Southtown Farmer Claims There's A Flaw In The Milk Pricing System
Published: January 8th, 2007
By: Michael McGuire

SOUTH NEW BERLIN – Currently in New York state, the cost for dairy farmers to produce milk is nearly double the amount they are receiving for the product. According to South New Berlin farmer Ken Dibbell, it’s not a market trend – it’s a fundamental flaw.

Liquid milk prices are guided by the United States Department of Agriculture, under the federal milk order, but Dibbell contends that dairy cooperatives and mis-guided government policies are keeping farmers from getting fair, market-based returns on their milk.

“Cooperatives are not working for the farmers like they should,” Dibbell said, arguing that the disparity between what farmers are getting paid by processors, and what consumers are paying for milk, is a three-fold difference that is essentially unaccounted for. He believes the cooperatives – brokers who sell product to dairy processors on behalf of the farmers – are either not advocating enough for small dairy farmers, or they’re exploiting them.

“There is a lot of frustration right now,” said Ed Gallagher, a vice president with Dairylea, a cooperative representing farms in New York state as part of joint venture with Dairy Farmers of America, a nation-wide cooperative from Kansas City. “Low milk prices, high energy related costs of production, rising interest rates and two weather situations, the flooding and the heat wave, are all adding to the stress ... this has maybe been the most difficult year in decades.”

But difficulties in the dairy industry have been prevalent prior to 2006. According to statistics provided by New York State Department of Agriculture and Markets, there are currently just over 6,000 dairy farmers in the state, down from over 9,000 in 1995. Dibbell adds that in 1980, there were over 19,000 milk producers.

“We recognize that,” Gallagher said. “We’ve been working hard to put more money in the bank for farmers.” Gallagher denied that Dairylea is withholding money from farmers or providing unfair amounts for dairy processors inside and outside the state. He added that Dairylea is working to institute a state-level milk pricing system that would create a fixed floor price to protect farmers from incurring extremely low numbers.

Dibbell claims that if the decline in farms continues, now aided by the low milk prices, devastating June floods, and high energy costs, the impact on rural communities and economies will be larger than people may understand.

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