As dairy exports drop, North Country Assemblywoman says premium payments on higher quality milk are needed
Saturday, March 3, 2018 - 8:37 am

Assemblywoman Addie A.E. Jenne, (D-Theresa), says the challenging environment facing the dairy industry in the North Country and New York State means the time is right to take action to protect the future of dairy farming.

"The price they are getting for their milk is just crushing for them," Assemblywoman Jenne said during a discussion with New York State Agriculture Commissioner Richard Ball at a budget hearing this week in Albany.

She pointed out the low milk prices that have plagued the dairy industry for the past four years is a reflection of supply and demand around the world.

"As we are looking at the options that are on the table for supporting our dairy industry, I would remind you of my thoughts on offering a premium payment for meeting very high-quality measures," Assemblywoman Jenne added.

"When we talk about exports being down, I think one component of that is the United States has failed to adapt those higher quality measures like the European Union has," she said.

"I think offering the premium payment of up to $3 per hundredweight would help to stabilize a dairy industry on the brink. The agriculture sector is the basis of much of the economy of Upstate New York. It is time to think more boldly," Assemblywoman Jenne stressed.

She has called on the state to provide a financial incentive program to reduce the somatic cell count in fluid milk from the federally mandated 750,000/ml to 400,000/ml -–the same level used in the European Union and the highest global standard.

"New York's exports of dairy products are down. In order to compete and get our dairy products to overseas markets, we have to meet or exceed the global industry standard. Most farmers already meet this standard, but statewide adoption of this standard could help address our oversupply and resulting low payments to farmers," Assemblywoman Jenne said.

High somatic cell counts are associated with bacterial infections in cows that result in lower yields and low-quality milk. This program would operate over three years and give farmers a competitive leg up on the global dairy industry.

Assemblywoman Jenne has suggested the state Department of Agriculture and Markets should develop premium payments for farmers reaching annual targets toward the goal of reducing the statewide somatic cell count.

She has proposed establishing a quality premium that would be paid to farmers by the state when the price farmers are receiving drops more than 9 percent below the USDA's calculated average monthly cost of production.

The premium would be capped at up to $3 per hundredweight of milk and would only be paid for the five-year monthly average of milk produced by the farm.

"It's not going to make a farmer rich, but it would give them a fighting chance to get their finances in order and make strategic decisions instead of ones that will hurt them in the long run," Assemblywoman Jenne said.

She envisions the premium would be of significant assistance to dairy farmers when the price of fluid milk drops below $18 per hundredweight.

Assemblywoman Jenne also feels farmers should have the option to seek a small grant, partially to pay for professional services and partially for revamping farm operations to provide long-term financial viability.

"There is a lot of money being proposed in the Regional Economic Development Council process, but that is more for individual projects and to access existing grant programs," she said.

"No grant program exists to address these needs, and the solution doesn't fit within the current council process. We need to designate up to $100 million toward the largest sector of the state's economy, agriculture. If our farms are failing financially, so are the majority of the other local businesses in upstate communities because they aren't getting paid," the assemblywoman added.

Assemblywoman Jenne said Commissioner Ball's testimony about the challenges facing the dairy industry due to a long period of low milk prices underscores the need to develop a plan to assist struggling dairy farmers in the state.

"Our farms in the North Country have been a vibrant source of economic activity and innovation. Today, many farmers, especially those in the dairy industry, are facing low commodity prices that threaten the future of too many dairy farmers," Assemblywoman Jenne said after the hearing.

She said the success of the farm-to-school pilot program in the North Country has shown the role government can play in assisting farmers in distress.

"The pilot program has made strides in improving the financial stability of growers and livestock farmers in the region. That effort should continue with Governor Cuomo including funding in the executive budget to roll out a statewide farm-to-school program," Assemblywoman Jenne said.

She said it is now time to turn proper attention to the plight of the state's dairy farmers.

"I have been seeking support for a state level program to provide assistance to dairy farmers in New York for over a year," Assemblywoman Jenne said.

"The typical response I have received is that we are in a normal down cycle and things will get better. Well, things have not gotten better and the duration and severity of the recent down cycles require the state to stabilize this major economic sector," she stressed.

The milk price was $17.20 per hundredweight in December 2017.

Milk prices had a five-year peak of $25.70 per hundredweight in September 2014 and hit a low of $14.50 per hundred weight in May 2016. The per hundred weight climbed above $18 for just five months in 2016 and 2017.

Commissioner Ball had acknowledged the challenges facing the dairy industry during his testimony before state lawmakers at this week's budget hearing.

"Our dairy industry is really in a very precarious state today. Typically in dairy we have seen a three-year cycle of ups and downs ... We've had a prolonged rather than a stab I'd say a long scrape in the dairy industry over the past three years," he said.

The agriculture commissioner said farmers had become accustomed to the cycle and had developed strategies to work around those cycles of low milk prices.

"Originally predictions for this year looked a little better. But just in the past couple of months it is looking like it is going to be more of the same. It is very challenging," he admitted.

"This challenge isn't so much something we are doing wrong in New York State. This is not just a New York problem, not just a Northeast problem, not just a United States problem. It's a global challenges as we see exports drop," Commissioner Ball added.

He said a review of milk prices over the past three decades at the recent Agriculture and Food Business Outlook Conference at Cornell University showed whenever exports drop there is a corresponding decline in milk prices.

"Over the past four years, we have seen a 3 percent drop in exports," he noted.

Commissioner Ball said the drop in milk prices was a reflection of several different factors ranging from the value of the dollar compared to other currencies around the world;, milk production in Australia, New Zealand and the European Union and the market for milk purchases from China.

He said discussions about renegotiating NAFTA also pose another major challenge since a significant percent of dairy exports currently go to Mexico.

The commissioner said he continues to meet with stakeholders to review steps that can be taken to address the challenges facing the state's dairy industry.

"I am confident we will be okay in the long term. We still produce the best milk in the country. The North Country, in particular, is famous for the quality of its cheeses and the quality and quantity of the milk we produce," he said to a panel that included Assemblywoman Jenne, Assemblyman Ken Blankenbush (R-Black River) and State Sen. Patty Ritchie (R-Heuvelton).