Dairy farmers' dilemma
Farm-level milk prices drop sharply in first part of ’09By Ashley Gurbal, agurbal@altoonamirror.com
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The Milk Income Loss Contract was established with the 2002 Farm Bill. MILC, funded through the United States Department of Agriculture's Farm Service Agency, will provide payments to farmers when Boston Class I milk prices fall below $16.94 per hundredweight (100 pounds of milk).
Boston Class I milk prices are the standard prices for milk producers in the Northeastern U.S.
MILC also considers the cost of dairy feed. When the costs of feed rise above $7.35 per hundredweight of milk produced, the MILC payment is adjusted accordingly. As of Friday, the National Milk Producers Federation in Arlington, Va., was predicting a Boston Class I price of $13.97 per hundredweight for February.
FSA determines the per hundredweight payment rate for the applicable month by subtracting the Boston Class I price for that month from the $16.94 baseline price, and multiplying the difference by 45 percent.
By those figures, farmers would receive a payment of $1.33 per hundredweight for February. Payments are limited by production. Producers are eligible to receive payments on up to 2.985 million pounds per fiscal year. Larger producers can choose the month for which they want to start receiving payments. After that, they receive payments for all months until they reach their cap. Months with no payment don't count.
The Huntingdon County FSA serves Blair and Huntindon counties. For more information, call 627-1624.
You won't see it at the grocery store, but the milk prices farmers receive have dropped sharply in the past two months.
''In January, the milk check for this farm was 70 percent of what it was last year,'' said Bill England, who owns Weeping Hollow Farm in Williamsburg, which is part of Penn England LLC, a partnership of family-owned dairy farms. ''For February, they were predicting a 20 (percent) to 25 percent drop.''
The laws of supply and demand determine farm-level milk prices, according to the Arlington, Va.-based National Milk Producers Federation. As the global economy has slowed, U.S. exports to overseas markets have also slowed.
Environmental factors are also at work, England said - a drought in New Zealand opened up a market for U.S. milk for a few years, but that outlet is disappearing.
''We knew it'd be dropping, but we didn't realize it'd drop as fast as it did,'' said England, 72.
Adding to dairy farmers' problems is the fact that feed prices are ''the highest they've ever been,'' England said. He said it costs $5.50 to feed a cow every day. There are 540 cows on Weeping Hollow; in total, the Penn-England LLC partnership has 1,950 cows.
In January, England said the farm received $15 per 100 pounds of milk; he's seen predictions that that number could go as low as $11 or $12.
The falling prices leave farmers unable to pay all of the bills, said Max Smith, a co-owner of Smith-Hollow Farms in Martinsburg, where he and his father and two brothers milk about 540 cows.
''Basically what you have to do is ask some suppliers to wait,'' said Smith, 53. ''There's usually silence. It's terrible, absolutely terrible.''
The drop ''couldn't happen at a worse time,'' said John Burket, owner of Burket Falls Farm in Claysburg. Burket's the third generation to operate the family farm, where he milks about 110 cows.
''For most farmers in this area, their biggest expenses take place at this time of year, with the planting season approaching,'' said Burket, 44.
Burket said his farm - which is on the smaller end of the spectrum - will spend $50,000 to $60,000 on planting. He hasn't had to put any bills on hold yet, but he's delaying updating his farm equipment, which is becoming more and more common, said Randy Acker, co-owner of Bobcat of Martinsburg.
Some of the farmers who have bought new equipment are having trouble paying for it.
''I've had some who wanted to know if they could pay later or make payments on their account,'' Acker said. ''I prefer not to be a bank; I'd just as soon be paid, but basically, I try to work with them and set up a payment plan.''
To cut back on expenses, some farmers are culling their herds by selling lower-end animals to slaughter. Since the price drop, Smith said he's been selling those animals off more than what he normally would.
"Long term, if these prices continue, it's going to be difficult for anybody to stay in business," Smith said.
