On the consumer's end, a gallon of milk is more affordable than ever;
from the dairy farmer's perspective, bargain prices have distributors
milking them for all they've got.
According to Richard Smith, Dairy and Farm Management Director for the Cornell Cooperative Extension, dairy farmers are seeing 1970's profits: "we are 30 years behind in what the farmers are receiving."
The downturn in the U.S. and global economy was a "perfect storm" for the dairy industry. A shift in the supply and demand of dairy exports struck hard. Once accounting for eleven percent of the country's total dairy revenues, export figures are now minimal.
Dairy farmers realize inflated production costs that markedly surpass their profits. According to Steve Ropitzky, of the Saratoga County Farm Services Agency, dairy farmers in Saratoga County receive $12 per hundredweight, while the cost of production is between $15 and $18 per hundredweight.
"Currently, it's costing farmers anywhere between four and six dollars, that's a big loss. They are bleeding, hemorrhaging at a tremendous rate. We have to offset huge negatives here," Smith said.
Farmers have no control over their product's pricing; "They are price takers, not price makers," Smith said.
Stewart's Shops, a local dairy distributor, works exclusively with local farmers and, according to Tom Mailey, Public Relations representative, "Stewarts pays farmers above the benchmark."
But even though Stewart's is known for setting a commendable balance between the farmer's profit and the consumer's cost, Saratoga County dairy farmers make a very small percentage of the $2.59 average spent on a Stewart's gallon of milk.
According to Smith, a big part of the problem is the relationship between supply and demand. Dairy farmers can't slow or stop production to demand higher profits. Milk is a perishable product, which forbids farmers from storing their excess. Therefore, every drop produced must be distributed or it will go to waste, which is why dairy distributors can pay farmers as close to the benchmark as they so choose.
"It's much different than producing cars; if a farmer is losing money, they can't halt production to break even; you can't tell a cow you're not going to milk it," Smith said.
State Senator Chuck Schumer is pressuring the USDA to provide temporary, emergency relief to New York dairy farmers, using Commodity Credit Corporation funds that could provide immediate relief to farmers on the brink of bankruptcy. Although legislative action is the ideal for suffering dairy farmers, immediate CCC payments would help buy time.
Schumer's immediate relief plan is a "band-aid" over a deep wound. Such action is vital because, unlike legislation, temporary relief can be implemented immediately, while a long-term solution is devised.
"If we wait the time it will take to pass legislation, there will be hardly any farmers left to enjoy it. The industry is a rubber band: you keep pulling and pulling and it will snap. That's when someone goes out of business," Smith said.
Schumer urged Secretary Tom Vilsack to use funds provided through the CCC to support dairy producers by temporarily supplementing payments alongside payments already allocated through the Milk Income Loss Contract (MILC) program.
MILC is a USDA Farm Agency program that supports the dairy industry by providing direct monthly payments to farmers when milk prices fall beneath $16.94 per hundredweight. The program reimburses at a rate of 45 percent which is simply not enough. Considering the severity of the current economic and subsequent agricultural crises, a new payment structure must be devised.
According to Ropitzky, there are 36 dairy farms in Saratoga County that are enrolled in the MILC program. If the CCC funds are used to support dairy producers, all 36 will realize an increased payment rate up to 95 percent. While, according to Schumer, all together farmers in the capital region would see an annual increase of $32,827,650.
By pumping money back into the dairy industry, the community will also benefit from what Smith refers to as the "multiplier effect." When farmers are able to pay their veterinarians, utilities and other associated services, that money will directly contribute to local economy.
"It is imperative that we work to meet the needs of farmers and rural communities in Upstate New York, and I will continue to work to ensure that they have the resources they need to make it through these tough times," Schumer said.
Otherwise, it "will be a sad day in America when a farming family can't afford to feed themselves," Smith said.
The downturn in the U.S. and global economy was a "perfect storm" for the dairy industry. A shift in the supply and demand of dairy exports struck hard. Once accounting for eleven percent of the country's total dairy revenues, export figures are now minimal.
Dairy farmers realize inflated production costs that markedly surpass their profits. According to Steve Ropitzky, of the Saratoga County Farm Services Agency, dairy farmers in Saratoga County receive $12 per hundredweight, while the cost of production is between $15 and $18 per hundredweight.
"Currently, it's costing farmers anywhere between four and six dollars, that's a big loss. They are bleeding, hemorrhaging at a tremendous rate. We have to offset huge negatives here," Smith said.
Farmers have no control over their product's pricing; "They are price takers, not price makers," Smith said.
Stewart's Shops, a local dairy distributor, works exclusively with local farmers and, according to Tom Mailey, Public Relations representative, "Stewarts pays farmers above the benchmark."
But even though Stewart's is known for setting a commendable balance between the farmer's profit and the consumer's cost, Saratoga County dairy farmers make a very small percentage of the $2.59 average spent on a Stewart's gallon of milk.
According to Smith, a big part of the problem is the relationship between supply and demand. Dairy farmers can't slow or stop production to demand higher profits. Milk is a perishable product, which forbids farmers from storing their excess. Therefore, every drop produced must be distributed or it will go to waste, which is why dairy distributors can pay farmers as close to the benchmark as they so choose.
"It's much different than producing cars; if a farmer is losing money, they can't halt production to break even; you can't tell a cow you're not going to milk it," Smith said.
State Senator Chuck Schumer is pressuring the USDA to provide temporary, emergency relief to New York dairy farmers, using Commodity Credit Corporation funds that could provide immediate relief to farmers on the brink of bankruptcy. Although legislative action is the ideal for suffering dairy farmers, immediate CCC payments would help buy time.
Schumer's immediate relief plan is a "band-aid" over a deep wound. Such action is vital because, unlike legislation, temporary relief can be implemented immediately, while a long-term solution is devised.
"If we wait the time it will take to pass legislation, there will be hardly any farmers left to enjoy it. The industry is a rubber band: you keep pulling and pulling and it will snap. That's when someone goes out of business," Smith said.
Schumer urged Secretary Tom Vilsack to use funds provided through the CCC to support dairy producers by temporarily supplementing payments alongside payments already allocated through the Milk Income Loss Contract (MILC) program.
MILC is a USDA Farm Agency program that supports the dairy industry by providing direct monthly payments to farmers when milk prices fall beneath $16.94 per hundredweight. The program reimburses at a rate of 45 percent which is simply not enough. Considering the severity of the current economic and subsequent agricultural crises, a new payment structure must be devised.
According to Ropitzky, there are 36 dairy farms in Saratoga County that are enrolled in the MILC program. If the CCC funds are used to support dairy producers, all 36 will realize an increased payment rate up to 95 percent. While, according to Schumer, all together farmers in the capital region would see an annual increase of $32,827,650.
By pumping money back into the dairy industry, the community will also benefit from what Smith refers to as the "multiplier effect." When farmers are able to pay their veterinarians, utilities and other associated services, that money will directly contribute to local economy.
"It is imperative that we work to meet the needs of farmers and rural communities in Upstate New York, and I will continue to work to ensure that they have the resources they need to make it through these tough times," Schumer said.
Otherwise, it "will be a sad day in America when a farming family can't afford to feed themselves," Smith said.
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