America’s Dairy Farmers Face Milk Price Crisis, Seek Solutions
(AMES, Iowa) Aug. 31, 2016 — America’s dairy farmers are facing a milk price crisis that is forcing producers to exit the business, putting the nation’s milk production infrastructure at risk.
In the last 18 months, farmers have seen their annual income fall by 40 percent, while their costs to produce milk continue to climb. The national milk price is the lowest since 2009.
“I can’t think of anyone who works for living, able to see their annual income fall by 40 percent,” said Paul Olson, President of National Farmers Organization. Olson said USDA’s move to purchase 11 million pounds of cheese from private inventories to assist food banks and pantries across the nation is a signal Secretary of Agriculture Tom Vilsack understands the problem is a severe one.
However, Olson emphasized last week’s cheese purchase is not nearly enough to begin to solve the price crisis. “Milk futures prices continue to fall on the Chicago Mercantile Exchange (CME), despite USDA’s purchase,” said Olson.
Meanwhile, producer input costs are going up, too. And, USDA’s Margin Protection Program was simply not designed to benefit farmers under these severe conditions, Olson said.
There is a worldwide glut of milk because of production growth not only in the U.S., but also in Europe, where production quotas have been removed. And, Russia and China have reduced dairy products imports. Here at home, truckloads of milk each week are disposed of, because processors simply don’t have room for it.
Approaches to help ease the problem have been discussed, including a dairy diversion program, where producers are encouraged to cut back their production output. Another option is a two-tier pricing system proposed by National Farmers. It calls for two pricing levels, depending on the amount of milk a farmer produces per month.
“We need a supply management system in the U.S., and we need it implemented quickly,” said Olson. “We urge Secretary of Agriculture Tom Vilsack to use his authority to further assist dairy producers, because the country’s milk production infrastructure is under extreme financial pressure,” Olson said.
National Farmers is a conventional and organic commodity marketing organization for the nation’s farmers and ranchers.