England said there'll be farms who don't survive this price drop, but those who do survive'll come out stronger.
"It's like a lot of companies," he said. "Banks buy other banks; companies buy other companies. ... Business is business - it's capitalism."
Burket doesn't see it that way.
"We're gonna lose farms in this downturn, and we don't come out of it stronger because we lose numbers," he said. "They always say there's power in numbers. At one time, 60 percent of Americans were involved in agriculture in some facet, now it's less than 1 percent. When we go to Washington or Harrisburg, they look at us and say we're only eight-tenths or 1 percent of the electorate."
To end the falling prices, Burket said some dairy groups are pushing for farmers to cut back production so demand will increase.
"We're getting penalized because we're producing 2 or 3 or 4 percent more than the milk demand," he said. "We could easily cut back that much. If every dairy farm in the U.S. cut back production 5 percent, we could march out of this dilemma in a few weeks."
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KBBMDB86
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03-04-09 9:32 PM
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I am a dairy farmer as was my father, grandfather, great-grandfather, etc. My grandfather always says that the American people will eventually regulate themselves out of their food supply. Since a large percentage of the population feels like brutis and orwell do, the chance is that in less than 50 years, everyone will be eating processed foods, including powdered milk. By the way, the Mirror contacted England, Burket, and Smith; not the other way around. Special thanks to those of you who appreciate the American farmer, the work we do, and the sacrifices we make.
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Keith38
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03-03-09 8:17 PM
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THE POST AT 2:25 AM WASN'T FROM ME. I HAD IT FLAGGED. DISREGARD THE COMMENT.
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khuisjen
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03-03-09 4:44 PM
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The reactions to this story shouldn't suprise me but do! I am a small dairy farmer from Western MI and feel this article is a good picture of what is really happening. All of the comments who feel that dairies should operate as other businesses have no idea what farming is. My farm is something my whole family is invested in. Generations have built a life on the husbandry of a wonderful species. Those people have also provided the American public with a safe healthy product. For what? To be at the mercy of a screwed up federal formula. Most businesses are not like that, thank God! I wish I could say that the money doesn't matter, but we have bills to pay.
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orwell
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03-03-09 8:17 AM
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That's wwwcatodotorg/pubs/tbb/tbb_0707_47.pdf
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orwell
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03-03-09 8:15 AM
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keith38, you're probably right that I don't understand the dairy industry like you do from the inside, but I understand it from the outside. I understand that my tax dollars go to farmers who produce too much milk because the government promises to buy their surplus and my consumer dollars pay for milk and cheese that is priced too high because of government price supports. Look, I don't envy the difficult planning or diminish the hard work that farmers do. I respect the farmers in our community. I'm just saying that taxpayers have been subsidizing farmers for 70 years and the entire industry is too reliant on corporate welfare. I also agree that these recent newspaper articles are an orchestrated PR campaign. ***********cato****/pubs/tbb/tbb_0707_47.pdf
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billdirka
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03-03-09 3:33 AM
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milk prices go down and farmers start selling the farms around central Pennsylvania it will become more of a dump than it already is,,, farming/ag business keeps plenty of people employed around that area. keith38 wants farmers not to fall to capitalism but he forgets,, the banking system,insurance and every other business is the US is like that and he thinks farming is any different??? I take it you've been to European and witness all those 3rd world countries produce pouring into European countries??? 3rd world countries are poor for a reason they don't export anything!!!
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Keith38
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03-03-09 2:25 AM
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Why don't farmers 1. stop giving their cows BST (a hormone that makes cows produce more milk)? 2. Start milking two times a day instead of three? Thus decreasing the supply. Supply and demand-Get paid more for their milk. I don't understand Englands answer of how if farmers buy other farmers out that milk prices will benefit him? It's capitalism? It's corporations owning the wealth! It's factory farming at the worst!
