$6 a gallon milk?

Farmers warn of high prices without farm bill
Associated Press
Jun 29, 2013

 

Dairy farmers expressed frustration this week with Congress' failure to pass a farm bill, saying the uncertainty made it hard to do business and some could go under without changes to the federal milk program.

Farmers also worried that if a current nine-month extension of the 2008 farm bill expires with no action, a 64-year-old law will kick in, sending milk prices spiraling. While that might provide short-term profits, they say, it'd hurt them in the long run because no one wants to buy milk at $6 a gallon.

The U.S. House voted down a farm bill June 20, about a week after the Senate approved a different version. It was the second year in a row that the House failed to pass the every-five-years bill that sets funding for agriculture and food programs. Last year, it didn't even vote, prompting the passage in January of a slimmed-down extension of the 2008 law — largely to avoid milk prices sharply increasing.

The Agricultural Act of 1949 sets a much higher price for government purchases of cheese, butter and other dairy products than the U.S. has seen in decades. The government cut the price in recent decades because if it didn't, more companies would sell to the government than to retailers, unless consumer prices rose to match.

Farmers fear if the higher prices kick in on Jan. 1, milk and other dairy prices will rise until consumers just stop buying their products.

"I don't think that's good for anybody because we would destroy demand," said Pete Kappelman, a Wisconsin dairy farmer and board chairman of Land O'Lakes, a farmer-owned company that markets milk, eggs, butter and many other products.

The farm bill failed in the House mainly because of disagreement over food-stamp funding and dairy program reforms farmers say are needed to keep them in business.

The government currently pays dairy farmers when milk prices get too low. But the problem in recent years has been the high cost of feed due to the ethanol industry's demand for corn as well as the drought. Farmers say milk costs almost as much to produce as they can sell it for — and sometimes more.

Kappelman, who has a 450-cow farm in Manitowoc, Wis., worked on a national dairy industry committee that proposed a margin protection program that pays farmers when the price difference between milk and feed shrinks to a certain point.

He also supports a market stabilization program that would require farmers to either reduce the amount of milk produced when prices drop too low or give up a portion of their margin protection payments. The U.S. Department of Agriculture would then use that money to buy and donate dairy products to food banks and help low-income families.

The margin protection and market stabilization programs would be voluntary, but farmers couldn't participate in one without the other.

The Senate passed a farm bill last week that included both the margin protection and market stabilization programs, but House Republicans voted to remove the market stabilization program. Minnesota Rep. Collin Peterson, the senior Democrat on the House Agriculture Committee, said a number of Democrats changed their vote to no at that point.

Randy Roecker, 40, was among those desperately hoping the complete package would pass. He and his wife farm with his parents in Loganville, Wis.

They were doing well in 2008, when they renovated to expand from 50 to 300 cows. The next year, milk prices plummeted and feed prices rose. At one point, they were losing $100,000 a month — Roecker lost his savings, his parents lost their retirement and the farm went into debt.

They and many of their neighbors are still struggling, even though milk prices have risen.

"Just last Friday, another one of my friends got rid of his cows," Roecker said. "... It's just getting to the point where you can't afford to keep going anymore."

Wisconsin farmers grow more of their own feed than those in states like California, the nation's top milk producer. Dean Strauss, 41, who milks 1,900 cows in Sheboygan Falls, said growing 3,000 acres of feed provides some protection from high feed prices but doesn't reduce the need for a new farm bill, which would likely have better crop insurance programs.

Strauss, who described himself as a "free-market" person, was among the farmers who opposed the market stabilization program, fearing that any reduction in milk production would stifle growth in the Wisconsin cheese industry, which buys most of his milk.

Jamie Bledsoe, who has 1,300 cows in Riverdale, Calif., had similar concerns about the effect on his state's growing, international dairy exports.

"My personal view is, the government does not effectively manage anything, let alone the supply of milk," Bledsoe said.

But Kappelman said that without a way to control supply when milk prices fall too low, farmers would keep producing, the margins would stay low and the government would have to keep shelling out.

Even with disagreement over the stabilization program, farmers were united on the message they wanted to send to Congress. Failure to pass a farm bill, Bledsoe said, "leaves us in a big cloud of uncertainty."

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Associated Press writer Gosia Wozniacka in Fresno, Calif., contributed to this report.

___

Follow M.L. Johnson on Twitter at https://twitter.com/MLJohnsonOnline and Gosia Wozniacka at https://twitter.com/GosiaWozniacka.

 

Comments

Contango

Re: "While that might provide short-term profits, they say, it'd hurt them in the long run because no one wants to buy milk at $6 a gallon."

Yep! Good ol' Supply & Demand.

Price would eventually decline and revert to the mean.

Taxpayers funded farm support programs skew market prices. End 'em!

The Big Dog's back

Once again the Repubs are trying to torpedo the economy.

CAST THE FIRST STONE

if the libs didnt add pork and just voted on 1 thing we would not have this problem

Nemesis

Sure dog, because it just wouldn't do to have people pay a fair market price for something. Mr. Marx wouldn't like that.

Kottage Kat

DRINK KOOL-AID

CAST THE FIRST STONE

funny

biggiesmalls

solution is to drink more breast milk

44846GWP

There is no need to drink cows milk, drink Soy or almond milk. Save a cow from a rotten life, and a male calf from becoming Veal chops!

Contango

Re: "Drink Soy or almond milk. Save a cow from a rotten life, and a male calf from becoming Veal chops!"

