New York U.S. Senator Kirsten Gillibrand held a hearing in Washington Wednesday on modernizing the federal dairy pricing system.
Gillibrand chairs the Senate Agriculture Subcommittee on Livestock, Dairy, Poultry, Local Food Systems and Food Safety and Security.
The current system of paying farmers for their milk is based on milk marketing formulas dating back decades. The Democrat says the federal milk marketing system must be modernized.
"The system is inadequate and out of date. We are using an almost 100 year old system which had its last major reform more than twenty years ago for pricing for an industry where no dairy farmer is running their farm the way they would’ve a hundred years ago. They should not be beholden to a price system that operates as if they are.”
Agri-Mark dairy economist Catherine de Ronde agreed and noted that milk pricing is one of the top issues among member dairy farmers.
“The industry has changed significantly since the last order reform in 2000. Industry growth, increased cost and participation on the export market are all viable reasons to thoroughly revisit the orders and revise them to better reflect today’s marketplace. We want our federal order system to evolve and to be supportive of the needs of today’s dairy market participants, especially those of our farmers.”
Vermont Democratic Senator Patrick Leahy noted the importance of the dairy industry to the state and region.
“Dairy is a bedrock industry in Vermont and the Northeast. It anchors our rural economies for generations. The years of price volatility, consolidation, rising costs have squeezed many small sized farms. Vermont’s been losing farms at a devastating rate, even before the pandemic," said Leahy. "Our farmers continue to struggle with an economic climate beyond their control. We’ve got to look forward to solutions and improve the resilience and address longstanding market inequities.”
Tollgate Farm is a small dairy operation that milks 64 cows in Ancramdale, New York. Owner Jim Davenport told senators on the subcommittee they need to address the fluid milk price formula to farmers.
“Forty years ago in ag economics class I learned that demand for fluid milk is inelastic, meaning that consumers don’t buy more when the price is low or less when the price is high. If the consumer demand for fluid milk tends to be steady then so should the fluid portion of the dairy farmer’s price," said Davenport. "So I think the fluid business that has to be addressed seriously in milk pricing. And I would really like to see them decouple the price for fluid milk from the international volatile cheese and butter powder price.”
Wisconsin milk processor and President of Clock Shadow Creamery Dr. Robert Wills said the current pricing system is a threat to the dairy industry.
“Milk pricing administered in the federal orders hasn’t been able to evolve to fairly address the changing dairy industry. And this old mechanism definitely has no tools to address global competition, the need for more sustainable production. The survival of the dairy industry depends on your decision to end the rigidities of the market order system as soon as possible.”
