Maine milk prices plunge
Economy

Maine milk prices plunge


Farms’ income could drop 50%

AUGUSTA, Maine — The crowd at Tuesday’s Maine Milk Commission meeting, part of the 68th Maine Agriculture Trades Show, was standing room only, with farmers spilling out in the hallway to hear the bad news: Maine’s milk market is crashing.

“I am here to tell you we are in unprecedented times,’’ Leon Graves of Dairy Marketing Services, which represents dairy cooperatives in the Northeast told farmers and processors. “We’re in for a rough ride.’’

Because of a lack of international demand, prices are expected to drop by as much as 50 percent and not rebound until at least September, going from an average of $16.25 per hundredweight, or cwt, last year to as low as $8 by March.

“This will put a lot of struggling farmers right over the edge,’’ Doug DiMento of the Agri-Mark Cooperative predicted.

Galen Cole, president of the Maine Dairy Industry Association, put it more succinctly: “$11 milk is the end, the end of milk in the Northeast.’’

According to the U.S. Dairy Export Council, exports dropped in 2008 from $4 billion to $3.1 billion and demand will continue to fall as other countries — particularly Brazil, New Zealand and Argentina — dramatically increase their production.

Graves predicted that the average Maine farm producing about 1.8 million pounds of milk a year will lose $65,000 in income, compared to 2008. “Farms, processing plants, jobs — they are all at risk,’’ he said. “If we thought 2006 was a difficult year, 2009 is going to be far, far worse.’’

The overall economic crisis in the country will complicate things, Graves said, since traditionally, dairy farmers would work with their lending institutions on short-term lending to get through the situation. “That will not be so now,’’ Graves said.

DiMento said the bottom will drop out at the worst possible time. “Farmers make their biggest investments in the spring. This will make for an incredible cash crunch.’’

Graves said the Northeast cooperatives are seeking help from Congress through the proposed stimulus package. He said they are seeking a floor under the minimum price of milk, a “tweaking” of the Milk Income Loss program — a farmer subsidy, access to credit, and a herd buyout program.

The buyout, which was used over the past several years to balance years of high milk production by removing herds from production through slaughter, would have to be dramatically increased, he said. “We would have to take a reduction of 250,000 to 300,000 cows to level off the supply and demand,’’ Graves said.

Julie Marie Bickford, executive director of the Maine Dairy Industry Association, said her industry is working hard to rectify the federal pricing system that does nothing to protect farmers from the roller-coaster price shifts.

She said MDIA has hired a legal team and will be lobbying Congress, as well as the Maine Department of Agriculture to continue funding Maine’s tier system, which puts a floor or minimum, on milk produced in Maine. “This tier program makes up for the failings in the federal system. It has been very, very successful.’’

Bickford said that although there is widespread support from Gov. John Baldacci through the Legislature for the program, because of the state’s current economic crisis, the program is “under a microscope.’’

She said the system will be vital to the overall economic health of the state, not just the dairy industry.

“This is not just about farms,’’ she said. “It is about … employment. It’s about feed dealers, equipment dealers. When the dairy farmers struggle, those sectors struggle as well.’’

On the national level, Bickford said the MDIA continues to press for changes to the federal milk pricing order, a complicated system that bases the price farmers are paid for milk on the commodity cheese prices in Chicago. Maine is hurt by this system because it does not take into consideration that the cost of production is higher in New England.

“We are going right to the U.S. Department of Agriculture,’’ she said. “It will be the ultimate David versus Goliath battle.’’ She said Maine farmers are reaching out to their congressional delegation.

“We’re telling them if they put Maine at the front and center, then we need to fix the federal system.’’

“Eleven dollar milk is not only unacceptable but unforgivable. The dairy industry is critically important to this state — 700,000 acres, 4,000 jobs, $570 million in receipts each year. No one here is throwing in the towel.’’

