Schumer: Rapidly Dropping Milk Prices Threatening Viability of Columbia County Dairy Farms; Senator Announces Push to Relieve the Pressure on Local Farmers

Press Release

SCHUMER: RAPIDLY DROPPING MILK PRICES THREATENING VIABILITY OF COLUMBIA COUNTY DAIRY FARMS; SENATOR ANNOUNCES PUSH TO RELIEVE THE PRESSURE ON LOCAL FARMERS

Wholesale Milk Prices Have Fallen Sharply Over the Last 12 Months - Decline Could Lead To Closures of Small Farms Around the State

Senator Calls on USDA to Take Steps to Address Crisis - Help Stimulate Demand, Reduce Instability in Market to Help Local Dairy Farmers from Sudden Drop in Milk Prices

At the USDA Building, Schumer Holds Q&A With Local Dairy Farmers

As Capital Region dairy farmers struggle with falling milk prices, U.S. Senator Charles Schumer today announced his push to help stimulate demand in the dairy market to relieve pressure on local dairy farms struggling to stay afloat. Wholesale milk prices have fallen sharply over the last 12 months and the decline could lead to widespread closures of small farms around the state. In the wake of the potentially dangerous effects of the price collapse, Schumer announced that he is joining legislators in calling on the federal government to address the problem.

"In these lean economic times it is imperative that we work to meet the needs of farmers in Columbia County and across Upstate New York," said Schumer. "As the nations' third largest producer of milk in the country it is critical that we provide some form of economic relief to our local New York farmers so that their farms can continue to thrive."

Since last summer the domestic dairy industry in Upstate New York has been grappling with a serious imbalance between the cost of operating a dairy farm and the price for which they can sell their milk. This problem threatens the stability and future of American dairy farmers. Falling domestic prices combined with relatively high input costs have put an extraordinary strain on the entire dairy sector. The global economic crisis has further exacerbated these challenges by reducing international demand, which has diminished the price that dairy farmers in Columbia County can receive for their milk.

Dairy farmers sell their milk to processors in units of 100 pounds, called a hundredweight (cwt). The price that farmers get for a hundredweight has dropped roughly $7 since this time last year- a 39% decrease in just 12 months. There are over 40 dairy farms in Columbia County - each with about 175 cows per farm. With over 7,900 cows across the county, dairy farms in Columbia County have lost a total of about $693,000 a month.

In 2006, Schumer helped save the Milk Income Loss Contracts (MILC), a program that supports the dairy industry by providing direct counter-cyclical style payments to milk producers on a monthly basis when the price for milk falls below the benchmark of $16.94 per hundredweight. However, the payment can often take months to reach the farmers, and dairy farmers who are already struggling to make ends meet cannot afford to absorb the current loss in profit.

Farmers are receiving less money for their milk because slackening demand is causing an imbalance between supply and demand. Though some input costs have more recently stabilized from record highs, this modest relief is not enough to offset the persistent low prices confronting dairy producers. In Columbia County and across the nation, dairy farmers face the prospect of losing money every time they milk a cow. Continued low prices could devastate not just dairy farmers and the dairy industry, but thousands of rural communities where agriculture and dairy are primary economic engines.

Recognizing the potentially dangerous effects of the price collapse, Senator Schumer joined Senators Feingold, Kohl, Stabenow, Snowe, and Johnson in calling on the United States Department of Agriculture to take steps to address the problem. The legislators are aiming to increase the demand for milk relative to its supply, which should help restore prices. The plan encourages the USDA to do three things to help dairy farmers: first, to increase its purchases of milk powder through the Commodity Credit Corporation; second, to restore the payments to offset the cost of packaging milk, which were ended under the last Secretary of Agriculture; and third, to restore a program to promote dairy exports, which would tighten the domestic market. The Secretary of Agriculture has the existing authority to do all of these things.

The legislators also urged the USDA to consider additional dairy purchases for distribution through the USDA commodity-based nutrition programs. With the current weak state of the economy, demand for these products by low income individuals, food banks and schools will continue to increase as dairy products like cheese are often among the most popular products available.

Schumer added, "Farmers are receiving less money for their milk because slackening demand is causing an imbalance between supply and demand. The USDA has the resources and the authority to help increase the demand for milk relative to its supply to help solve this problem. I will fight tooth and nail to help our local dairy farmers from going under."

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