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July 10, 2014
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editorial

What the Dairy Industry Really Needs


Solve the underlying problem! What is really needed is a total scrapping the entire dairy portion of the proposed 2012 Farm Bill and drafting a new version with what is really needed; reform of USDA's Federal Minimum Price Formula.

All the wasted motion around the current dairy portion of the proposed 2012 Farm Bill is being trotted out to mask the obvious: the current price formula used by USDA to calculate the federal minimum price results in prices paid to dairy farmers that are unsustainable. The pricing of U.S. farm milk is controlled by an elite group of multi-national dairy corporations manipulating cheese trading on the Chicago Mercantile Exchange's (CME) cheese-trading floor. The calculations resulting from this sham trading are then used by USDA as the basis of the Federal Minimum Milk Price Formula. This dysfunctional system uses less than 1% of total U.S. milk production to set pricing the remaining +99%. These CME manipulations have caused a roller-coaster chaos in farm milk prices for a generation, resulting in a steadily dwindling number of U.S. dairy farms and economic decline in rural communities all across America.

This is the very monkey-business cited by Sen. Kirsten Gillibrand, (D-NY) on August 15, 2011 at Westfield, New York; “There is no transparency or honesty in the (CME) pricing mechanism at all.... There is a disconnect between the price of (farm) milk and how we come up with it through the price of cheese in Chicago. I think there is a lot of corruption and anti-trust behavior that is there to keep the (farm) prices down.” Obviously, the sharp-eyed Senator spotted the elephant hiding in the room! Too bad her superior intellectual insight and profound common sense can't be duplicated on the rest of her less observing, less grounded Congressional colleagues.

What really has the NDA's knickers in a knot is the sudden rise of a vastly profitable yogurt industry in upstate New York. Suddenly traditional dairy processors are confronted with a brand new, aggressive competitor for a very limited milk supply. The milk supply is so limited because NDA's members have starved out Northeast dairy farms with unsustainable pay prices. The NDA's member processors’ greed has worked too well; Northeast farm milk prices are ridiculously low, and for this exact reason, these dynamic yogurt makers chose to set up in Upstate New York. An extravagant mark-up on yogurt products gives these johnny-come-lately yogurt guys very deep pockets. Now, after decades of having things their own way, the traditional NDA members obviously fear this new shoe may tend to pinch.