Is the "udderly" confused Zippy still eatin' meat, wearing leather and also contributing money to PETA? :)

Funny, but often when I see a herd of docile cattle grazing, I can't help but think about how naive & trusting Americans are being led to their eventual slaughter by nut ball, Big Govt., Progressive cradle-to-grave thinking.

The Big Dog's back

So when poor people get help it's cradle to grave, but when big business gets a handout it's good business?

CAST THE FIRST STONE

when is the last time a poor person wrote a payroll check. ill help you..never. if big business didnt write checks you and me wouldnt make money to pay taxes to give to poor people..just simple math

The Big Dog's back

Shill.

Darwin's choice

Hey Big Dog, all this talk from you about big business and money....how much is Obamas newest vacation costing the taxpayers? Also, YOU'RE calling someone a shill?? Hahahahahahahaha!!!!!

The Big Dog's back

As conservatives rage about the cost of Obama’s Africa trip, it is important to remember that George and Laura Bush made a combined 7 trips to Africa all on the taxpayers’ dime.

We’ve played this game before, but anytime the nation’s first black president spends more than a dollar, the right wing freaks out about Barack Obama “wasting taxpayer dollars.” Back in 2011, the right claimed that First Lady Obama’s Africa trip would cost taxpayers millions, but even if you use numbers that the White House disagrees with ($424,000), they weren’t even close.

This time the right has whipped up the fake outrage over a leaked document showing that President Obama’s upcoming Africa trip could cost $60-$100 million. What these same people don’t tell is that George and Laura Bush loved to go to Africa on the taxpayers’ dime…a lot.

During Bush’s second term alone, Laura Bush made five “goodwill” trips to Africa. President Bush made the trip twice during his presidency. Here is former First Lady Bush at an event the night before their trip in 2008, “Tomorrow, President Bush and I leave for what will be my fifth trip to Africa since 2001, and his second trip to Africa since 2001. I’ve seen the determination of the people across Africa — and the compassion of the people of the United States of America.”

grandmasgirl

And out comes the race card again. Surprise, Surprise.

The Big Dog's back

?????

The Big Dog's back

Now who's your Daddy?

Huron_1969

Anytime a Big Dog post is more than one sentence, you can be certain it's a cut and paste from a left winger website..... for example
http://www.sodahead.com/united-s...’ve%20played%20this%20game%20before%2C%20but%20anytime%20the%20nation’s%20first%20black%20president%20spends%20more%20than%20a%20dollar%2C%20the%20right%20wing%20freaks%20out%20about%20barack%20obama

Nemesis

What's the matter Dog? Welfare is welfare, whether it's for your favorite people or for corporations. You and the Republicans are just arguing over who gets to rob the taxpayers.

Nemesis

But I LOVE veal, especially Osso Bucco.

Vegetables are not food; vegetables are what food eats.

Evolution = carnivorism - how much intelligence does it take to sneak up on a carrot?

Wald

Threats of higher costs and uncertainty if something doesn't pass. Is Gunner in charge of the farmers as well as Perkins schools?

The Hero Zone's picture
The Hero Zone

With as many beverage alternatives as there are, I would rather "suffer" through a market correction to level out supply and demand for a while while enjoying any of the other myriad products that are out there. Or, if threatening possibility is enough to get a subsidy...

CONGRESS: I WILL BE FORCED TO CHARGE $9/COMIC BOOK UNLESS YOU RENEW THE POP CULTURE BILL. THINK OF THE CHILDREN!

Nemesis

WORD!

BEST. COMMENT. EVER!!!!!!!!!!!!!!!!!!!!!!!!

YOU. DA. MAN!!!!!!!!!!

BRILLIANT!!! BRAVO!!!!

Just for that, I am going to make a point of going to your shop and buying something in the next couple weeks. It's on Market Street, right?

The Hero Zone's picture
The Hero Zone

Yes, haha. Thankfully you will find that as Congress sits on their thumbs on this issue the price is holding steady at $3-4/book.

The Hero Zone's picture
The Hero Zone

As a side note and not come off as too sarcastic, I see the internal initiatives to reduce their dependence on government as a good start. Would like to look more into the stabilization and margin aspects of it. This is a good story, too, to show that the other subsidy - that of ethanol - is very detrimental to both food production and the auto industry.

Nemesis

That's how subsidies are. Subsidizing one market disrupts another, so you need another subsidy to fix what you broke with the first subsidy, and then that one disrupts yet another....

Wisdom can be found in the songs of children:
"She swallowed the spider to catch the fly; I don't know why she swallowed the fly"

Simple solution - completely free market farming. U.S farmers can produce more food, for less money, than anywhere else in the world. Tell them to grow all they can, make their money on volume, and limit the government to fighting tooth and nail at the WTO to remove barriers to exporting it. The ripple effects are amazing. We can do to other countries' agricultural industries what they did to our steel industry. You end up saving the rain forests, because it's cheaper to buy corn from the US than it is to cut down the rainforest and grow it. That stops deforestation, which, by exploding the termite population, is responsible for more growth in CO2 output than all the coal fired power plants in the world. And then, when we have the only viable agriculture system left, well, we just point out to all those jihadists that they can't eat oil.

KURTje

Sweet! ewg.org Taxpayers pay for Agri-buSINess. Welfare is welfare whether country or ghetto.

registerer

Awwwww the "poora' farmers won't get their handouts! Go to the USDA website and look at he farm subsidies the farmers around here getting or have received in the last 7-10 years. Many close to or over a million bucks!!

Contango

A govt. spending website, provided BY the govt.:

http://usaspending.gov/