Dairy crisis too urgent to wait for farm bill: Gillibrand
Tuesday, March 1, 2011 - 2:06 pm

The dairy crisis is so urgent that Sen. Kirstin Gillibrand says solutions can’t wait for the 2012 farm bill.

After hearing from dairy farmers at six agricultural listening sessions across New York State in preparation for the 2012 Farm Bill, Gillibrand concluded that farmers cannot wait and that steps are needed now.

Gillibrand’s plan centers on overhauling the milk pricing system with fair, competitive pricing for New York dairy producers, and “making the opaque pricing system more transparent in an effort to fix a system where dairy farmers often pay more to produce their products than they make from selling them,” a statement from her office said.

Gillibrand is also working to prevent cuts to the MILC program, bolster New York’s dairy exports, improve cold storage inventory reporting standards to stabilize dairy trading prices, and get dairy farmers the tools and information they need to thrive.

Along with the statement from the senator is a set of figures that show that the state lost 1,705 dairy farms from 2002 to 2007, a decrease of 23 percent in just five years.

It shows that as of 2007, the North Country counties of Clinton, Essex, Hamilton, Warren, Lewis, Jefferson, Franklin and St. Lawrence were home to 1,050 dairy farms, down from nearly 1,500 in 2002, down by 39 percent.

In St. Lawrence County, there were 445 dairy farms in 2002, and 262 in 2007, a decrease of 41 percent.

“Our dairy farmers are facing a real crisis, and we simply cannot wait until the Farm Bill to find solutions. We need to address this crisis now,” Senator Gillibrand said. “New York is home to the hardest working farm families and the finest dairy products in the world, but outdated regulations, broken pricing structures and a bad economy are hurting our dairy farmers, and farming communities across the state. We need to act now to support New York’s dairy farms.”

Gillibrand’s statement includes a comprehensive agenda for saving dairy in New York. It follows:


Senator Gillibrand’s Dairy Agenda

1. Prevent Cuts to MILC Program

Senator Gillibrand is working to prevent cuts to MILC program that are set to take effect on September 2, 2012.

The MILC program was designed to be a safety net when prices fall below $16.94 per hundredweight. However, because of the high costs of feed and fuel, dairy farmers are not even receiving enough income to cover the cost of staying in business. New York farmers have been forced to either take on massive debt to cover their costs or go out of business.

Starting September 2012, the MILC reimbursement rate is set to decrease from 45 percent to 35 percent of the difference between the $16.94 trigger price and the actual Class 1 Boston price. Senator Gillibrand is working to prevent these cuts and preserve this vital safety net for New York producers.

2. Increase Competitiveness of Dairy Pricing Measures

Senator Gillibrand is urging the USDA to collect and publish data on alternative measures of dairy pricing, such as competitive pay pricing so that everyone can clearly see if this would be a better way to price milk. This idea has also been endorsed by Secretary Vilsack’s Dairy Industry Advisory Committee and the National Milk Producers Federation. Since it was adopted in 1996, the current system of end-product pricing has contributed to increased volatility in the prices farmers receive for their milk.

A competitive pay pricing system would base the price of milk on a survey of prices paid to farmers for milk used in cheese production in a competitive market, which are counties with at least five different milk buyers. New York is one of only three states with competitive counties today. In noncompetitive areas, the existing Federal Milk Marketing Order (FMMO) system would take effect, however base prices would be established by the competitive pay pricing system.

A competitive pricing system would benefit New York because of our proximity to competitive markets, and would be a more transparent and direct way of pricing milk based on the actual prices that farmers receive.

Senator Gillibrand is urging Secretary Vilsack to collect this data retroactively to allow the comparison of prices derived under this system to end-product pricing, and determine a thorough, informed decision about the best path forward.

3. Reduce Somatic Cell Counts

To improve America’s milk quality and bolster New York’s dairy exports, Senator Gillibrand is leading the effort to limit somatic cell counts (SCC) – the most basic measure of milk quality – from the current standard of 750,000 cells/ml down to 400,000 cells/ml.

Lowering the SCC limit can benefit both producers and consumers. Milk with low SCC has a longer shelf life, better taste, and greater cheese yield. Studies have shown that for every doubling of somatic cell counts in a herd, milk production drops by 400 pounds per cow per lactation. Many cooperatives already provide incentives for farmers to produce milk under the legal SCC limit, and for the last 7 years the national average SCC count has declined. In 2008, the average SCC in the U.S. was 262,000 cells/ml, far below the legal limit of 750,000 cells/ml.

4. Require Cold Storage Inventory Reporting

Inventories of certain types of classified cheeses have the ability to significantly influence trading activity on the Chicago Mercantile Exchange. However, cold storage facilities are currently not required to report their inventories of dairy products to the USDA Natural Agricultural Statistics Service (NASS), and only do so on a voluntary basis, creating an environment of volatility and uncertainty for dairy trading. In fact, by February of 2009, the low point of the dairy crisis, NASS reported that Cold Storage Inventories had been inflated by approximately 9 percent.

Senator Gillibrand is introducing legislation that would make reporting to the NASS Cold Storage Report mandatory, and give the USDA the authority to audit warehouse inventories to help bring more stability to dairy trading prices.

5. Increase Transparency and Information for Dairy Farmers

To provide more transparency into dairy cooperatives and arm dairy farmers with more of the information they need to thrive, Senator Gillibrand is introducing the Democracy for Dairy Producers Act. The legislation would require dairy cooperatives that engage in bloc voting to provide their member farmers with written notices when votes occur that provide the following information:

Procedures by which a producer may cast an individual ballot;

· Contact information for the milk marketing order information clearinghouse;

· Point of contact within the cooperative to provide members with information about upcoming bloc voting

The bill also requires each milk marketing order to establish an information clearinghouse to provide information regarding any proposed milk marketing order reforms. This information is required to be published on a website and distributed to producers through a fax list, email distribution list, or U.S. mail list, at the discretion of individual producers. Clearinghouses would be required to provide:

· Information on procedures by which a producer may cast an individual ballot;

· Due dates for each specific referendum;

· The text of each referendum question under consideration;

· A description in plain language of the question and relevant background information