WOOSTER, Ohio — A Congressman from northeastern Ohio wants to save our dairy farmers from the perils of below-profit milk prices.
In late October, Rep. Steve LaTourette, R-Ohio, sponsored a bill before the nation’s House of Representatives that seeks to set a temporary floor price for Class II and III milk.
New prices
If approved as drafted, Class II milk — used for “soft” manufactured products — would provide farmers a minimum of $17.23 per hundred pounds, and Class III — milk used for hard cheeses — would sell for no less than $16.81 per hundred pounds.
The bill is being called the Save Our Dairy Farmers Act of 2009. It has been referred to the House Committee on Agriculture, where it awaits the committee’s consideration.
Producers and dairy analysts are optimistic for what the bill could bring, but also cautiously aware it will not provide a long-term solution to their struggling industry.
Bill history
The bill was created after discussions with Ohio Farmers Union Vice President Bryan Wolfe, an Ashtabula County dairyman. Wolfe said he began talking with other dairymen as early as January, about a bad year ahead and the likelihood of it continuing unless something was done.
In addition to other dairymen, he contacted other Farmers Union representatives, including California Farmers Union President Joaquin Contente. The two of them looked into ways to keep the most efficient dairy farmers in business.
The nation’s 23 top dairy states were selected for an analysis of their cash costs and labor costs. The average came out to $17.23 per hundred pounds — the amount being sought by the bill for Class II.
“I was trying to come up with some kind of a floor price that would allow farmers to pay their bills, feed their cows and keep the lights on,” Wolfe said.
Temporary relief
Wolfe admits the bill is not a fix to the industry’s pricing woes, instead calling it “an emergency floor price,” different from the nation’s milk support price program, which he said is for long-term pricing.
The Save Our Dairy Farmers bill sets a floor price only for a 12-month period, beginning the same day the bill is made law.
Congressional matter
A need for Congressional attention and serious discussion may be the one area dairymen agree.
“It’s (the bill) a good way to get Congress talking about this national issue,” said David Marrison, Ashtabula County director for Ohio State University Extension. “Kudos to him (LaTourette) to help stop the bleeding and to get Congress talking.”
Marrison, whose family has a dairy, knows it’s only a one-year proposal, but said it could still help save some. He said dairymen need a voice, and that the problem is bigger than just northeastern Ohio.
But at the 2009 OSU Extension Dairy Outlook in Wayne County, Ohio, state Dairy Specialist Cameron Thraen questioned whether the bill will even make it out of committee.
Supply and demand
One of his concerns about price setting, he said, is whether it does anything to balance supply with demand.
“You have to be very careful about shifts of supply from one class (of milk) to another,” he said.
Thraen said by e-mail the minimums would create a minimum price structure on butter of $1.55 per pound, nonfat dry milk at $1.24 per pound, cheese at $1.90 per pound and whey at 24 cents per pound.
Class I milk — in fluids and beverages, would have to rise to $20 per hundred pounds.
Thraen said the only way this could work is for the USDA to set these commodity prices as the support prices for butter, cheese and nonfat dry milk.
Dianne Shoemaker, OSU Extension dairy financial specialist, said she was concerned whether the minimum would do anything to balance supply with demand, and whether instead, there might be more milk produced than the industry could market.
“While that (floor prices) would be lovely, we would have so much milk, it wouldn’t be funny,” she said.
However, Shoemaker said it’s beneficial when dairymen talk and consider options, as they’ve been doing across the state.
With many different plans that claim to stabilize or fix the milk market, she said it’s unlikely all producers will support the same plan, but said it is likely for them to move in a similar direction.
Read the bill
LaTourette’s full plan can be viewed at www.house.gov. In addition to establishing minimums, it also requires the Secretary of Agriculture to provide a report to Congress evaluating options available to stabilize the prices dairy farmers receive for their milk.
Wolfe said he thinks this report could be where long-term solutions are discovered and then presented to Congressional leaders, who have the power to act.
Has anyone ever considered the industrial dairies are at the root of the problem. I would really like to see the state subsidize the small and medium sized dairies so they will have a level playing field. These industrial dairies receive all kinds of monetary help and the little dairies are left to fend for themselves or go out of business. Ohio can do better by the small and medium sized livestock facilities which do not create harm for their neighbors and do not have the clout to ignore regulations! As a neighbor of the North Preston poultry operation owned by Park Farms I have spent 21 years studying this issue and know what I am speaking of to be accurate.
Mary,
This is not a big vs. small issue when it comes to milk prices. There are many issues that have caused the milk prices to be low, and they are low for all producers. Any action that sets minumum prices will be bad for the dairy industry long term. We need a more transparent pricing system and to decouple the class prices from each other.