Gillibrand’s dairy plan

Fixing a broken system

By FRITZ MAYER

WASHINGTON, DC — In a free-market society, the price of goods is normally set by the market, not by the government. In the United States, however, that’s not true in the case of milk. Through a complex formula, the federal government sets the price. And the price being paid to farmers just now doesn’t come close to covering the cost of production.

That led New York Senator Kirsten Gillibrand to exclaim, “It makes no sense that the federal government would ever set a price that is less than what it costs to produce it.”

On a conference call with reporters on June 23, Gillibrand took up the cause of saving dairy farms by changing the way farmers are paid for their milk. The senator introduced legislation that would give farmers more money through the Milk Income Loss Contract (MILC), which is triggered when milk prices drop below a certain level. The problem is the MILC contract makes up only part of a dairy farmers losses; Gillibrand’s legislation would increase the amount of money available to farmers.

In the long run, Gillibrand, the first New York Senator to sit on the Senate Agricultural Committee in 40 years, thinks the entire milk-pricing system needs to be revamped, and that should come as the next farm bill is negotiated in 2012.

Gillibrand said, “We continue to experience these boom-and-bust cycles in the dairy market and the current price that farmers get is less than they got 30 years ago, even though the price of milk continues to climb in the supermarket. So, I want to get to the bottom of this very broken system and find a way to fix it.”

Others are also trying to fix it. Pennsylvania Senators Bob Casey and Arlen Spector introduced separate legislation in early June intended to tie the price paid to farmers for milk to the cost of production. This legislation got a vote of approval from the Sullivan County Legislature when they voted to endorse it three weeks ago.

The increase in activity surrounding milk comes as the price has fallen from a high of $24.03 per hundredweight in July 2008 to $13.33 in June. The collapsing prices have led a few farmers throughout the country to dump milk on the ground in protest and forced many others to sell off their herds.

The number of dairy farms across the region and the country has been falling steadily over the years. In Wayne County, PA, there were 205 dairy farms in 1996, and that number had decreased to 120 by 2005. In Sullivan County, there were 50 dairy farms in 1999, now only 30 remain.

On Gillibrand’s conference call, one reporter asked, “Why not get the federal government out of the dairy business altogether and let the market set the price?” Gillibrand said that’s an idea that would be explored, but she also warned of a danger in moving in that direction.

She said it was a question of national security. “I want to have wholesome food production in all parts of the country; it’s a fundamental goal, because I think it’s a national security problem to relegate food production just to who can make it the cheapest,” she said. “Because if you relegate food production just to who can make it the cheapest, the next step is consolidation and you’ll only have large dairy farms, and all the small dairy farms across the country will go out of business. Once you have consolidation, you will have outsourcing. If anyone thinks it’s a concern that we have to get our oil from the Middle East, imagine how concerned we would be if we had to get our milk from China.”

Gillibrand said that such commodities as baby formula, children’s toys, pet food and pharmaceuticals coming from China in recent months and years had been laced with poisons due to lax oversight in that country.

“So, we want to have healthy, wholesome food production,” she said, “in all parts of America.”