Milk price hike not enough for dairies, Turlock-based group says

MODESTO -- A dairy group said Wednesday that farmers will get little help from milk price increases approved by the state.

The California Department of Food and Agriculture, after hearing from farmers struggling with high feed costs, decided Tuesday to slightly increase the minimum milk prices that processors must pay from February through May.

The increases average about 25 cents per 100 pounds of milk, which is equal to about 11.6 gallons. They fell short of the $1 urged by the California Dairy Campaign, a farmer group based in Turlock.

"There's this continuing gap between the cost of producing milk and the prices the producers receive," Executive Director Lynne McBride said.

Farmers have dealt for four years with milk prices that often fall below production costs, especially the cost of feed corn.

The squeeze has contributed to a drop in the number of dairy farms in the San Joaquin Valley, one of the world's top milk producers. The average number of cows per farm has grown as the survivors expanded.

Food and Agriculture Secretary Karen Ross approved the increases based on a Dec. 21 hearing and other input. They will be tacked on prices that already are adjusted monthly to reflect dairy industry conditions.

The Dairy Institute of California, which represents processors, acknowledged the farm troubles at the hearing. But it said the state's prices have to stay in line if the industry is to compete on the world market.

"Processors and manufacturers simply do not have the margins to support large, unilateral revenue transfers to (farmers), nor are they able to get such revenues from the market in today's competitive environment," testified Bill Schiek, an economist with the institute.

The approved increases include:

• 5 cents per 100 pounds for milk bound for the fluid market. The minimum in Northern California this month is $20.24.

• 10 cents per 100 pounds for milk to be made into yogurt, sour cream or other soft products. This month's minimum is $18.54.

• 10 cents per 100 pounds for milk to be made into ice cream. This month's minimum is $18.49.

• 30 cents per 100 pounds for milk to be made into butter. This month's minimum is $18.27.

• 30 cents per 100 pounds for milk to be made into cheese. This month's minimum is $18.48.

McBride said farm production costs averaged $19.94 per 100 pounds as of the third quarter of 2012.

Bee staff writer John Holland can be reached at jholland@modbee.com or (209) 578-2385.