With wholesale milk prices paid to dairy farmers well below the cost of production, Sen. Kirsten Gillibrand, D-N.Y., discussed a plan on Tuesday to offer more federal aid. Two area farmers said that while they could use assistance, they were mixed about the proposal's effect.
"The current system of pricing makes no sense," Gillibrand said during a telephone media conference.
Wholesale milk prices do not reflect the cost of production but are set by the federal government, she said. In February, the prices paid to farmers dropped below the estimated cost of production of $17.58 for 100 pounds of milk, with Boston Class I price currently at $13.33 a hundredweight, she said.
Farmers typically receive a couple of dollars less that the Boston price, and that's before deductions are taken.
"I want to get to the bottom of this broken system and find a way to fix it," Gillibrand said.
But until that is possible, she said, she will be introducing legislation to change the current dairy support system, the Milk Income Loss Contract.
As the first New York senator to serve on the Senate Agriculture Committee in nearly 40 years, she said, it was important that she takes "a leadership role" on the issue.
She was appointed as senator in January to fill the vacancy left when Hillary Rodham Clinton became secretary of state. Gillibrand was serving in the House of Representatives, where she served on the agriculture committee.
The MILC was designed as a safety net, but even with that, farmers are not receiving enough to cover their production costs, said Gillibrand. In April, the program added $1.58 per hundredweight, according to the Farm Service Agency website. More-recent figures were not available.
The MILC program kicks in when prices dip below $16.94 per hundredweight, adjusted by a factor based on the cost of grain.
She will propose this week that the MILC rate be raised from 45 percent to 90 percent of the difference between the trigger price and the Boston Class I price.
Payments on production are capped at 2.94 million pounds.
Gillibrand: Long-term solution needed
But a long-term solution may have to wait until the next Farm Bill is written in 2012, she said.
It could take that long to meet with all the stakeholders and decide how to ensure farmers are able to meet costs, she said.
Hearings will be held later this year in New York and Washington, D.C., on how to address the issue. Until then, she said, she wanted to hold off on comments about legislative changes.
Preliminary estimates on the cost of the proposed changes are about $200 million dollars, Gillibrand said, and the funds for the mandatory program could be found through other changes to the federal agriculture program.
Food production is something that shouldn't be relegated to the cheapest suppliers, she said.
To ensure "healthy, wholesome food production," she said, it's important that food be grown locally. Otherwise, the consolidation in the industry could lead to outsourcing, she said.
"A smart investment now can save an industry," she said.
Local farmers
weigh in
Bloomville dairy farmer Barbara Hanselman said any change in the pricing system should take time, to make sure it is done correctly. But something needs to be done, she said.
"We go to work seven days a week, and at the end of two weeks, we get a bill" because income does not meet expenses, she said.
It costs her farm about $15 to produce 100 pounds of milk, before paying for debt service or living expenses, she said.
The farm has had to borrow money and family members have to do without to make ends meet, she said.
Gillibrand's proposals are "a step in the right direction," Hanselman said, who agreed that local food production is an important part of homeland security.
To address the long-term issue, more will probably have to be done to manage the milk supply, she said.
"The cost of food should reflect what it cost to produce it," said Franklin dairy farmer Ronan Robinson.
He only has to look at his current income to see that is not happening. He said he wouldn't be surprised if Gillibrand's plans were nothing more than "just talk."
Despite that, he could use the help if something was to be done, he said.
If milk could be priced around $16 to $17 a hundredweight, his farm would be able to meet expenses, he said.
He has cut back on expenses and is working with those to whom he owes money.
Possible solutions, he said, could include a quota system of production, similar to that being used in Canada.
Robinson said he would like to see a wholesale price set that would allow his family to meet today's standard of living.
