Iowa Public Television

 

Milk prices lose 30%over previous year

posted on February 11, 2000


BEGINNING NEXT MONTH THE HOUSE AGRICULTURE COMMITTEE WILL BEGIN A SERIES OF 10 FIELD HEARINGS TO TAKE INPUT FROM RURAL AMERICANS. OVER A THREE-MONTH PERIOD THE HEARINGS WILL BE HELD AT SITES ALL ACROSS THE COUNTRY. BUT THE TESTIMONY IS LIKELY TO BE MUCH THE SAME NO MATTER WHERE THE COMMITTEE LIGHTS. THE NATION'S FARM ECONOMY IS NOT OPERATING ANYWHERE NEAR PROFIT MODE.

IN THE SHORT TERM, THAT IS THIS ELECTION YEAR, THERE SEEMS TO BE SOME CONSENSUS TO SIMPLY SHORE UP EXISTING FARM LAW WITH DOLLARS. THE ONLY DEBATE IS OVER HOW MUCH TO SPEND.

HOWEVER, A KNOTTIER PROBLEM HAS SEEPED FROM A SECTOR OF THE FARM ECONOMY THAT IS THE HISTORICAL BANE OF GOVERNMENT FARM POLICY MAKERS, THE PRICE OF MILK.

A YEAR AGO DAIRY FARMERS HAD LITTLE TO COMPLAIN ABOUT WITH MILK PRICES AT MORE THAN 18 DOLLARS A HUNDRED WEIGHT. IN RECENT MONTHS DAIRY PRODUCERS HAVE SEEN PRICES ENTER FREE FALL, PLUMMETING MORE THAN 30 PERCENT TO LESS THAN 12 DOLLARS A HUNDRED WEIGHT.

BECAUSE OF THE LOW PRICES IT'S PROJECTED THE GOVERNMENT WILL LAY OUT MORE THAN 350 MILLION DOLLARS IN DAIRY PRICE SUPPORTS THIS YEAR, THE LARGEST OUTLAY IN A DECADE.

SOME ANALYSTS VIEW THE PRICE DROP AS THE RESULT OF OVER PRODUCTION, HOWEVER MORE THAN A FEW PRODUCERS ARGUE IMPORTS HAVE CONTRIBUTED TO THEIR DILEMMA.

THE USDA IS PROJECTING PRICES TO RECOVER BY THE SECOND HALF OF THIS YEAR. BUT, THE PROVERBIAL LIGHT AT THE END OF THE TUNNEL WILL BE A TRAIN FOR SOME AS THE PRICE INCREASE IS LIKELY TO BE THE RESULT OF DAIRY HERDS THINNED BY THE ECONOMIC PRESSURE OF HIGHER FEED COSTS AND LOW MILK PRICES.

THE YEAR'S PRICE SWING IS PRESSURING CONGRESS TO DO SOMETHING BEYOND WHAT IT DID LAST FALL. THEN THE ISSUE OF MILK PRICING NEARLY FORCED A FILIBUSTER IN THE SENATE THAT WOULD HAVE HELD UP THE BUDGET FOR FISCAL YEAR 2000. LEGISLATION DID REDUCE THE UNWIELDY 31 PRICING REGIONS THE USDA USED TO PRICE MILK FOR PURPOSES OF GOVERNMENT SUPPORT. HOWEVER THE EFFORT FELL SHORT OF THE 11 REGIONS THE USDA HAD RECOMMENDED.

THIS WEEK DISCUSSION WAS RENEWED.

SEN. DICK LUGAR, (R) INDIANA: "on the 1a 1b issue I believe and I commended USDA last year for the reforms, modest as I thought they were. So I would prefer those as opposed to the status quo which we have now."

CONFUSING THE ISSUE IS THE NEW ENGLAND DAIRY COMPACT. OTHER REGIONS NOW WANT THEIR OWN, BUT SO FAR CONGRESS HAS RESISTED EXPANDING THE COMPACT CONCEPT.

AT WEEK'S END PROSPECTS FOR REFORM TO THE GOVERNMENT PRICING SYSTEM REMAINED AS CONVOLUTED AS THE SIX DECADE OLD SYSTEM THAT HAS PRODUCED NEARLY AS MUCH DISCORD AS MILK.

FOR HIS PART SECRETARY OF AGRICULTURE DAN GLICKMAN SAYS HE IS URGING GOVERNMENT POLICY TO BE TARGETED TO SMALLER DAIRIES.

GLICKMAN SAYS GIANT DAIRIES THAT MILK TENS OF THOUSANDS OF COWS CONTRIBUTE TO AN OVERSUPPLY OF MILK AND LOWER PRICES. THE SECRETARY SPEAKING AT THE CALIFORNIA FARM EQUIPMENT SHOW, PRETTY MUCH THE HEART OF LARGE-SCALE DAIRY COUNTRY, SAYS FEDERAL POLICY SHOULD BE CHANGED TO ENCOURAGE SMALL AND MEDIUM SIZED DAIRIES.

Tags: agriculture business commodity prices dairy farming markets news