Dairy farmers hold rally for 2nd time in 5 weeks

Low milk prices' effects range wide

October 20, 2012 

Dairy farmers traveled to Sacramento this week to demand that state officials help their struggling businesses. The rally was the second in the past five weeks, reflecting the growing unease of farmers squeezed by high feed costs and low prices for milk.

Seeing hundreds of milk producers on the Capitol steps is "pretty rare," said Scott Magneson, a dairyman from Cressey. "It's desperate, dire straits. This is worse than I've ever seen it. You have so many dairies going out of business."

He and other members of the California Dairy Campaign, a chapter of the California Farmers Union, were joined by a growing number of industry-related business owners also feeling the pinch.

"This has gone on way too long," said John Teicheira, a feed broker in Manteca. "It's affecting my income. I'm starving on my end too. These dairymen need help. It's basically a trickle-down effect."

The event Tuesday drew more than 350 people, slightly less than the turnout from the previous rally Sept. 13.

The first rally was aimed at the California Department of Food and Agriculture, which sets minimum prices for milk each month, said Lynne McBride, CDC executive director.

On Thursday, farmers and others hoped to catch the attention of Gov. Jerry Brown.

"People came from all over the state," she said. "It's not just the dairy producers, it's the feed sellers and people all along the chain."

California Department of Food and Agriculture Secretary Karen Ross, who controls the state's milk pricing, released a statement the day of the rally defending her position.

In the letter, the secretary pointed out that since June the minimum price dairy farmers get for milk has been rising, mostly because of market factors.

However, she also recognized that farmers are still hurting. "We know that changes to producer prices take time to make their way to the bank accounts of farmers," she wrote. "Given the very difficult economic climate, that's a huge concern."

State Sen. Anthony Cannella, R-Ceres, who spoke at the rally, said he recently sat down with the secretary.

"She is trying to deal with this," he said. "I can sense the concern in her voice. She's working hard on this. And I told her I'm ready to work with her."

Milk is the top-grossing farm product in the Northern San Joaquin Valley, but it has not been very profitable in recent years. Milk prices collapsed with the recession in late 2008, then recovered slowly, but the feed costs have pinched off profits.

"I don't think there's a milk producer in the state who is profitable right now," said Michael Marsh, chief executive officer of Western United Dairymen.

Many farmers survived in the early part of the slump because they could borrow against their equity, but for many that's no longer an option.

In August, several dairy organizations filed suit, alleging that the CDFA failed to follow the law when it refused to increase the minimum price of milk sold for cheese to bring it in line with prices around the country.

"It doesn't matter if prices go up or down if our system is flawed and the pricing system isn't fair," McBride said. "We just want a fair price compared to what's being paid in other states."

California has had its own milk pricing system since the 1930s, separate from that operated by the federal government in other states. In recent years, the state's prices have tended to be lower.

In 2011 and 2012, California dairy farmers frequently received $2 less for every 100 pounds of milk they produced than farmers in other parts of the country.

However, a switch to the federal system wouldn't help dairy farmers, according to CDFA officials.

State officials say the reason for the state's lower price is that milk supply exceeds demand in California.

The glut forces the state's producers to sell much of their milk to makers of products such as cheese, which pays much less than selling milk for drinking, according to CDFA. And since much of the milk is sold out of state, the price farmers receive is lower, reflecting higher transportation costs.

Economists say the market itself could lift prices: As more dairymen go out of business, fewer cows will produce less milk -- leading to higher prices.

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

The Associated Press contributed to this story.

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