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Milk Producers' Price Hike Request Denied

California

March 08, 2001|MELINDA FULMER

State agriculture officials have denied a request by California milk producers to factor rising energy costs into the formula it uses to set the minimum price paid for their milk.

Farmers say they need these increases to offset rising utility costs and survive. But the Department of Food and Agriculture said it fears that increases would make such California dairy products as cheese, butter and powdered milk too expensive.

"We did not want our producers to be in a position where they could not compete with other states," said Kelly Krug, dairy marketing manager for the Department of Food and Agriculture. "We think that's best addressed [with support programs] at the national level."

But milk producers say that since much of the state's production goes to fluid milk, which is consumed mostly in California, this shouldn't have as much impact.

"Who are they competing with, themselves?" asked Jay Goold, a spokesman for Western United Dairymen. Already, he said, older milk producers, strapped with higher costs and low prices, are deciding to get out of the business.

Krug said that milk processors have had to shoulder a much greater share of the utility cost burden than have dairy farmers. Outages and rising electricity and natural gas costs have made their plants significantly more expensive to run than plants in other states.

Some of the state's major processing cooperatives still plan to ask for an increase in the profit margin they can take on their products, a move that would trigger an automatic decrease in price down on the farm.

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