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Comments
30 comments on this item

This is really too bad, because once a farm is idled, it very rarely comes back to life. In our rural state this industry is important.

yea how truegarysavard i was born and raised on a farm

,but as you read the new our elected official idiots make more non smoking laws rather than put thier weak minds to work on industry, if they lose they just tax more or create another law to generate revenue ,well bad news is coming to these idiots that just got them selves a nice raise for controling our lives,peoples pockets are like a well

each year ,day ,month you keep dipping,reality is your well is about dry augusta ,hope you all choke on your brilliance,

I feel bad for the darn cows too! Farm animals have become truly disposable which is pretty sickening really.

Where are all the people who were complaining about the lobstermen whining.

God help the little man, this is truly a tradgedy and it looks like there is no turning back. Industrial farms are productive but corporate owned and maned by illegals. The family farm is starting to disappear and dairy seems like they will be the first ones to go. There is no way, with the price system now in place, that a small farmer can survive.

bendover, what a great idea give a lobster with every gallon of milk.

It will all work out... :)

How can Brazil and Argentina sell milk in Maine? Isn't it too far away? Larry SG is absolutely right. The corporate farms are more efficient because of their cheap illegal immigrant labor and gov't subsidies. If small farmers could get gov't handouts like the big corporate farms it would be a fairer system. Milk should never be as cheap as soda. Somebody has to actually work to produce milk. With soda, some machine mixes some sugar and water and can produce and endless supply. I guess I'm still not understanding how foreign countries can sell fresh milk in this country and compete with American farmers. Maybe our legislature should look into this problem before they worry about same sex unions and smoking on the beach.

Kylie how about a free lobster with ever pound of butter.Might have to switch that around now that lobsters are more that butter.

The article didn't say that Brazil and Argentina are exporting, it said they're importing less, thus, we're exporting less.

During the depression, farming dropped dramatically, farms were lost to taxes all over Maine. Population in rural areas dropped accordingly.

Horrible news. I hope the predictions are wrong.

Well, awhile ago a gallon of milk was close to $5.00 a gallon, and I had to reduce my milk purchases because of the high price. I didn't hear any framers complaining then. I didn't hear any farmer explaining why the price was so high. Any business has ups and downs.

Some of these business groups try to manipulate public opinion in an attempt to put pressure on the political body to help them. All I can say is that they should have saved when the price was $5.00 bucks. I wonder if the Maine Restaurant Association will ghost write an article about the decrease in waitresses tips? How about hamburger flipper lay-offs? Gas pumpers laid off because people are buying less gas. And this week - "IT'S FEEL SORRY FOR MILKERS WEEK....." Give me a break milkers.

good now i can get more milk for my kahula

Dear Readers,

This is truly a dire situation, one that anyone who is not in the dairy industry can not understand. If these predictions come true there will not be one dairy farm left in the state of Maine. There is no way any one farm could survive. Many people out there are very misinformed about how milk pricing works. It is very complicated. The dairy farmer is the only manufacturer in the United States that can not set the price he gets for his product. That price is set by the government, and is based on supply and demand. The dairy farmer workes very hard to get is cows and farm employees to work as efficiently as possible, but yet the government sets his price. On the other side of the milk price, what you see in the grocery stores that is the price the retailer sets. This price has almost nothing to do with what the farmer gets. When the retail price goes up that is not passed on to the dairy farmer.

In response to the comment about cheap illegal immigrant workers. These workers are not cheap, they in fact most times make a minimum wage of eleven dollars an hour, they are provided a home, uniforms, utilites, and transportation to town for their shopping needs. The only reason farms hire migrant workers is because the farmer can not find local help. Please talk to the farmers who hire these people, they will tell you the truth, the migrant workers don't come cheap.

In response to the comment about small farms not getting the handouts like the big corpoate farms, please be aware there are no big corporate farms in Maine, and also let it be known that the small farms in Maine recieve more help with their milk price than the larger ones.

Maine farmers are in a very dire situatiion, I beg you all to get your facts straight and talk to your local farmers, ask them how you can help. Call your Representative, and Senators, this may just be the begining of the end.

Thank you

I don't feel bad at all for the farmers they were loving it when the prices want through the roof and causing everything made with milk go up also. To bad to sad should have saved some of that extra money made for when the prices came down.

