By Nate Wilson
On Sept. 24, a letter to Agriculture Secretary Thomas Vilsack, signed by six U.S. senators, asked him to review the current federal minimum milk price and adjust it into parity with prices paid for dairy feed. Basically, they asked for an emergency hearing by the USDA.
Hundreds, perhaps thousands, of desperate U.S. dairy farmers have already petitioned Vilsack asking him to do just as the senators requested. Reports leaking out of USDA suggest Vilsack is and will remain unmoved by the plight of dairy farmers, unless the major dairy cooperatives deliver formal petitions to his desk. Yet the largest U.S. dairy cooperatives have not mounted petition drives.
By refusing to bring the 2012 Farm Bill to a vote before the September adjournment, House Majority Leader John Boehner, R-Ohio, ensured any aid available in the 2012 Farm Bill will not be forthcoming until after the 2012 elections, if then. Thanks to Boehner’s “leadership,” the salvation of dairy farmers now rests with a prompt implementation of the provisions allowing for an emergency hearing by the USDA.
The drought is not the only factor in the dairy crisis. Overlooked in the senators’ letter was the federal ethanol mandate, rampant speculation by world grain traders and record export demand for U.S. grain stocks. Those factors are prominent players in this record rise in U.S. grain prices.
According to USDA, the average loss to dairy farmers on a hundredweight of milk was $4.05 in January, six months before there were even rumors of drought. By August the loss had ballooned to a staggering $10.24. While the drought has further exacerbated the situation, the January prices paid to U.S. dairymen were already unsustainable; since then losses have become catastrophic.
The current prices paid by U.S. dairy farmers for grain reflect the new reality of world markets: The price of U.S. dairy feed is not too high; the price of U.S. farm milk is too low. Nowhere in the developed world are milk processors procuring raw milk at anywhere near the ruinous farm prices routinely paid to U.S. producers. As a result, an accelerating, mass selloff of U.S. dairy herds is now under way. If this situation is allowed to continue to the point of a shortfall of dairy products in supermarkets, there is no other source, worldwide, that can take up the slack and certainly none that will provide dairy products to consumers at the unsustainable prices currently being paid to dairy farmers.
The Obama administration must expect dire consequences if it continues to ignore this situation. Vilsack needs to schedule emergency hearings immediately.
Failure to act will rightly open the administration to charges of gross incompetence. If these farms are lost, U.S. consumers will be the ultimate victims.
Nate Wilson is retired after 40 years of dairying on a small Chautauqua County grassland dairy farm.