July 29, 2009

New York’s Dairy Farmers Face Crisis – Gillibrand Urges USDA to Follow Farm Bill When Establishing Advisory Board

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

Washington, DC -In the 2008 Farm Bill, U.S. Senator Kristen Gillibrand worked as a member of the House to establish the Federal Milk Marketing Order Review Commission to review issues surrounding milk pricing and dairy competitiveness. However, the USDA recently announced plans to create a dairy pricing advisory group en lieu of the Commission. Senator Gillibrand today called on the USDA to ensure that the structure for the Commission is used to put together the advisory group.

"Plummeting milk prices combined with rising costs of production have been devastating for dairy farmers across New York," said Senator Gillibrand, the first New York Senator in nearly 40 years to serve on the Senate Agriculture Committee. "The current system is clearly not working for dairy farmers in New York. While creating an advisory group at the USDA is a positive step, we must ensure that we get to the bottom of this broken system and find a way to fix it."

New York farmers are facing a dairy pricing crisis. According to Farm Credit, it costs dairy farmers $17.58 to produce a hundredweight of milk. Yet the market is only paying $13.33 per hundredweight.  The Milk Income Loss Contract (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.

Under the Farm Bill, the Secretary of Agriculture was directed to establish a Federal Milk Marketing Order Review Commission, which would conduct a comprehensive review and evaluation of milk marketing order systems. As part of the review, the Commission was  to evaluate the milk pricing standards currently in place, as well as look at options to ensure or enhance the competitiveness of dairy products with other competing products.

Specifically, the Farm Bill dictates that the Commission be composed of 14 members with the following requirements:

  • At least 1 member shall represent a national consumer organization
  • At least 4 members shall represent land-grant universities with accredited dairy economic programs, with at least 2 of those members being experts in the field of economics
  • At least 1 member shall represent the food and beverage retail sector
  • 4 dairy producers and 4 dairy processors, appointed so as to balance geographical distribution of milk production and dairy processing, reflect all segments of dairy processing, and represent all regions of the United States equitably, including states that operate outside of a Federal milk marketing order.

In her letter to Tom Vilsack, Secretary of the USDA, Senator Gillibrand wrote, "Emulating this composition with the dairy advisory group would make certain that all important segments of the dairy industry are adequately represented in the important assessments and recommendations made regarding milk pricing."