$5 a gallon milk: only $1.10 went to the farmer. Although the price paid to the farmer consistently drops, the retail price never changes. So who, augustagoverned, is getting that money? The retailers. Hannaford. Shaws. Wal-Mart (who by the way is considering bottling a "gallon" of milk that is less than an actual fluid gallon. How many people will notice?)

As far as the other countries increasing their production, wayback is right. It means we cannot export there. It also means they are producing MUCH more milk protein concentrate which shows up on the labels of products as MPC - an overload of this dried product is why Kraft can no longer call their sandwich slices "cheese."

The average size of a Maine dairy farm is around 70 cows. They cannot survive a hit like this and by this time next year we could be drinking milk from Kansas or California. Chinese milk (doesn't that just fill you with confidence?) won't be far behind.

Just because milk costs more in the grocery store does not mean the dairy farmers are getting more money. Anyone who thinks that the farmers are whining should walk a day in their shoes. Those farm families work extremely hard, 365 days a week to provide fresh milk and cheese and ice cream to Maine people. They provide jobs, buy goods from other Maine businesses, and the article said they contribute $570 million a year and 4000 jobs - WOW! If it were a paper mill or other large manufacturing business in trouble, people would be bendiong over backwards to help. Why shouldn't we do the same for the farmers. Would you think differently if it were 1 big farm instead of the many farms across the state? What will happen to the tourism industry (snowmobiling and hunting and fishing) if farms go under and the land is sold for house lots? I always buy Maine milk for my family and I gladly will do my part to support the farmers. Hang in there... Maine needs you!

milk that cow jimbo!

I want to support what busyworkingmom wrote...especially the 365 days a year piece...animals do not tend themselves...the farmers, their workers and others have to be there every day. The work is brutal and with very little understanding from the folks who have never even been on a farm. I believe everyone who drinks milk should spend a day on a dairy farm...to understand what a gift we have in being able to purchase milk from our farmers. I worked on a chicken, broilers, farm as a girl with my parents and watched that industry go down in our state. Everywhere, you see the ex-chicken barns where working family farms used to exist. I also lived in No. Maine for several years and the potato industry has also struggled. We should all take note and appreciate the ease with which we go to the store to buy our milk at a price that we can afford. If the milk producing farms are not supported in this state...I wonder what are we coming to as a society to be so disconnected from our agricultural connections? We need to stop taking for granted the farmers in this state and celebrate their contributions to all of our well-being.

I agree that farmers had it good when we were paying 4.85 a gal. a while ago. I still think milk is to high. They should have saved when it was sky rocketed. I cut back then a lot on milk purchases and never picked back up much so it changed our milk habits. So it cost business by rising the prices and I know other ppl as well that dont buy it like they used to. Its not just milk that is expensive my grocery bill has jumped 30 bucks a week and i am buying the same things as I always do.

Good news for the Allen's Coffee Brandy Co.!

What people need to understand is that milk is a necessity for most people. The extra cost is worth it to get high quality milk that I trust to give my children. I would gladly pay $6 a gallon for milk if it means that the farmers can continue to produce high quality product. I wouldn't say I am terribly upset about milk prices going lower, no doubt I will save money. However, I don't mind the price being high if it means that it will help the economy even just a little bit. If people are drinking less milk because of high prices, they really should cut corners somewhere else in their grocery bill. Trust me, you can do it.

Get the government out of the milk business and let things shake out how they may. Efficiency and productivity are the root of economic growth. As long as the government is artificially inflating prices by buying milk and dumping it on the ground, the marketplace distortion will only get worse.

Want more money for the milk you produce? Find a niche to distinguish your product from the stuff produced by the big guys. Convince the consumer that your stuff is better and is worth the asking price that you want.

I understand that farmers want to stay on the farm, but there's no such thing as a "right" to earn a living at whatever job you choose. The famous cliches about the buggy whip maker or selling ice to eskimos come to mind.

Well, certainly if Baldacci and his admin. are on it, the dairy farmers shouldn't have any worry...............they are doomed!! Sorry, let's get him out of Augusta, soon.

