Farmers offer perspective from trenches of dairy crisis

Dahlkemper asks for suggestions, solutions to issues

By Carol Ann Gregg

Allied News Staff Writer



A “perfect storm” of historic prepositions has hit the dairy industry.

The convergence of economic recession, the reduction of milk exports and the spike in farm input costs have delivered a frighten blow to dairy farmers everywhere.

On Oct. 5, U.S. Rep. Kathy Dahlkemper hosted a Dairy Solution Forum at the Butler Farm Show Grounds on Route 68. She did not come with a solution to the national dairy crisis; instead, she sought solution recommendations from a group of over 100 farmers from the length and breadth of her district.

A committee of Butler County people pulled together a panel of presenters from across the industry and across the Third Congressional District. Dairy producers, implement dealers, veterinarians, feed consultants and agricultural lenders were all represented. The positions of farm organizations were also shared.

John Frey, executive director of the Center for Dairy Excellence, said that the public and even farmers don’t realize the impact that the dairy industry has on the community.

“For every nine cows, one job is created,” Frey said. “Every dairy cow has a $14,000 impact on the commonwealth’s economy. With 50,000 cows that is a huge impact.

“I recently heard someone say, ‘Dairy farms grow the next generation of leaders in the community,” he said.

Dahlkemper anticipates that a pending bill with $350 million in relief for the dairy industry to pass the House soon.

Frey urged producers to contact their legislators to let them know what they want. “Legislators don’t know if we don’t tell them.”

“With population expected to top 2 billion by 2050, I am bullish on dairy,” Frey said. If we can get past this crisis, there is a bright future for dairy.

Paula Meabon, Erie County dairy farmer and member of the National Dairy Promotion and Research Board, talked about the current programs made possible by the check-off funds that comes fromeach producer.

“Because of the current crisis, the board voted to move $35 million from long term to short term projects,” Meabon said. The job of the national dairy board is to increase demand for milk produced in this country.

Through partnerships with McDonald’s and Domino’s Pizza more milk has been used by the consuming public. The McCafe promotion by McDonald’s uses up to 80 percent milk in its coffee drinks, which means all new consumers of milk, Meabon said.

McDonald’s also moved up the availability of its third-pound Angus burgers from October to May. These sandwiches have two slices of cheese and introduce Swiss cheese to the McDonald’s line. They were watching to see the impact of these sandwiches on the sales of their other cheeseburgers, and were pleased to see a 4 percent increase in sales.

“Pizza has been a stagnant market,” Meabon said. “Domino’s has developed the American Legends, six new pizzas that use 40 percent more cheese than the regular pizzas on their menu. That is three ounces more cheese per pizza. Through an investment of check-off dollars these items will become a permanent part of the Domino’s menu.”

The dairy board also worked with the school lunch program.

“We know that kids like pizza but they don’t like school cafeteria pizza,” Meabon said. By working together they were able to create a pizza that was tastier and met the nutritional guidelines of a school lunch. The pizza used twice as much low-fat cheese as before.

The last partnership the Meabon described was one between the dairy council and the NFL. The NFL and dairy board’s combined “Fuel Up to Play 60” is a program encouraging drinking milk and to exercise “play” for 60 minutes a day.

“The dairy board wants to move product and move it now,” Meabon said.

Dairy farmer Jake Jones of J-Squared Farm, Titusville, brought the first presentation from the farmers.

“It will take a combination of ideas to meet the demands of the market and to find new opportunities for exports,” Jones said.

He said that any solution should benefit consumers, producers and processors.

“I am concerned about product labeling. Real cheese should be labeled 100-percent cheese,” Jones said.

Sheryl Vanco, Warren, dairy farmer and president of the Farmers Union Dairy Cooperative, shared statistics to illustrate the depth of the crisis.

“National average shows that farmers are losing $100 per cow per day,” Vanco said.

She explained how the organic milk producers had developed a surplus and had the farmers cut delivery to the dairies by five percent. What they did with the excess on their farms was not controlled by the organization. Therefore, the farmers received the usual $25 per hundredweight for 95 percent of their milk.

Richard Kind, dairy farmer from Grassy Crest Farm, Plain Grove, Lawrence County, described the picture most consumers have of a dairy operation.

“They see a red barn with cows grazing on a green pasture. This isn’t the picture of today’s modern dairy operation,” Kind said.

Producers are unorganized, and the needs and markets change regionally, he said, adding, “Milk should be priced regionally.”

“The federal orders need fixed. We need to know the truth about how our milk is priced,” Kind said.

Bill McDowell, McDowell Implement, Grove City, represented machinery dealers. “About half our sales are to dairy farmers,” he said. “Our sales are down by about a half and our accounts receivable are going up. Western Pennsylvania needs the dairy industry.”

