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Dairy farmers receive another black eye


October 4, 2012

Despite hundreds of petitions sent to the U.S. Secretary of Agriculture asking for a milk hearing, despite the fact that dairy farmers are caught up in the worst price cost squeeze since the Depression days, and despite nearly half of the counties in the United States having been designated a drought disaster area, the U.S. Secretary of Agriculture has announced that he is turning down the request from the petitioners to hold a national milk [price] hearing.

Many people, including Judge Sessions, strongly feel that section 608c(18) [part of milk regulatory legislation enacted in 1937] clearly gives the Secretary the authority to call for a national milk hearing such as what the petitioners are asking for.

Basically, the Secretary is saying he doesn’t have the authority to hold a hearing that would be geared to establishing minimum prices based on dairy farmers’ costs. I respectfully disagree with the Secretary. The USDA’s regulations contain the language that permits the Secretary to implement a milk pricing formula under the “make allowance” provision in the Federal [Milk Marketing] Orders today. This provision allows milk processors to recover the cost of operating their processing plants.

By now, most dairy farmers are aware that before the dairy farmers’ prices are determined, the milk manufacturing processors’ costs are subtracted from the pricing formula before the farmers’ prices are announced. This subtraction amounts to about $2 per hundredweight (cwt).

Let’s think this one through! It appears that the USDA’s position is that it is okay for the USDA to implement a pricing formula to cover the cost to operate a milk manufacturing plant but, oh no, we don’t dare to do the same for dairy farmers. (There is an impolite term that covers all of this.)

Representatives of the USDA say that discussions should be held [regarding] any milk pricing formula. OK, we are ready for that discussion. We are not going to throw in the towel on this issue.

All dairy farmers: please remember the price for Class II, III and IV milk is the same in all Federal Orders, regardless of the dairy farmer’s location, size, etc. [Yet not the same for Class I milk.]

Really, why is it all right to cover the processor’s cost but not the dairy farmers’ cost?

Remember, the USDA surveys manufacturing plants regarding what they are willing to sell their products for, knowing full well their costs will be covered in the pricing formula.

Also, let’s bring representatives in from the Economic Research Service (a division of the USDA) and let them defend their National Cost of Production figures on our dairy farms.