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December 21, 2014
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editorial

Hypocrisy in milk pricing


But a processor can’t stay in business buying raw milk at $40/cwt and selling the cheese produced from it for $40. Here’s where the make allowance comes in. It’s the amount set to equal the cheese-making costs, other than milk, of “a reasonably efficient” processing plant, which must be subtracted from the $40/cwt price to obtain the price the processors will be asked to pay the farmer for raw milk. In our simplified example, if these costs of milk processing, ex the milk itself, were $2.50 per pound, or $25/cwt, then the price paid to farmers for milk would be reduced accordingly, to only $15/cwt—which might very well not be enough to yield the farmer a living.

It is baked into the cake of the milk pricing formula, in other words, that the middleman’s costs are covered—at the expense of the farmer, who will take the hit if retail prices sink too low. Does this sound familiar, in this country where the riches and benefits are more and more unevenly distributed, with the muscle of corporate money making the difference? Is it just a coincidence that most processors are mid- to large-size corporations, while many dairy farmers are families?

It’s discouraging to see this year’s Farm Bill roll by without an attempt to restore some fairness to the milk pricing system, and by the time the next one comes around, who knows how many more dairy farms will have gone out of business? Still, the idea is so sensible, and the hypocrisy of the current system so profound, that it is worth getting out the word as to why the system needs to be changed in the hopes that sooner or later it can be turned around, both to save the dairy farms and in the interests of good old-fashioned American fairness.