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Keith38
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03-02-09 8:43 PM
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Aces20 and Orwell don't seem to understand the value of the American Dairy Farmer. In fact they don't understand the Dairy industry period. Rosiclare beat me to it. If we Dairymen can't be protected then our food sources would come from a trusty 3rd world nation. The Europeans have already fallen into this trap. Let's not follow in their footsteps otherwise we will be doomed!
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Aces20
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03-02-09 7:40 PM
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This story must be a gimmick set up by the dairy farmers, the extention offices, and their supporters in order to soften us up while they appeal for more farming subsidies. I say this because the Centre Daily Times and a few other papers across PA also carried almost the same type of story with their local farmers.
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Rosiclare
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03-02-09 6:40 PM
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If less than 1% of our population is involved in any facet of ag, that means actual producers are a fraction of that. Want to rely on China for our dairy products; cheese, milk, ice cream, etc? Ever hear of melamine? And what do you think you would pay for a gallon of THAT milk? Think, people!
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orwell
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03-02-09 2:24 PM
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Farmers complain that meat and milk prices are "too low". Well guess what? Most business owners can complain that prices are too low for their products. Consumers decide how much something is worth to them. If the price is too high for any given item, they either reduce how much they buy and/or find a substitute, reducing demand. Almost every business is facing reduced demand and lower prices. I have empathy for dairy farmers right now, but no more so than for other business owners. And I don't want government price supports or subsidies for any of them.
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NRAREP
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03-02-09 1:00 PM
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16 servings (1 cup) to a gallon of milk. Gallon of processed milk weighs over 8 lbs(12 1/2 gallon per hundred. Farmer gets $15.00 per hundred. Theoretically. Todays price of a gallon at the store $3.31. Consumer pays $41.98 hundred. $26.98 is split from Penn-England, Milk Haulers,processed, packaged, delivered to the consumer.So the Farmers are getting the biggest cut but the farmer has large cost to cover to produce a 100 lbs.of milk. Not a responsible profit to the Farmer. Raise the price of milk!!! consumer just has to understand nothing was never free
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negativened
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03-02-09 12:04 PM
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I like milk with a shot of vodka and a shot of khalua ooohhhh the joy of a white russian.
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mama64
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03-02-09 12:00 PM
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We drink milk like crazy at our house. I would pay 50 cents more for sure. I could never see us drinking powdered milk. I hope times don't get THAT bad that I can't even afford good milk! We need that milk farmer to be in business, because we love his milk!!
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clover
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03-02-09 11:39 AM
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This would mean NinjaEnigma that the already hurting farmers would have to sell cows or dump their milk therefore shipping less. So, they would be selling off cows and additionally losing money due to beef/dairy cow prices being low. Or they would be receiving even less of a paycheck if they dump their milk. It would be a lose/lose situation for a while before farmers could get to a adequate paycheck. And 814Tim80, if the topic was revelent..but you will pay 50 cents more in gas when the price goes up and give your money to the Middle East but you won't pay 50 cents more to help out your fellow neighbors, the farmers? Enjoy your powdered milk bud. We need more people like tyronefan and jimdandy in the world!
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pgl1clem
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03-02-09 11:25 AM
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If I get less than a dollar for a gallon of milk, and You the consumer pays more than $4.00 for the same gallon, Who gets the $3.00 difference? I have to buy retail and must sell wholesale. Subsidies don't cover that "orwell" Central Pa Farmer
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orwell
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03-02-09 8:20 AM
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The whole farming industry is distorted by government subsidies, price supports and other payments. Farmers need to do what other businesses do when prices drop below supportable levels - reduce production or switch production. We're already paying too much for milk, especially if the farmers are receiving less than a dollar per gallon.
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jimdandy
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03-02-09 6:30 AM
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Me to, tyronefan!
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814Tim80
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03-02-09 1:20 AM
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i wouldnt pay 50 cent more i go to to powder milk
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tyronefan
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02-27-09 5:31 PM
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I enjoy cheaper milk, but if I would have to pay 50 cents more per gallon of milk so that the milk farmer could keep his dairy running....I would gladly do so.
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