After severe market volatility caused a nationwide losses of $10 billion, dairy farmers have pushed to include stronger milk protections in the upcoming 2012 Farm Bill.
In 2009 in South Dakota, milk prices dropped from $20 per hundredweight to an all-time low of $10 per hundredweight. While the market has since stabilized, with prices shooting back up to $16 per hundredweight, dairy farmers report that they cannot long remain in business with that level of volatility.
The dairy proposals in the new farm bill, some dairy farmers say, do not go far enough to protect the milk industry. As it currently stands, farmers would be protected if the margin between the cost of feed and the price of milk grows too narrow. In addition, farmers would have the option of participating in federally subsidized risk management insurance, in exchange for agreeing to limit production if prices fall too low.
Many dairy farmers, including those in rapidly expanding farms in South Dakota, believe that these caps are too limiting to an industry that could experience rapid growth. “Supply controls are not good for dairy, and certainly not for a state like South Dakota. We’ve got 90,000 cows, and we want 200,000 in the next five to seven years. We’re not going to do that if they put a cap on us,” said the CEO of Davidson Food international.
Many state officials have carefully worked to lure California dairy farmers out to South Dakota, and feel that a cap would undo years of hard work. While some farmers are willing to accept the provisions in the farm bill, others continue to hope for a bill containing crucial price protections without the production caps.
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Written by: Justin Ellison / Farm Plus Staff Writer