Organic Consumers Association

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For Dairy Farmers, the Depression is Here

Editor's Note: Take Action on This Issue Here: Tell HP Hood Not to Cut Family Farmer Contracts

If you drink milk, you probably haven't noticed any drop in the price of a gallon anytime recently. But if you were a dairy farmer, you'd know quite well that the price you'd received for the milk has dropped, because it has fallen so far so fast -- by half since December, the largest single drop since the Great Depression. At present, farmers are being paid a price that is far below the cost of production. As a result, we stand to lose as many as half of the nation's dairy producers by the end of the year.

How did this happen? Some suggest the root of the crisis is a surplus in supply, but other likely culprits include market manipulation (by groups like the "cooperative" Dairy Farmers of America, which controls 40% of the market and was fined $12 million last year for price fixing), lack of government oversight and increased dairy imports (which, according to the National Milk Producers Federation, have risen from $80 million to almost $3 billion in the last 10 years). Adding fuel to the fire, just as the prices fell out from under dairy farmers, so too has the credit market collapsed, making it all but impossible for farmers even to borrow their way out of this mess. From Jim Goodman at Grist:

Milk prices, like the rest of the world economy, crashed because of a globalized, unregulated free market system, not because of surplus product. According to New York dairy farmer/market analyst John Bunting "dairy markets are run by an oligarchy-a few elite players-with little or no government oversight." The parallels between the current dairy price crash and the Wall Street financial crash are pointedly exact.

In an attempt to staunch the massive hemorrhaging, both Farm Aid and Food Democracy Now are gathering signatures and encouraging calls to Secretary of Agriculture Tom Vilsack, asking that he:

halt this injustice and adjust the price of milk paid to farmers to "reflect the price of production" by invoking his authority under Section 608c (18) of the Agricultural Marketing Agreement Act of 1937. This legally mandated "floor price" should be at least $17.50 per cwt (a cwt is the standard measure for milk producers).

This solution, should Vilsack implement it (which, because of the act referenced above, is actually part of his job and not something consumers should have to nudge him toward, especially in the midst of such a crisis) won't be any miracle cure, in particular for small-scale producers, whose operating costs are much higher than that of the industrial-scale producers. According to this recent NY Times article, organic producers, who in the past few years have enjoyed some security in higher prices and rising demands, are feeling the pinch now, with decreased demand as a result of the weakened economy -- and those who are in the middle of transitioning to organic may be hit the hardest.


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