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| Industrial Dairy Crisis
LU: 1/22/19What is the Dairy Crisis?
Basically the
dairy farms are disappearing from the United States
such that some day there will be a shortage of milk. The farms
are disappearing due to the low cost paid to the farmer. The low
milk cost is due to the governemnt price fixing called the Federal milk
order. If imported milk products were limited we would not have
enought milk today.
What is causing this low farm prices?
Today
essentially all milk is
taken to a milk processor for pasteurization then to the
retailer. This system has created a monopoly
system with the price of milk set by the Federal order. The
Federal order price over the years has continued to reduce the
price the farmer received for his milk. Over the past 39 years
the price paid to the farmer has decreased continuously in real
spending power. The
Class I milk price now is $15.30/100wt (1/22/19).
In 1980 the
milk price was 13.05/100wt. Medium income in 1980 was $16,671 now
its $59,055 or 3.54 times as much. The milk price now should be
$46.00/100wt. How would any person like to get the same wage
they got 39 years ago. The government has succeeded in keeping the price of milk low for the
consumer but has done so by taking advantage of the farmer.
The milk price in the store has to go up for the farmer to
make a
profitable wage. I have calculated that if the milk price would
increase by $1.00 dollars that farmer could get $28 for his milk. The
Federal milk order must be repealed to allow a free martket to
determine the real milk price. Farmer have to set the price not
the government.
Why the low prices to the farmer
The
Federal order pricing system
has successed in reducing the family farm dramatically by creating too
low of a farm milk price. The cost of milk is determine by the
Federal order not free markets since the 1930's. The
disappearance of the family farm is not because the farmer failed, or
he/she was not a good farmer it is because the Federal order
system put them out of business. The government and dairy processor
want low prices for milk. The government likes low milk
prices to keep
the population happy and for the dairy processors to get
guarenteed large profits. The low price allows the
processor to export any oversupply of milk. The low milk prices
create an oversupply of milk. The increased supply is the
only option a farmer has to create more income.
How can the farmer milk price be fixed, yes it can:
REPEAL the Federal
Order for milk prices and go to a free market milk pricing system.
Enact
anti-trust legislation to break up the monopoly of the dairy processors
(milk handlers). Create new co-op's run by dariy farmers only.
Allow
the co-op's to compete for the milk sales
one against another to determine a fair market price
for their farmers milk. Price and supply would be negociated by
the co-op with the milk handler.
Allow tarrif against unfair dumping of low cost dairy products into the US.
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