July 27, 2009
Missouri dairy sector struggling for survival
Many dairy farms in Missouri have gone bust, as the industry continues to struggle with declining milk prices and low payments, according to a senior official of the Missouri Dairy Association.
According to the USDA, dairy producers receive only 28 cents of a retail dollar, said association executive director David Drennan.
The farm has no control once the milk leaves the farm, and with everyone fighting for their share of the pie, the farmer's share keeps getting smaller, Drennan said.
There are about 1,900 dairy farms in Missouri, but the state has lost about 500 since 2005, he said.
There were two to three years of high milk prices, before the prices plummeted for two to three years, said state Rep. Casey Guernsey. It was impossible to stay in the business with those prices especially with increased input costs, said Guernsey.
The state Rep. believes the main problem is that the dairy industry is heavily regulated at the federal level and that the regulation needs some reform.
Meanwhile, the federal government has also announced it would go ahead with its Dairy Export Incentive Programme despite protests from other milk producing countries. The programme could help export as much as 1.5 billion pounds of US milk but Drennan said it is not enough.
Drennan said because of low retail prices, the industry needs an increase of a federal subsidy called the Milk Income Loss Contract, which is a safety net that makes up the difference between the price received by farmers and the market price of dairy.
The programme needs to be further enhanced during these tough times, and if the government could afford millions of dollars for the auto industry, it can do the same for the dairy industry, Drennan sad.
Missouri is a milk-deficient state, resulting in more imports from other states, said Drennan. Consumers in Missouri would eventually end up paying more for milk because of higher costs for transportation, energy, and packaging and other expenditures.
Drennan said that's the double-whammy for Missouri, as prices will gain and the state will lose economic activity and jobs as more dairy businesses shut down.
