Farm Beat: Dairy farmers seek relief from low milk prices

I saw a gallon of reduced-fat milk for $3.29 at one store this week. Not bad if you’re on a budget for a product that sometimes tops $4.

The recent downswing in milk prices is not so welcome to dairy farmers in and near Stanislaus County. The minimum prices they get from processors, adjusted each month by state regulators, have dropped about a third from strong levels last year.

Farmers hope for relief through a June 3 hearing in Sacramento called by Karen Ross, secretary of the California Department of Food and Agriculture. She will consider an extra adjustment on top of the monthly minimums in an effort to help farmers cover feed and other costs.

“I was happy to see the announcement (last week), and even more pleased to see Secretary Ross’ support for immediate action,” said Frank Mendonsa, president of Modesto-based Western United Dairymen, in a news release. “I encourage dairymen to be present at the hearing and make sure CDFA hears directly from the family-run dairies this pricing will affect.”

The hearing will involve only milk bound for cheese plants, the largest use of the region’s huge output. Monthly minimums are set for a few other categories, including butter, ice cream and milk sold in cartons and jugs.

Ross is likely to hear also from processors concerned that an increase in the minimum could put the California industry at a disadvantage in the global market.

Milk, as this column has noted a few times, seems like the most basic of products, but the state’s pricing formula is about as complicated as anything in agriculture. It takes into account the needs of farmers and processors, as well as current prices for cheese and other goods.

A basic free-market principle – stop selling a product if it doesn’t bring enough from a buyer – is little help here. A farmer can’t simply shut down a cow’s milk output for a while. She would still need feed, veterinary care and other things, which cost money.

As of April, dairy farmers in Northern California got a minimum of $14.22 for each 100 pounds of milk sold to cheese processors, down from $21.73 a year earlier and $16.93 in April 2013. The latest price works out to $1.21 per gallon, compared with $1.86 a year ago.

The farm price is only one part of what goes into the retail price for consumers, which also includes manufacturing, transportation, refrigeration and other costs.

Some dairy farmers are urging that California join the federal system for milk pricing, which they say would give them a better deal. They have support from three processing companies that are owned by farmers – California Dairies Inc., Dairy Farmers of America Inc. and Land O’Lakes Inc. All have plants in or near Stanislaus County, among other locations.

The idea drew criticism from the Dairy Institute of California, which represents many of the processors.

“Their failure to present any real evidence of disorderly marketing conditions is not surprising, given that no such evidence exists,” the Sacramento-based group recently declared.

The June 3 hearing will be at 8 a.m. in the CDFA auditorium, 1220 N St., Sacramento.

This story was originally published May 8, 2015 at 9:38 AM with the headline "Farm Beat: Dairy farmers seek relief from low milk prices."