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California Dairymen Split on Fixing the Farm Bill

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(Sacramento, CA)
Wednesday, June 20, 2012
During tough times, the farm bill allows the government to prop up dairy farmers by buying their milk. But the price the government pays hasn't really changed in three decades.  It's way below what it costs farmers to produce a gallon of milk.

Over the past few years,  feed costs have skyrocketed, and many farmers have taken out multiple loans just to stay afloat.  

That's true for dairymen Case van Steyn who runs a thousand-cow dairy in Galt, whose family has been in the dairy business for 50 years. 

"If you listen to the experts, a lot of people say things will improve fall or by early next year-- but those kind of comments have been made before," van Steyn said. 
Van Steyn says that of California's 1,600 dairies more than 40 have gone bankrupt in the last few months. 
"Now we're burning up equity trying to stay in business, because you know, you've got to feed the cows and you've got to take care of them, you've got to milk 'em no matter what the economics. You can't just lock door and say I'll be back in 6 months."
That's why Van Steyn and his group Dairy Farmers of America are backing the proposed dairy supports currently in the Senate version of the farm bill.   It basically creates an insurance program. When the cost of feed gets really high in relation to the price of milk -- farmers would get a payment.  Signing up for the program would be voluntary, yet to get the money, farmers would have to agree to cut back milk production.
But the program doesn't work for all California dairymen, says President of Western United Dairymen Michael Marsh.  He says the problem is the insurance margin is based on the average feed cost.  For California dairymen, feed is more expensive if you have to truck it from Iowa or Illinois.
"Unfortunately the proposal that is in the dairy title, in the senate farm bill, severely discriminates against dairy farmers, actually in most parts of country, because most parts of the country rely on imports of feedstuffs coming form Midwest."
"I don't believe (this program) is going to work," says dairy owner Antoinette Duarte. 
She runs a 500-cow dairy with her son, just south of Sacramento.  
"It's another cost to the dairymen, and like I said, what I understand through reading some of the literature that we're paying a premium in if you want to participate, but then who knows if you'll ever be able to reciprocate any of those premiums coming back to you."
Dwarte says she doesn't want to pay for a program where the supports wouldn't kick in frequently enough.
But an agricultural economist takes a different issue in the proposed dairy bill.    Formerly with the U.S. Department of Agriculture, UC Davis economist Dan Sumner says because the plan requires farmers to cut back milk production in tough times, it will punish those trying to grow.
"The long-term health of the industry is comprised for protecting producers against short-term harm when it occurs. And that may be a perfectly reasonable trade-off for producers, for some producers in the industry."
Still, it's not the trade-off that Dwart is looking for.   Like many dairy farmers, she says her dream was to pass on the dairy to the next generation -- her grandfather had a dairy in the 1920s, which her father and brothers ran up until recently:
"They don't see future. They were having a difficult time, and they felt that instead of hanging on and eating away their equity, they just recently sold their cows, and the dairy that my dad worked so very hard for, with no fault of their own.  It was the economy."
Duarte says whatever dairy supports end up in the final version of the farm bill, it's too late for some.  And it certainly won't help everyone who's still trying to stay in the business of making milk.
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