AMES, Iowa (February 9, 2000) - Devastated by inadequate prices, America's dairy farmers are searching for ways to raise those prices before more families lose their livelihoods.
Answering the call of the nation's dairymen, National Farmers testified Feb. 9 before the Senate agriculture committee, pushing for badly needed policy reforms in the face of a dairy price crisis. "Today's dairy legislation has brought chaos to the industry," said Gene Paul, National Farmers Washington policy analyst. "Since September, the prices dairy farmers are paid have decreased nearly 40 percent. That is why our organization is calling for, among other things, a $13.50 price floor for Class III milk."
Paul was quick to point out that 131,535 dairy farms were being commercially operated in 1992. By 1999, that number had decreased to 87,669. "In seven years, 43,866 dairy farms went out of business across this nation," Paul emphasized. "That loss of business and income has had a tremendous negative impact on rural America."
The Senate Ag Committee called the hearings to debate recent sweeping changes to dairy legislation mandated by USDA. National Farmers brought up many key issues, including unfair "make" allowances granted to dairy processors; the need for a shift in emphasis from Class I to Class III milk pricing; a nationwide effort by the organization to urge producers to implement supply management techniques; and the organization's concept of a $13.50 Class III milk price floor.
"A great deal of focus has been placed on Class I milk, or milk used for fluid consumption. While Class I differentials are important, the lion's share of milk is used for cheese processing and is priced as Class III. Today's milk pricing system reform is not truly market oriented nor is it fair to dairy producers," Paul said.
"And, make allowances tend to become obsolete rapidly, allowing for processing plant inefficiency and interference with market signals," Paul continued. "California's end product pricing system is a great example of this point. That state gave plants make allowances which let them expand processing of the lowest valued dairy products regardless of market demands, resulting in lower producer milk prices."
Probably the most important development is the call for a temporary floor price of $13.50 on the Class III milk price, or the base price paid to dairy farmers. "Flooring the price at $13.50 would certainly go a lot farther toward helping producers make ends meet," Paul said. "Without quick action in the form of price relief, financial disaster will plague America's dairy producers for years to come."
National Farmers members drafted the $13.50 floor policy last month at the organization's national convention, held Jan. 17-20 in Minneapolis, Minn.:
