June 23, 2009

As New York's Dairy Farmers Face Crisis, Senator Gillibrand Unveils Plan to Address Milk Prices

Price Paid to Farmers In New York Has Dropped Over $8 Since This Time Last Year

Washington, DC - As New York famers face a pricing crisis, U.S. Senator Kirsten Gillibrand today unveils a new plan to deal with low milk prices. According to Farm Credit, it costs dairy farmers $17.58 to produce a hundredweight of milk. However, the market is only paying $13.33 per hundredweight.

"The current system is clearly not working for dairy farmers in New York," said Senator Gillibrand. "We continue to see cycles of boom and bust in the dairy market and the safety net in place to help dairy farmers hasn't changed in years, even though the price of milk continues to climb in the supermarket. I want to get to the bottom of this broken system and find a way to fix it."

The MILC program was designed to be a safety net when there is a large price discrepancy. However, as the MILC program currently works, farmers are not even receiving enough income to cover the cost of staying in business.  New York farmers have been forced to either take on massive debt to cover their costs or go out of business.

The charts below, provided by Cornell University, depict just how low the price farmers receive for milk has dropped over the past year:

2008 Class I Prices in the Boston Zone of the Northeast Marketing Area (per Hundredweight)

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

24.22

22.93

19.95

21.86

19.87

21.43

24.03

21.72

20.90

18.78

20.58

18.68

2009 Class I Prices in the Boston Zone of the Northeast Marketing Area (per Hundredweight)

JAN

FEB

MAR

APR

MAY

JUN

18.99

13.97

12.68

13.61

14.22

13.33

Senator Gillibrand is deeply concerned by the rapidly falling milk prices that dairy farmers have faced in recent months. Today she unveiled her proposal to help New York's farmers now and address the problems in the system over the coming years.

First, Senator Gillibrand is introducing legislation this week that would double the amount of money farmers get from the MILC program retroactive to the low point of the crisis in March. While raising the MILC payment rate to 90 percent will not completely make up the gap between cost of production and market rates, it will certainly help prevent more New York farms from going under.

Second, Senator Gillibrand will introduce legislation that would index the MILC rate of $16.94 to inflation. The price floor of $16.94 per hundredweight has not changed since the 1990's, yet the cost of production has increased exponentially. The MILC program payments were originally designed to help dairy farmers in their time of need, but have remained stagnant.  While this legislation would not address the current crisis, it would help farmers in the coming years by providing a safety net that allows farmers to break even.

Finally, as a member of the Senate Agriculture Committee, Senator Gillibrand pledged to hold Senate hearings on dairy pricing both in Washington, DC and New York State. The hearings will focus on reforms for the daily pricing system. Senator Gillibrand hopes to work with stakeholders and economists to develop a proposal before the next Farm Bill is written in 2012.