Just The Facts
Published on Fri, 02/08/2013 - 10:25am
There was an old T.V. show that I am sure most of you are not old enough to remember that was called Dragnet.
It was a detective show and one of the detectives had a saying “the facts, Ma’am, just the facts”.
Dairy producers and all those who consume dairy products need to know a few facts:
1. U.S. dairy producer numbers have been reduced to a level that represents only 9% of all the producers that were in business just 40 years ago.
2. U.S. dairy producer numbers continue to decline at an ever increasing rate.
3. The dairy producer farm needs to get paid at least what it costs to make the milk if it is going to have a potential to be profitable and sustainable.
4. If the milk supply (both domestic and imported) exceeds profitable demand milk will not have value equal to what it costs to make.
5. Since the supply of milk (domestic and imported) has been exceeding profitable demand for some time now, the price dairy producers have been receiving for their milk (which is based on the dump market price for cheese on the CME) has been well below the cost of production.
6. If the dairy producer farm is not potentially profitable it does not have the potential for financing and will not survive.
7. In order for the dairy producer farm to be potentially profitable its feed costs should run about 50%of its total cost of producing milk, i.e., one half of its income should be available to pay for non-feed costs such as cows, facilities, equipment, land, repairs, cow care, payroll etc.
8. The people who claim to represent the dairy producer farmer and their best interests and spend their check-off money have proposed a solution to the dairy producer’s financial problem. It is called the Dairy Security Act.
9. The Dairy Security Act provides that the price the dairy producer is to receive for milk is to be equal to the dairy producers feed costs i.e., one-half of the dairy producers total cost of production, plus receive $4.00 per hundredweight (cwt.) paid for by the general taxpayer for the first 4 million pounds of milk produced.
So if the dairy producers feed costs are $10/cwt., this being one-half of his total cost of producing that milk (and recognizing his total cost of producing that milk is $20/cwt.), the dairy producer farmer will be losing $6/cwt. for the first 4 million pounds of milk produced and losing $10/cwt. for all milk produced thereafter.
The Dairy Security Act also provides that the dairy producer should have the right to buy additional income insurance for additional income up to $8/cwt. but at an unknown cost but estimated not less than $1/cwt.
So the maximum possible benefit of the Dairy Security Act provides a $3/cwt. LOSS for the dairy producer.
10. No financial institution sees a potential for profit for the dairy producer under the above noted facts. Therefore, nor do they see a future for the dairy producer under the Dairy Security Act.
11. Without our remaining dairy producers our existing national milk producing infrastructure and our ability to provide our citizens with fresh and safe domestic milk products will disappear.
12. The U.S. dairy industry can be a competitive, global dairy product provider WITHOUT the continued destruction of the U.S. dairy producer by implementing the goals and policies of the National Dairy Producers Organization, Inc.
food consumers, who may not be aware of these behind the scenes processes at the thousands of dairy processing plants around the world.