One issue was predominant last week in Modesto, California when U.S. Department of Agriculture (USDA) Secretary Tom Vilsack made a stop there as part of his ongoing, nationwide rural tour. The issue is dairy, and the big problem facing dairy producers in California’s Central Valley and across the country is the reality that current trends of prices not keeping up with the cost of production is unsustainable.At his stop in Modesto the secretary heard from many dairy producers and other attendees during his open dialogue session. Many of the dairy farmers were dressed in red to symbolize the tough economic conditions they are facing. As Steve Adler writes for the California Farm Bureau Federation, Gary Genske of Costa Mesa, California laid out the problem, as he sees it, for Secretary Vilsack:
"There are approximately 60,000 dairy farmers losing somewhere around $4 per cow per day, which times 9 million cows is $36 million a day as well as about a billion dollars a month in true operating losses. We don't see any plan put into place to change that . . . Our co-ops are telling us that a year from September things will get better. I will tell you that if we don't have a change in the way our milk is priced, within a month there will be hundreds, if not thousands, of dairy farms forced out of business, so we need to know how quickly the federal government will do something to help resolve the problem."In response to Mr. Genske’s question, Secretary Vilsack listed three recent actions implemented by the USDA to address the dairy problem: purchasing surplus commodities, providing export assistance for 2009 and 2010, and including the milk payment program in the 2008 Farm Bill. Additionally, the secretary stated:
"We will continue to look for those kinds of things that we can do in the short term, but your question really requires a long-term response . . . We've put together an internal group within the USDA and today we've announced an external advisory group that will help us to try to figure out precisely what we need to do to create greater price stability and less volatility within the dairy industry in the long term. We are looking at virtually every idea that is out there."According to Ray Souza, president of the Western United Dairymen, the 1,800 dairy farmers in California have already lost between $2.5 billion to $3 billion in equity. This, Souza argues, makes it hard to refinance herds. As a solution, Souza suggested the USDA conduct a cheese purchase and move the cheese immediately to consumers and to those in need through food banks. According to Adler’s article, the secretary hinted that when new funds become available when the next fiscal year starts on October 1, 2009, there may be some purchases. Previously, Secretary Vilsack denied a request by pork producers to provide them with some financial relief through government pork product purchases citing a lack of available funds in USDA coffers.
To read the Adler story click here.
Posted: 09/02/09
