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Dairy farmers in desperate straits

Falling prices are forcing many to sell their cows for meat. Some are threatening to dump milk into sewers. Two have committed suicide. In California, the No. 1 dairy state, the pain is felt keenly.

May 29, 2009|Jerry Hirsch

So far, the main government action has been to buy up 238 million pounds of nonfat dry milk powder and 4.6 million pounds of butter since prices started to fall in October. Last week, the USDA said it would provide subsidies to export up to an additional 150 million pounds of nonfat dry milk, 46 million pounds of butterfat and 6 million pounds of cheese to help dry up the surplus. Cumulatively, these USDA actions will support milk prices by about 70 cents per 100 pounds of milk, said Roger Cryan, a National Milk Producers Federation economist.

Longer term, some farm groups want to change milk price regulations to better account for the cost of production in the system.

The price California farmers get for their milk is tied to sales of butter and cheddar cheese on the Chicago Mercantile Exchange combined with prices for dry whey and dry milk. Federal regulators and other states use similar formulas.

Farmers have faced low prices before, but what's different this time around is that their cost for feed and other expenses is high compared with what the milk sells for, said Bill Schiek, an economist with the Dairy Institute of California in Sacramento.

"They are just bleeding cash," Schiek said.

Some farmers now are thinking of doing the unthinkable -- dumping their milk as part of a national protest next week. "If they are not going to allow us to make a living, we will just dump it down the drain," said Arie DeJong, who owns several dairies and 20,000 cows in California and Arizona. "We just can't keep losing money like this."

Luis Bettencourt, an Idaho farmer who owns one of the biggest dairy companies in the nation, is considering dumping two days' worth of milk production -- about 8 million pounds.

"Why not?" he said. "We ain't getting any money for it anyway."


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