Dairy farmer Jeff Raney of Adamsville, Crawford County spoke as a board member of AgChoice, a farmer-owned financial service cooperative.

“This ag lender remains committed to supporting the dairy industry in this state,” Raney said.

The prices received by farmers are lower and over a longer period of time than most farmers have experienced. The average price has been quoted as being $15.20 per hundredweight but the cost of production is $17. That is a $2 loss per hundredweight. Raney said the August price was $13 which translates into a $4 loss per hundredweight.

Twenty-one percent of AgChoice’s portfolio is from dairy. The figures show that the income from January to August 2009 compared to that from January to August 2008 on Raney’s farm, is down 38 percent.

As a member of the dairy caucus of the House of Representatives, Dahlkemper sits with representatives from dairy states from the West and the Mid-west who have very different opinions about how to help dairy producers and how to price milk.

If farmers came to the meeting to have Dahlkemper hand them a solution, they would have been disappointed. She came wanting to hear the solutions from the people on the ground, working day in and day out with the problem.

As the Congresswoman responded to questions, she often asked more questions back to the audience.

From her perspective, there needs to be an immediate influx of cash as a short term solution to see farmers through the rough time. Then, a long-term solution needs to be found to increase stability to the industry. She also said that she believes the dairy export program needs to be reactivated.

The last farm bill called for a study of the Federal Order system. Currently, U.S. Secretary of Agriculture Tom Vilsack is pulling together a commission of 15 that will include producers to study the pricing system and to come up with recommendations.

As the conversation continued Dahlkemper pleaded with the audience for someone who could give her a tutorial on the milk pricing system. She got a couple of volunteers.

Alluding to the system that has been in place since the 1930s and has been amended from time to time, “I’m not responsible. I’ve only been in office for eight months.” she said.

Dahlkemper drew applause when she said, “I think that all food coming into this country should meet our standards.”

When asked what she thought of dairy products having country of origin labeling, she agreed: As a consumer, she wants to know where her food has come from.

“We have it on clothing. Why not on food?” she said. “I want the milk that I buy in the store to be from Pennsylvania, not California or New Mexico.

Troy Hill, a Mercer County dairyman from Sandy Lake, represented Farm Bureau. He sees the perfect storm from his farm, where he works with his parents milking about 100 cows and growing crops on about 650 acres.

The high input costs, the price received over input costs and the impact of the global economy is being felt on dairy farms across the state. Credit is tight and some no longer have access to additional credit.

He is working within the farm bureau’s grassroots system to get policies from the farmers moved to the state meeting where state policy can begin to impact what is done on a state level.

Butler County farmer Norman Graham has been in farming for 43 years.

“I have never faced this before,” he said. “If there is a 3 percent surplus, why is my milk check down 50 percent?”

“It is time to change the 1938 pricing system,” he said. “I don’t want a hand-out. I just want to be paid a fair price for my milk.”

The audience appreciated that Russell Redding, acting Pennsylvania Secretary of Agriculture, took time to make the trip across the state to be at the meeting.

“Thanks to the folks who stay in agriculture,” Redding said. He related that he and his wife started their careers in agriculture in dairy.

“It is a very different conversation when you’re talking out of your own checkbook.”

“I would be disappointed if we end this crisis and not have reform in milk pricing,” Redding said. “This is a teachable moment.”

“We never want to waste a crisis. Critical reform is a burden for all of us. We need to recognize the important of the dairy industry to the state. It is not going to happen by sitting back and waiting, but you need to be ready to fight for it,” he said.

Redding outlined six things that need to be done:

ä An influx of cash into the industry to allow farmers to step back and take a breath. He thinks the $350 million that Congress will provide will help here.

ä A value of the product needs to be determined.

ä There needs to be an understanding of what import agreements are in place and demand that they meet farmers’ standards.

ä The peaks and valleys need to be eliminated. Risk management products need to be available with a true reform in crop insurance. The product for dairy doesn’t guarantee a price, but it does protect the margin between milk price and feed costs. This is a way to shift some of the risk.

ä There needs to be Milk Market Order reform.

ä Farmers need to see if the Pennsylvania Milk Marketing Board has powers they are not using, or whether there needs to be legislation to change its powers.

“Milk pricing should be clear and transparent. We should get so much for what goes out the door,” said Elaine Duncan, dairy farmer from Crawford County.

Before Dahlkemper left, she added, “I want the agriculture industry to be strong in this region. I want the next generation to be able to stay here.”



Published Oct. 14, 2009 in Allied News. Pick up a copy at 201A Erie St., Grove City.

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