Is monopoly milking dairy farmers?

[ Originally published on: Thursday, July 16, 2009 ]

Pointing to falling milk prices as ''a disaster in the making'' for the dairy industry, food security and the economy of states that depend on agriculture, U.S. Sen. Bernie Sanders, I-Vt., has called for a national coalition to press for changes in the dairy pricing structure.

Sanders, who spoke in a telephone press conference Wednesday following a meeting with Agriculture Secretary Tom Vilsack, is also asking the U.S. Justice Department antitrust division to investigate whether Dean Foods Inc.'s control of 70 percent of the New England fluid milk market contributes to ongoing pricing problems for dairy farmers.

''Farmers have seen the price for their milk drop from $19.50 per hundred pounds a year ago to less than $11 in June,'' Sanders said earlier this week, following a meeting with the head of the Justice Department's antitrust division. Meanwhile, he said, Dean Foods' profits climbed from $30 million in the first quarter of 2008 to $76.2 million for the first quarter of 2009.

He called the continued prices paid for milk below the rising costs of production ''unsustainable'' and action by urged Congressional coalitions from around New England and the nation.

Massachusetts Agriculture Secretary Scott Soares said farmers here are benefiting from a tax credit and other pieces of a Dairy Farm Preservation Act implemented last year after a declaration of a ''dairy emergency'' in the state. About $3.3 million was distributed to milk producers this year.

''It's helped keep some farms operating that otherwise would have gone out,'' said Soares. ''It doesn't sound like a lot, but it was enough to get many of them over the hump to stay farming.''

Yet Massachusetts Association of Dairy Farmers President Albert 'Chip' Hager of Colrain said that that while farmers here are helped by the initiatives, ''All those programs were made for a normal dip in prices in a normal economic climate. This is not normal.''

Hager said that milk prices are now about $12 per hundred pounds, but higher costs for feed, fuel and fertilizer translate to production costs rising as high as $21. ''We're seriously eating up our equity here.''

The worldwide economic crisis has resulted in a global plummeting of consumption for dairy products -- in household groceries, in restaurants, in exports.

Sanders on Wednesday called for a multi-pronged approach from the agriculture secretary, including examining the federal milk marketing order that affects prices paid to farmers so that it takes into account production costs in different parts of the country. In the short term, he said there should be an increase in payments in the Milk Income Loss Contract program, as well as an effort to boost exports of powdered milk and distribute it to schools and food pantries, while also buying more ground beef to help farmers forced to sell off part of their herds.

 

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