2002 Farm Bill

The following is a summary of a piece that was contributed by Margie Andrews (Western New York Conference, Cornerstone District) from the Andrews Farm in Randolph, New York.

Dairy farmers are experiencing the lowest prices for their milk in 20 years. This price drop has caused much hardship and heartbreak among the most dedicated and hardworking group of people in our nation. The Farm Bill is a government subsidy program that is supposed to help farmers in times when the milk price is the lowest. However, this has not been the case.

The dairy section of the farm bill establishes the National Dairy Market Loss Payment Program, which is good through 2008. The program reestablishes the floor price for milk and establishes one base Class I milk target price for the entire nation. Farmers from across the nation will be paid 45 percent for the difference between the Class I milk price in Boston and the target price of $16.94. The Class I milk price in Boston was chosen because of the recently expired Northeast Dairy Compact which sets the floor price for milk for the northeast states in the compact.

1 The problem though, has become that no farmers get the Boston price. The farmerís price has dropped to $10 (and at times less) and the Boston price has not dropped below $13. Local farmers are losing thousands of dollars every month, and are only receiving a rebate of one-dollar per 100 pounds of milk. The processors, cheese makers, milk plants, and milk powder plants also have no incentive to raise milk prices because the government provides subsidies for milk providers that get paid less. The bill also causes a gap between small and big farmers. A portion of the bill states that farms that produce large amounts of milk will only be paid a subsidy for 2.4 million pounds of milk. Small farmers are afraid that if all the milk is covered under the subsidy, it will cause the bill to become bankrupt. They are afraid that farmers will expand their large operations to accommodate the bill. Large farmers feel cheated because a third, half or two thirds of their production will have to be sold at a loss. Small farmers will collect year round while big farmers must see if their first 2.4 million pounds of milk will qualify for the subsidy at all.

On average, though conditions vary from state to state, it costs a dairy farmer $13-$14 to produce 100 pounds of milk. The breakeven price per 100 pounds of milk, including expenses, is about $13. In order for farmers to breakeven they must get paid $0.96 per gallon of milk sold. Unfortunately, with the current milk price set at $10, dairy farmers are only being paid $0.80 per gallon of milk sold. Each time the price falls below $13, farmers are unable to pay their bills and they must access credit lines, borrow money from the bank, or sell assets. Thus, without a breakeven price, these farmers do not receive income. As quoted from Hoardís Dairymen magazine, in 1985 the US government reported that the price of milk was going up to $11.67 and they had high hopes it would average $12 for the year. In 2002, farmers are still hoping for the milk price to average $12.

Without an increase in milk price, farmers are unable to adequately meet cash flow needs for things such as paying for feed for cows. Without adequate cash flow, farmers are unable to make needed changes to their facilities to better serve themselves and to produce a high quality product. Farmers are also unable to make upgrades to their farms that meet environmental regulations which either means that they will not be done, thus putting our land and water sources at risk, or that the federal government will have to pay for upgrades.

Dairy farmers are asking for your support to ensure that we will have a local, fresh, safe and viable source for the food we so depend on. We must stand behind these people who work so hard for so little.


C Write to your representatives and let them know that paying farmers subsidies only creates a false market which causes further market loss. Demand that the federal government raise the price of milk.

C Buy milk from vendors, stores and supermarkets that consistently offer milk at a fair price. Large buyers usually purchase milk at a super low price in a surplus time, allowing them to offer the consumer a low price. Unfortunately, the stores or the processors are not the ones that take the loss.

C Support your local farmers.


Legislative Letter Table of Contents

United Methodist Women home page