Holstein cows (Photo: Wikipedia)

Holstein cows (Photo: Wikipedia)

Although their message may have gotten lost in the ‘tea party’ hype, Iowa dairy farmers spent time at the capitol this week to raise awareness of drastically low farm milk prices. During the past year, farmers have seen the price they are paid for milk drop by nearly half, even while retail prices have remained relatively high.

“This has reached a crisis point in rural Iowa,” said Jerry Harvey, a dairy farm producer in the southern portion of the state.

Francis Thicke, an organic dairy farmer who is considering a run for Iowa Secretary of Agriculture as a Democrat, explained that as prices rose for producers, prices also rose in grocery stores. Now that producer prices have fallen, however, retail prices have remained steady.

John Bunting, a New York dairy producer and member of the National Family Farm Coalition commissioned to write a report on the dairy industry earlier this year, concluded that a few “elite players, with little or no governmental oversight, are running the dairy markets.”

…The current financial situation provides an opportunistic moment for key players to unduly depress farm milk price and reap both profits and market power.

Farm milk prices began to fall in late 2008, in spite of data which suggests it should not have happened:

  • Nearly as much nonfat dry milk was exported in December 2008 as was exported in December 2007.
  • December 2008 imports of milk protein concentrates were massive.
  • Imports of casein, another dairy derived protein, also increased in December 2008.
  • “Butter and other milkfats” imports increased nearly 60 percent in December 2008 compared with December 2007.
  • Cheese imports for December 2008 increased 15 percent over December 2007.
  • Commercial disappearance of dairy products increased in December 2008, and, for the 2008 year, increased 2.6 percent according to USDA data.

If, indeed, as most experts believe, too much milk drove farm milk prices down, there is no easy explanation of the dairy exports and imports of December 2008.

The premise of Bunting’s arguments — that a lack of oversight is playing a major role in the dairy crisis — was echoed by Thicke during the local demonstration. Specifically, Thicke questioned why Dairy Farmers of America, billed as a cooperative of farmers, has 12 licenses to import dairy products into the U.S. and how such imports could benefit the organization’s farmer members.

In December 2008, two former Dairy Farmers of America executives and the organization agreed to pay a $12 million civil monetary penalty to the U.S. Commodity Futures Trading Commission for attempting to manipulate milk futures and exceeding speculative position limits. The Kansas City-based organization is believed to represent more than 18,000 dairy farmers and control between 30 and 40 percent of the commodity milk market.

Dairy farmers at the Iowa rally on April 14 called for a congressional investigation into dairy and commodity price manipulation, passage of a milk marketing improvement act, and enforcement of anti-trust laws.

“We are at a crossroads in agriculture,” said Chris Petersen, president of the Iowa Farmers Union. “We need to decide who will produce our food — farmers or vertically integrated corporations.”

The National Family Farm Coalition has asked U.S. Secretary of Agriculture Tom Vilsack to implement the Agricultural Marketing Agreement Act of 1937, which requires the agency to adjust farm milk prices within all federal orders to reflect the price of feeds, availability of supplies and other economic conditions.