March 01, 2011

Gillibrand Announces Plan To Provide Support To New York Dairy Farms

Gillibrand Plan Would Make Dairy Pricing More Competitive for NY Producers, Prevent Cuts To MILC Program, Help Bolster NY’s Milk Exports, Improve Storage Reporting Standards and Trade Price Stability

Washington, D.C.  – U.S. Senator Kirsten Gillibrand today announced a comprehensive plan to provide immediate support for New York’s dairy farmers who are facing an imminent crisis. After hearing from dairy farmers at six agricultural listening sessions across New York State in preparation for the 2012 Farm Bill, Senator Gillibrand concluded that farmers cannot wait for solutions, and that steps are needed now.

The cornerstone of Senator Gillibrand’s plan is overhauling the milk pricing system with fair, competitive pricing for New York dairy producers, and making the opaque pricing system more transparent in an effort to fix a system where dairy farmers often pay more to produce their products than they make from selling them. Senator Gillibrand is also working to prevent looming cuts to the MILC program, bolster New York’s dairy exports, improve cold storage inventory reporting standards to stabilize dairy trading prices, and arm dairy farmers with more of the tools and information they need to thrive.

“Our dairy farmers are facing a real crisis, and we simply cannot wait until the Farm Bill to find solutions. We need to address this crisis now,” Senator Gillibrand said. “New York is home to the hardest working farm families and the finest dairy products in the world, but outdated regulations, broken pricing structures and a bad economy are hurting our dairy farmers, and farming communities across the state. We need to act now to support New York’s dairy farms.”

In the span of just five years, New York State lost 23 percent of its dairy farms. As of 2007, New York State is home to nearly 5,700 dairy farms, down from nearly 7,400 in 2002, according to the USDA.

These county-by-county data reflect the most current data available. Since 2007, though, New York has lost even more dairy farms, with 5,400 dairy farms today.

  • Western New York is home to more than 910 dairy farms as of 2007, down from nearly 1,170 in 2002, an average decrease of 20 percent.
  • The Rochester/Finger Lakes Region is home to more than 830 dairy farms as of 2007, down from nearly 900 in 2002, an average decrease of 15 percent.
  • Central New York is home to more than 1,240 dairy farms as of 2007, down from 1,635 in 2002, an average decrease of 23 percent.
  • The Southern Tier is home to more than 850 dairy farms as of 2007, down from more than 1,100 in 2002, an average decrease of 24 percent.
  • The Capital Region is home to nearly 640 dairy farms as of 2007, down from nearly 850 in 2002, an average decrease of 28 percent. 
  • The North Country is home to more than 1,050 dairy farms as of 2007, down from nearly 1,500 in 2002, an average decrease of 39 percent.
  • The Hudson Valley is home to nearly 150 dairy farms as of 2007, down from more than 230 in 2002, an average decrease of 48 percent.


    Senator Gillibrand’s Dairy Agenda


    1. Prevent Cuts to MILC Program
    Senator Gillibrand is working to prevent cuts to MILC program that are set to take effect on September 2, 2012.

    The MILC program was designed to be a safety net when prices fall below $16.94 per hundredweight. However, because of the high costs of feed and fuel, dairy 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.

    Starting September 2012, the MILC reimbursement rate is set to decrease from 45 percent to 35 percent of the difference between the $16.94 trigger price and the actual Class 1 Boston price.  Senator Gillibrand is working to prevent these cuts and preserve this vital safety net for New York producers.

    2. Increase Competitiveness of Dairy Pricing Measures
    Senator Gillibrand is urging the USDA to collect and publish data on alternative measures of dairy pricing, such as competitive pay pricing so that everyone can clearly see if this would be a better way to price milk. This idea has also been endorsed by Secretary Vilsack’s Dairy Industry Advisory Committee and the National Milk Producers Federation. Since it was adopted in 1996, the current system of end-product pricing has contributed to increased volatility in the prices farmers receive for their milk. 

    A competitive pay pricing system would base the price of milk on a survey of prices paid to farmers for milk used in cheese production in a competitive market, which are counties with at least five different milk buyers. New York is one of only three states with competitive counties today. In noncompetitive areas, the existing Federal Milk Marketing Order (FMMO) system would take effect, however base prices would be established by the competitive pay pricing system.

    A competitive pricing system would benefit New York because of our proximity to competitive markets, and would be a more transparent and direct way of pricing milk based on the actual prices that farmers receive.

    Senator Gillibrand is urging Secretary Vilsack to collect this data retroactively to allow the comparison of prices derived under this system to end-product pricing, and determine a thorough, informed decision about the best path forward.

    3. Reduce Somatic Cell Counts
    To improve America’s milk quality and bolster New York’s dairy exports, Senator Gillibrand is leading the effort to limit somatic cell counts (SCC) – the most basic measure of milk quality – from the current standard of 750,000 cells/ml down to 400,000 cells/ml.

    Lowering the SCC limit can benefit both producers and consumers. Milk with low SCC has a longer shelf life, better taste, and greater cheese yield. Studies have shown that for every doubling of somatic cell counts in a herd, milk production drops by 400 pounds per cow per lactation. Many cooperatives already provide incentives for farmers to produce milk under the legal SCC limit, and for the last 7 years the national average SCC count has declined. In 2008, the average SCC in the U.S. was 262,000 cells/ml, far below the legal limit of 750,000 cells/ml.    

    4. Require Cold Storage Inventory Reporting
    Inventories of certain types of classified cheeses have the ability to significantly influence trading activity on the Chicago Mercantile Exchange. However, cold storage facilities are currently not required to report their inventories of dairy products to the USDA Natural Agricultural Statistics Service (NASS), and only do so on a voluntary basis, creating an environment of volatility and uncertainty for dairy trading. In fact, by February of 2009, the low point of the dairy crisis, NASS reported that Cold Storage Inventories had been inflated by approximately 9 percent. 

    Senator Gillibrand is introducing legislation that would make reporting to the NASS Cold Storage Report mandatory, and give the USDA the authority to audit warehouse inventories to help bring more stability to dairy trading prices.

    5. Increase Transparency and Information for Dairy Farmers
    To provide more transparency into dairy cooperatives and arm dairy farmers with more of the information they need to thrive, Senator Gillibrand is introducing the Democracy for Dairy Producers Act. The legislation would require dairy cooperatives that engage in bloc voting to provide their member farmers with written notices when votes occur that provide the following information:

    Procedures by which a producer may cast an individual ballot;

    • Contact information for the milk marketing order information clearinghouse;
    • Point of contact within the cooperative to provide members with information about upcoming bloc voting


    The bill also requires each milk marketing order to establish an information clearinghouse to provide information regarding any proposed milk marketing order reforms.  This information is required to be published on a website and distributed to producers through a fax list, email distribution list, or U.S. mail list, at the discretion of individual producers.  Clearinghouses would be required to provide:

    • Information on procedures by which a producer may cast an individual ballot;
    • Due dates for each specific referendum;
    • The text of each referendum question under consideration;
    • A description in plain language of the question and relevant background information