WOOSTER, Ohio — Dairy farmers weathering one of the worst milk price fall-outs in recent history should soon see some relief in the form of federal payments.
On Oct. 21, President Barack Obama approved legislation to provide $350 million in emergency assistance for struggling dairy farmers.
Funding
The funds are part of the $121 billion agriculture appropriations bill for 2010 and will allocate $60 million to be spent to purchase cheese and other dairy products for food banks and nutrition programs, with an additional $290 million in direct support to dairy farmers.
Good news for now
The announcement was well-received among dairy producers in Ohio, although many in the industry say it is yet another example of temporary relief, and do not expect the funds to fix the internal woes their industry faces.
Cameron Thraen, state dairy specialist with The Ohio State University Extension, said the impact of the allocation will not be realized until U.S. Secretary of Agriculture Tom Vilsack determines how the funds will be administered.
If the $290 million in payments is divided by every dairy farm in the country, then each farm would only receive about $2,900, figuring there are roughly 100,000 operations considered dairy farms.
“That’s a help, but if you’re under water on your dairy farm, that’s not going to get you out of it,” Thraen said.
The amount paid to recipients will likely be more if fewer farms are selected, he said. But any hopes of returning to the $20 range per hundred pounds of milk, which were realized last year, or even returning to the cost of production, will not be fulfilled in this legislation.
Federal support
Legislators are aware the funds will not solve the problem, but are trying to provide temporary assistance in the hopes dairies will be able to stay in business until markets can improve.
In a released statement following the president’s signature, Sen. Patrick Leahy, D-Vt., called the action “another timely lifeline for dairy farmers who are struggling just to stay afloat through this crisis.”
The legislation cleared the Senate in early October with a vote of 76-22.
“These direct payments are a fast and efficient way to deliver help right to the farm,” Leahy said following Senate approval. “Right now another day of dairy farming means another day of losses, and we need both short-term and long-term solutions to break these vicious downward price spirals.”
Thinking forward
Long-term solutions could be the most difficult to secure. Thraen said part of the problem is decreased exports of milk to other countries, citing a receding global economy as a big reason exports are down.
He’s also concerned about the influence of ethanol and the country’s push toward alternative fuels, which were linked to a spike in grain prices in 2007 and 2008, causing dairy producers’ inputs to double and triple.
The country made its food supply part of its fuel policy, which had repercussions on many levels, he said.
“This (federal payments) isn’t the solution,” Thraen said. “It’s to help them (producers) survive a little longer.”
Similar legislation was approved in July, when Vilsack and legislators approved a three-month price hike expected to increase farmers’ revenue nationwide by $243 million.
Rep. Peter Welch, D-Vt., co-chairman of the Congressional Dairy Farmers Caucus, in a released statement said the measure will provide “much-needed temporary support to these hardworking, dedicated members of our community.”
The legislation was sponsored by Sen. Bernie Sanders, I-Vt., who said “dairy farmers are in desperate need. We must help them as soon as possible.”
The average price farmers received for their milk fell this year to $11.30 per hundredweight, down from $19.30 in July 2008. It costs farmers at least $18 per hundredweight to produce milk.
Bigger change
What still needs changed is the way milk is marketed, explained Fred Gingerich, a large-animal veterinarian with Country Roads Veterinary Services of Ashland County.
Although he doesn’t dairy farm himself, his business is dependent upon a successful dairy industry and he sees dairy farmers’ struggles daily.
The price farmers receive for their milk needs to be balanced more closely with what retailers are charging, and he’d also like to see a lowering of the acceptable somatic cell count in milk, which would remove poor quality milk from the market.
He’s also one of many dairy farmers and consumers who are upset over dairy imports into the United States.
“I don’t possibly see how we could let our dairy producers go bankrupt when we’re importing dairy products into this country,” he said.
Won’t help some
Gingerich said every bit of assistance helps, but does not think many of his customers will benefit, because 90 percent are Mennonite and probably will not accept the payments.
Thraen said the world market can bring quick demand and can quickly dissolve demand, which is partly what is being experienced right now.
“When you decide to become a player in world trade markets, you’ll import the instability of that world market,” he said.
