Honoring dairies requires action on pricing crisis

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webmaster | 06/27/13

By Assemblyman Frank Bigelow and State Sen. Tom Berryhill

The governor and Legislature have declared June Dairy Month in California to celebrate a storied industry that has helped shape the fabric of our state. Our dairy farms and happy cows are a source of tremendous pride and an important component of our economy.

In 2008, the latest year for which figures are available, California’s largest agriculture commodity was responsible for creating a total of 443,574 jobs and $63 billion in economic activity for the state. If you are trucker, a veterinarian, a farmer, distributor, grocer or a consumer you are positively impacted by this industry.

However, unless something is done to confront a crisis forcing hundreds of family-owned dairies out of business, those happy cows will soon be hitting the unemployment line. Simply put, government regulation of milk prices is making it impossible for dairies to make ends meet.

Nearly 400 dairy farms have closed in California in the past five years, 105 last year alone. Madera and Fresno counties have lost 40 dairies during that same time period, which totals loss of over 50,000 production milk cows. The Fresno-Madera-Tulare-Kings county-area has lost over 100 dairies combined. Meanwhile, California’s remaining 1,500 dairies are fighting for survival under the weight of soaring feed costs and the controversial cost structure within the state’s milk marketing order.

According to California Department of Food and Agriculture (CDFA) data, California dairy farmers suffered losses of $882 million last year.

How could this be?

In 2012, according to CDFA data, it cost an average of $1.64 to produce a gallon of milk. However, because of CDFA pricing regulations dairy producers were paid only an average $1.46 for their milk. That is an 18-cent loss on every gallon produced. Over an extended period, that is a back-breaker.

Adding to the burden is an out-of-date price-setting method that allows cheese producers to pay dramatically less for milk in California than in other states.

While we celebrate Dairy Month, and recognize the importance of an industry built by generations of Californians, we must also commit to fight for our dairies so that farmers get a fair price for the milk they produce.

That’s why we are supporting Assembly Bill 31. This bipartisan legislation would give the California Department of Food and Agriculture the authority to stabilize the dairy cost structure and fix this flawed system.

Even with this legislation, California’s milk prices would remain the cheapest in the nation, which means our cheese companies would still be getting a competitive price while our dairy farmers would be protected.

As it now stands, AB 31 would create the California Dairy Future Task Force, which will hold workshops and solicit input from the dairy industry and related businesses. The California Dairy Future Task Force will make final recommendations to the Legislature and the Secretary of Agriculture no later than July 1, 2014.

The stakeholders continue to meet to craft a solution to the immediate economic crisis facing our dairies. While important work has been done to seek long-term structural changes, California dairies continue to go out of business.

Losing dairies threatens those at all levels of our economy, from working families and small businesses to other agriculture firms and schools. Skilled workers are in danger of losing jobs, feed producers would suffer steep revenue losses, and local communities would suffer a devastating blow to their economies.

There is no better time than Dairy Month to right this wrong for a homegrown, California industry. These family-run businesses not only supply local products that Californians want to buy, they infuse much-needed money into our local and state economies.

This is a tough issue and no solution is going to make everyone happy. As legislators, we are seeking a reasonable solution that allows both the cheese companies and the dairies to compete and thrive for generations to come.

As we celebrate the dairy industry, we must do whatever it takes to protect this legacy and California’s dairy families — many of whom are our friends and neighbors.

 

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