I as a Dairy Farmer myself wish that people would know a little about what they are talking about.. Just because milk goes up in the store doesn't mean the farmer is seeing that price to.. And yes when milk was $5 in the store it was nice on the farm but it didnt make any dairy farmers rich i will garinty you that.. All that did was help try to catch up on bills.. I figured out what I made an hour all I will say is that it wasnt even close to min. wage.. so all you out there that think we where getting rich YOU ARE WRONG!!! Im not here for a pity party. but for people to say they dont feel bad cause they didnt like $5 milk how will you like it when ur milk comes from China?? there is only around 300 farms left in Maine and if milk goes as low as they say there might not be any left. This is not a laughing matter. what would you do with out milk ask your self that ?? Farmers work hard every day of the year cows dont take a day off not even x-mass that means we have to be there to take care of them so the next time you say you dont feel mad stop and think... So lets hope they dont drop for the sake of everyone. Like I said early i will asure you that dairy farmers are not getting rich.....

What people in Maine don't realize is for one- 5 per gallon milk doesnt mean the farmer is getting paid even close to that, and while milk prices were at this level, feritlizer actually doubled in cost not to mention diesel was hovering in the 5 per gallon range. Mainers should take pride in the wholesome dairy and beef products sold in this state that farmers work tirelessly to produce.. The last thing I think we'd want is for milk produced as far away as California or possibly China sold in this state.

-----BREAKING NEWS------

Circuit City to shut down

NEW YORK (CNNMoney.com) -- Bankrupt electronics retailer Circuit City Inc. said Friday it has asked for court approval to close its remaining 567 U.S. stores and sell all its merchandise.

http://money.cnn.com/2009/01/16/news/companies/circuit_city/index.htm?cnn=yes

When they say "liquidate," does that mean milk, or how does Circuit City play a role in Maine farming?

What also jumped out at me was the fact that so many countries are exporting milk. MILK! Where is it going?? I thought milk was a local commodity. Additionally, why on earth are we still feeding what is essentially cow sweat to our children? Can't our technologists find something that could replace dairy?

milk in maine is a local commodity. I dont beleive we inport any milk if we do it is a very small amount I believe. When they talk about exporting milk it is powder milk that all off the liquid is taken out this is used mostly in the cheese plants. milk is one food sorce that is the most natrual. if they did find something that could try and replace it i dont think i would be feeding that to my kids or myself.

I would just like to say that to all the people that don't feel bad for farmers they are idiots because I am sure that at least 75% of things they eat are from a farm in Maine. Whether it is potatoes or milk. Once the dairy farmers go out of business thats it. There is going to be nothing left. Were are the main suppliers of a lot of things. It is kinda like the food chain. We go down so does the grain companies they people we buy equipment from. Thats how i see it working. Yes the dairy farmers did get a high milk price this last summer but it was not like they could just keep it or save it. They most likely used it to pay off debt or equipment or stuff for their crops so they could feed their cows. One thing that I ado know is that it they go down it is not going to be good. I don't want to get stuck drinking and eating stuff from china.

I work on a Dairy farm from the age of 12, i'm 20 years old now. To say dairy farmers are getting to much money for there milk you're just lacking an understanding what Farmers go through. During the 5 dollar gallon milk era so wasn't the price of fuel was up there. We need fuel to run the tractor to start a spring planting all the way through fall harvest. before the increase in price farmers where reciving the same price for there milk as they did in the 70's. its kinda hard to save money in the high times, when you are trying to get your head out of the low times. We work and slave for a little earning. when i was 13 years of age i would put in over 80 hours a week, remember cows must be milk twice a day in a 12 hour rotation. Thats one thing i would never trade for anything in the world. Today we milk 120 head of cattle and farmer puts all his earnings back into the farm. He works everyday before the sun rises and long after it sets. this farm is a seven generation farm, and if where to go under, there would no way to bring it back. Peolpe should live just one day working at a dairy farm, most peolpe wouldn't be able to take it metal or physically. The common death for a farmer is farms machinery or suicide. if it wasn't for farms we all would starve to death. Just take a few minutes and think what it would be like with out milk, ice cream, cheese. Just a few tasty goods from milk!

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