By Nathan Blesy and Barbara Blesy
Thanks to an explosion in demand for Greek-style yogurt, upstate New York is experiencing a 21st century boom in dairy processing. Unfortunately, the dairy farmers who supply milk to those yogurt plants are still operating – struggling might be a better word – under a 20th century dairy program.
That program is supposed to help us through the rough spots in a business that has boom and bust cycles. But in recent years, it hasn’t helped us cope with swings in both milk prices and feed costs. As a result, New York farmers lost millions of dollars in 2009, and again last year.
So, while we appreciate the yogurt makers locating their plants in New York, we’re competing in a global marketplace with an antiquated federal dairy policy.
That could change this week, when both the House and Senate agriculture committees try once again to pass a new farm bill.
The committees will have under consideration an updated dairy program – four years in the making – that is designed to help us cope better with the conditions we face today. That means protecting against not just periods of low milk prices, but soaring feed costs as well. Together, these roller-coaster conditions have played havoc recently with our operating margins, the crucial gap between what we receive for milk and what it costs us to produce it.
The new program in Congress, called the Dairy Security Act, is based on a model drawn up by dairy farmers for dairy farmers. It does away with price supports and direct payments, substituting a voluntary program focused not on price, but on allowing us to better maintain our profit margins. The DSA is a dairy program for the 21st century. It’s a safety net for when times are hard. It doesn’t kick in at all in good years.
More importantly, it’s voluntary. However, those farmers who sign up must agree to trim the amount of milk they produce when supply and demand get out of alignment. Putting the brakes on milk production when conditions deteriorate helps keep the costs of the insurance program down, which means farmers bear more responsibility for helping themselves.
An alternative approach is likely to surface in the committee debates, and at first blush it might sound better than the program I described. It’s not. Defeated once already last year, it offers farmers help maintaining their margins, but with no means to limit payouts if milk prices collapse. That’s totally irresponsible and deserves to be rejected.
Milk remains by far the dominant farm product in New York. In 2011, it generated more than $2.7 billion in sales. But those who want to keep producing milk in our state need a federal dairy program that works. The Dairy Security Act is that safety net.
Nathan and Barbara Blesy operate Blesy Farms in Springville.