it costs to care for people, so we rely on private pay residents and county taxes for the rest. A recent federal regulation thought up by some idiot bureaucrat requires us to install a sprinkler system for any OUTSIDE area that is roofed and is within 48" of the building wall.

In order to comply (a word I hate), we had to spend $7,000 to hook up the front porch as part of the existing sprinkler system.

How much good could we have done for our residents with that $7,000? Instead it went to comply with a reg thought up by someone who was trying to justify his bureaucratic position, IMO.

Carolyn

[eastforker]

Sure it is but my interest in the article is that farm subsidies is a security issue, not a social one.

[snowsislander]

We can all thank FDR for this socialist nonsense at the federal level with dairy.

I don't personally think the federal government has any call to be involved in the milk business, and certainly not with the heavyhanded shutting down of successful businesses just because they don't fit the USDA's view of the world.

[lodwick]

That post was worth showing twice.

Governments - the perfect criminal operation.

[Cowman]

Do you have any idea whatsoever what it takes to feed and maintain a dairy cow? No, I didn't think so.

Add to this the fact that a dairy cow will produce for only about 305 days a year and in that time has to produce enough to cover the costs of the other 60 days.

It appears to me that the crime here is bypassing the government system and showing it to be (at least in this case) not just not beneficial, but harmful to farmers and consumers.

These infidels must be stoped.

[irishtenor]

I wonder who the first person was that said "Hey, I am going to squeese those dangly things and drink whatever comes out."?

[Red Badger]

Brave was he who first ate an oyster..........................or licked a toad.......

[Red Badger]

Governments - the perfect criminal operation.

The ultimate goal of all gang warfare......Egypt, Babylon, Persia, Greece, Rome, et al. Ottomans, Nazi Germany, Soviet Union, et al. ALL wars have been fought for the same reason., namely: Who gets to collect the taxes..........at least that's what extortion is called when someone from the gov't does it......

[kaboom]

It sound like this Dairy is now constrained by it's own security net. The big dairy processors were limited from being truly competetive in order to save the lesser farms. Now one of those farms wants to compete against the big boys and is hitting the same regulations that restricted the big processors. While Smith Brothers Dairy says that they were exempt from the earlier regulations, it does not say that they did not benefit from them.

[eastforker]

Here is the problem, this dairy has its own cows. They control the milk from teat to doorstep, therefor they have cut out any middlemen. Dairy farmers who only have cows feel they are not getting their market share since the dairy can process their own milk without buying it from other farmers but this dairy has been around for70 something years and now the gubmint want them to cut back on milk production from the cows and buy the milk from farmers who only have cow and that would increase their production price and that would increase the price to the consumer.

[eastforker]

Let me argue it this way. I have a farm that raises beef cattle, I also have my own packing plant and I also have restaurant and grocery stores where I sell my products exclusively. I also grow my own grain and hay to feed these animals. Needless to say I can produce this user end product much cheaper than the farmer that only raises beef, we both recieve the same subsidies but I make more money because we take the product from cradle to the end user and the small farmer says his product won't bring as much because of the monopoly I made with my company.You see I do not have to buy the small farmers goods and because I distribute my end product goods lessens the demand for the small guy and he in return receives less money for his product. I am all in favor of the small farmer to receive subsidies but when big coops monopolize an economy like I mentioned before I do not think subsidies should be allowed. Did I make any sense at all?