PROGRESSIVE AGRICULTURE ORGANIZATION

RR 2, BOX 165 , MESHOPPEN , PA 18630

PH: 570-833-5776  FX: 570-833-5992

e-mail: progressiveagricultureorg@gmail.com

                                                                                                   February 23, 2010

GUEST EDITORIAL by Arden Tewksbury, Manager, Pro Ag

WHAT IS EVERYONE WAITING FOR?

How much longer must dairy farmers wait for some realistic action to be taken in Washington , DC ? Time is still running out for many dairy farmers. In some areas, the “lines of credit” that dairy farmers have counted on are reportedly being removed by some banks.

During 2009, the Farm Service Agency (FSA) in many areas was not able to fund approved loans until late summer! Now spring planting season is approaching with many dairymen facing the same problems as last year. Something must be done. Personally, I do not feel we need any more “surveys” to see why the dairy farmers’ problems exist, and I do not believe we need any more evidence to determine the solution to the dairymen’s crisis.

The signs are very clear. Dairy farmers need a pricing mechanism that allows dairy farmers to cover their cost of production.

As we reported earlier, the average dairy farmer across the United States lost nearly $9 per cwt on all of his milk last year! These losses are unimaginable and unacceptable, and any dairy policy that tolerates such losses is unconscionable.

With the average annual milk production per farm last year being slightly over 3 million pounds, then the average loss per farm would be nearly $270,000. However, USDA’s figures for 2008 indicate that the national average cost of production was slightly over $24.00 per cwt. This probably means that our estimated $9.00 per cwt loss on last year’s production (2009) is somewhat understated.

Now we are moving right along in 2010 without anything being done to correct the pricing inequities facing the vast majority of America ’s dairy farmers. Last year, the average price in Federal Order #1 was $13.01 per cwt. This year maybe it will average $15.50 per cwt. Who really knows? It depends on how the speculators play around with the “market” prices. Supposedly, the average price expected to be paid to Order #1 shippers in 2010 will be $15.50 or around that level. Well, this means that the average dairy farmer this year will lose between $7.00 and $8.00 per cwt on all the milk he produces. Coupling this projected loss with the 2009 losses of nearly $9.00 per cwt clearly indicates that the average dairy farmer in the United States will lose between nearly $470,000 and $500,000 of essential income in two years’ time! This money that belongs to hardworking dairy farmers is being diverted by a criminal pricing system that has been the law of the land since “Federal Order Reform” was implemented by the US Congress in 2000.   And people say we cannot do anything about this problem!

I have personally talked to thousands of consumers since January 2009, and they simply cannot understand why there is not some sincere intervention being offered for dairy farmers to receive a fair and realistic price for their raw milk. These consumers support dairy farmers’ getting paid a fair price. They understand that dairy farmers must stay in business to provide them with fresh, local milk.

A certain survey being circulated by an organization called DPAC seems to suggest that dairy farmers received milk prices with “extreme highs and lows” during the past. While there is no doubt about the low milk prices, to call the higher milk prices “extreme” is very questionable. The highest statistical price received by Federal Order #1 producers was $23.14 per cwt in August 2007, with the highest Class I price being $25.16 per cwt in September 2007. At the same time, some milk handlers were paying a $1.00 per cwt premium on top of these prices while, additionally, the Pennsylvania Milk Marketing Board (PMMB) had a premium on Class I milk substantially above these prices. Evidently, some milk handlers and the PMMB did not find that the reported prices were “extremely” high.

DAIRY FARMERS WANT SOMETHING DONE!!

(1)   A floor price under all manufactured milk must be implemented by the US Secretary of Agriculture or the US Congress. This price should be approximately $20.00 per cwt. (This $20.00 represents around 85% of the national average cost of production for 2008.)

(2)   Existing Class I differentials must be added to the floor price.

(3)   If necessary to control supply, the Secretary could use the “supply management” provision contained in “The Federal Milk Marketing Improvement Act of 2009,” S-1645, (often called “The Specter-Casey Bill”). Either the floor price or the existing price formula would dictate the prices, whichever is higher.

(4)   As soon as possible, Congress must enact permanent new legislation which allows dairy farmers the opportunity to cover their total costs.

We strongly suggest that “The Federal Milk Marketing Improvement Act of 2009” become the enabling legislation to correct the dairy farmers’ crisis.

All dairy farmers and agribusiness people must immediately insist that their legislators take immediate action to correct this financial mess that is destroying our dairy farmers. Do not take “No” for an answer from your elected officials. Many of these officials keep saying, “We are working on the problem.” This is unadulterated baloney!

You dairy farmers must force your farm organizations and dairy coops to get on the right page. We cannot let this problem continue any longer. Action is needed now!