Are California dairies drying up?

The consolidation of dairy farming into fewer hands is nothing new, said Bill Schiek, economist for the California Dairy Institute. "I think the fundamental thing is that while there are some producers that are losing money, there are others that are expanding and making money."

Many dairy farmers have expressed concern that the consolidation of dairy operations also means the concentration of wealth in too few pockets.

"When you wind up with a community with less entrepreneurs and more workers, that's a loss to the community because people don't have an ability to contribute," said Joaquin Contente, a second-generation dairy farmer in Hanford. "It's too bad, because it was a business that you could be proud of."

In an effort to save more dairies from going out of business, supporters and advocates recently petitioned the CDFA to raise the minimum price that cheese processors must pay to farmers for their milk.

The request was to adjust the price factor for whey in the funding formula.

State officials expressed concern that would strain smaller processors who do not have the technology and infrastructure to profit from the cheese byproduct popular in protein shakes and many other health foods.

A small increase was granted, but dairy farmers expressed frustration with the formula adjustment, which raises by about 4 cents the minimum price processors pay to farmers for milk per 100 pounds, depending on market factors.

The processor community has opposed increases to the minimum price of milk.

The issue is a tricky one for state officials, because forcing prices higher could make it even more difficult to attract and keep processors, who must deal with California's tough environmental regulations.

CDFA leader Ross has said she is putting together a task force to analyze the industry and provide recommendations for stability.

"The task force will be in place by the end of this month," she said. "This is so important to me that I don't feel we have time to waste."

Reporter Joshua Emerson Smith can be reached at (209) 385-2486 or jsmith@mercedsunstar.com.

AT A GLANCE

Here are some key factors for determining the profitability of the dairy farming industry over recent years, based on data from the California Department of Food and Agriculture:

In 2011, a dairy cow produced an average of about 23,438 pounds of milk a year. That's up from 21,815 in 2006.

During the first quarter of 2012, it cost California farmers an average of $16.63 to produce 100 pounds of milk. Over the same time period, the "mailbox price," calculated to reflect the average price a farmer received for 100 pounds of milk, was $15.52.

In 2011, it cost California dairy farmers on average about $15.79 to produce 100 pounds of milk. That year, the average mailbox price was $18.13 for 100 pounds of milk.

In 2010, it cost California farmers an average of $13.70 to produce 100 pounds of milk. That year, the mailbox price was $14.37 for 100 pounds of milk.