Sen. Kirsten Gillibrand plans to reform the dairy industry by emphasizing stability, transparency and fairness in a system that is currently volatile and complicated.
Local dairy farmers, Nate Wilson of Sinclairville and Legislator Fred Croscut of Sherman, believe Sen. Gillibrand is on the right track for helping out dairy farmers.
"After holding listening sessions with agriculture communities across New York state, gathering input in preparation for the next Farm Bill, it has become crystal clear that our dairy farmers need immediate solutions to the dairy crisis, and we have to begin moving forward now on some of these solutions. We simply cannot wait for the next Farm Bill," Gillibrand said in a phone conference.
Submitted Photo by Julia Gugino
Sen. Kirsten Gillibrand proposed five measures in a phone conference Tuesday in order to reform the dairy industry in the U.S. Local farmers agreed that the reforms she proposed would help out ailing dairy farmers if enacted. Pictured is a dairy farm in the town of Cherry Creek.
In five years' time, New York state lost 23 percent of its dairy farms. From 2002 to 2007, New York's dairy farms dropped from nearly 7,400 to nearly 5,700, and now are down to just 5,400.
In 2002, Chautauqua County was home to 308 dairy farm. Five years later, only 229 remained, a 26 percent decrease. Cattaraugus and Erie counties suffered similar losses with a 22 percent decrease in the number of dairy farms in each.
"We need to take action to keep our dairy farms in business, and put them on a path to prosperity. And while the next Farm Bill may not be set into law for another few years, there are steps we can take today to support our dairy farms," Gillibrand added.
Sen. Gillibrand proposed five measures that would reform the current system and achieve the goals of a transparency, fairness and stability of the dairy market.
The first measure she suggested was to prevent cuts to the Milk Income Loss Contract (MILC) program that are set to take effect in September 2012.
"The MILC program was designed to be a safety net when prices fall below $16.94 per hundredweight. However, because of the high costs of feed and fuel, dairy farmers are not even receiving enough income to cover the cost of staying in business," Gillibrand explained.
The MILC reimbursement rate is set to decrease from 45 percent to 35 percent of the difference between the $16.94 trigger price and the actual Class 1 Boston price.
"MILC is a good thing for dairy farmers ... it's not meant to make a profit, just to make up losses. But from a government expenditure perspective the MILC program is very costly and she may have trouble passing it," Croscut said.
During the call one reported questions the new idea of dairy insurance for farmers instead of the MILC program. Gillibrand replied that the MILC program favors small farms and that she was not prepared to endorse the insurance option.
"I think what farmers need is a fair price for milk, they don't need insurance ... so I think Gillibrand is right on track there," Wilson said in a phone interview.
The second measure would eventually reform the milk pricing system.
Sen. Gillibrand saud she would urge the USDA to collect and publish data on alternative measures of pricing.
"A competitive pay pricing system would base the price of milk on a survey of prices paid to farmers for milk used in cheese production in a competitive market. Competitive markets can be identified using a technique known as the Herfindahl- Hirschman Index (HHI), which will identify areas where there is significant competition for milk," Gillibrand explained.
According to the HHI, most rural dairy counties in Upstate New York would be classified as competitive counties, and should receive higher prices than noncompetitive areas. In noncompetitive areas, the existing Federal Milk Marketing Order system would take effect, however base prices would be established using the competitive pay pricing system.
"A competitive pricing system would benefit New York because of our proximity to competitive markets, and would be a more transparent and direct way of pricing milk based on the actual prices that farmers receive," Gillibrand said.
Croscut supported a change in the current pricing system calling the Federal Milk Marketing Order system "antiquated and complicated" but said that people had been taking about changing the system for 40 years at least.
Her third proposal would bolster milk exports to foreign markets.
Sen. Gillibrand suggested improving America's milk quality by updating the somatic cell count standards - the white blood cell count in milk present due to udder infection - from the current standard of 750,000 cells per milliliter down to 400,000 cells per milliliter.
Wilson called this update "long over due" and an "achievable goal."
In 2008, the average somatic cell count in the U.S. was 262,000 cells per milliliter, far below the legal limit.
Many local farmers operate ar below the limit (above the standard). Wilson reported coming in at 150,000 somatic cells per milliliter and Croscut said his milk measure between 200,000 to 300,000 cells per milliliter.
Wilson said cell count is very much dependent on sanitary procedures. Croscut said less somatic cells make the milk yield more cheese and tase better.
"Updating this standard is important to maintaining export opportunities for our dairy products, and will bring our standards in line with those of our major trading partners, such as the EU, Canada, and New Zealand," Gillibrand added.
Both Wilson and Croscut agreed that raising standards is the way to target foreign markets. However, Croscut worried that gillibrand would face some opposition and he worried about staying competitive in the global market.
Her fourth measure would require cold storage facilities to report milk inventories.
Inventories of certain types of classified cheeses have the ability to significantly influence trading activity on the Chicago Mercantile Exchange.
In February of 2009, a low point of the dairy crisis, USDA Natural Agricultural Statistics Service (NASS) reported that Cold Storage Inventories had been inflated by approximately 9 percent.
She intends to introduce legislation that would make reporting to the NASS Cold Storage Report mandatory, and give the USDA the authority to audit warehouse inventories to help bring more stability to dairy trading prices.
"This goes back to errors made by the USDA," Wilson explained. "I don't know why but whenever they make an error it always ends up hurting the farmers and driving the price of milk down."
Sen. Gillibrand's final measure will increase transparency and information for dairy farmers.
She is proposing the Democracy for Dairy Producers Act to provide more transparency into dairy cooperatives and arm dairy farmers with more of the information they need to thrive.
The legislation would require dairy cooperatives that engage in bloc voting to alert of co-operatives when inportant issues are being decided and who to contact about it.
"These five measures lay the foundation for my plan to achieve comprehensive reform of dairy pricing, so that we can minimize volatility in dairy pricing and help protect and preserve the cornerstone of New York State's rural economies," Gillibrand said.
"Sen. Gillibrand is doing as much as she can. We are not going to see everything she wants done but she is on the right track. Dairy farmers need somebody in their corner," Wilson added.