What’s Wrong With Pricing Milk at the Farm?

March 26, 2014 — Another Farm Bill has passed without any consideration of a new pricing formula for our American dairy farmers, according to Pro-Ag’s Arden Tewksbury.

Arden Tewksbury, Pro Ag

Arden Tewksbury, Pro Ag

“Oh, I know while the prices paid to dairymen are escalating, and some people will say, ‘See, we don’t need a new pricing formula.’  However, I remember that so many times we have seen milk prices escalate, but a sudden drop of prices always seems to follow,” he said.

“Yes, the people in charge always seem to find a way to have the prices fall,” he continued.  “Maybe this time the prices to dairy farmers will stay reasonable a longer time than usual.
Certainly with the Class I price in Boston reaching $26.90 per cwt. (hundred weight) there is a bright side to look at.

However, the milk supply management program contained in the Farm Bill is not sufficient to prevent a possible escalation of milk production. In addition, there are even some people claiming there is not a milk supply program in the Farm Bill.

“There is an old saying that if it looks like a duck, quacks like a duck, and walks like a duck, then it must be a duck,” he said.  “Whenever a dairy farmer is assigned a milk production base, and when a dairy farmer is penalized for producing over his allowable base, (even if it is the wrong program) then indeed it is a milk supply management program.”

Senator Collins from Maine and Senator Gillibrand from New York are still attempting to have milk hearings in an attempt to give dairy farmers an opportunity to present testimony to price milk in a different method.

“We have always said the time to develop a new pricing formula is when the prices are at a reasonable level (like now), not after they crash,” Tewksbury said.

He believes it’s time to develop a pricing formula that allows dairy farmers a chance to cover their cost of production, plus a reasonable profit.  However, along with a new pricing formula, there must be a milk supply management program that would be implemented only when some dairy farmers over-produced more than the real market can bear.  If exports of dairy products hold up, then that would be great.

“Some people say that our proposed program tells dairy farmers how much milk they can produce. This is positively not true,” he said.   “A program is only needed when there is overproduction, and only then.  This program would be paid for by dairy farmers, not the American taxpayer.  The milk supply management program contained in the Farm Bill is not the answer, and certainly the milk supply management program that was in the original Dairy Security Act certainly was not the way to go.”

Tewksbury’s organization strongly feel the supply management program contained in the Federal Milk Marketing Improvement Act is the way to go.

“However, it’s time reasonable people sit down and develop a program that is feasible and acceptable,” he said.  “It might not be our plan, but it’s got to be somebody’s!”

Tewksbury invites lawmakers to have a milk hearing that uses a pricing formula that gives credence to the dairy farmers’ cost; plus a supply management program that allows a dairy farmer to produce milk, that acknowledges that dairy farmers who over-produce milk beyond the needs of the market must pay the fiddler.

“We and other people for years have proclaimed that these over-produced dairy products (if they exist) must be given to needy people (and they are out there) throughout the United States,” he concluded.

Pro-Ag can be reached at 570-833-5776.

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