It’s the Law: When Feed Costs are Sky-High (vs. Milk Prices)
USDA Must Raise Milk Prices to Protect Future Milk Supplies
U.S. dairy producers don’t need new dairy legislation out of Washington, D.C. to address these
volatile times. A decades-old law on the books
grants the Secretary of Agriculture authority to raise
regional milk prices, when unduly high feed costs
(vs. milk prices) threaten future milk supplies.
That law is section 608(c) 18 of the enabling
legislation for federal milk orders. See the accompanying paragraph for the full language of 608(c) 18.
Problem is: costs for grain, forage and other
feed inputs are rising faster than milk prices ... so
the imbalance between producers’ milk prices
received and their costs in recent months is everwidening. And that trend will continue at least
for the next few months. There are virtually no
good signs on the horizon for improved fortunes
of the United States’ 2012 corn and forage harvests as we approach the second half of summer.
What’s required to try to kick-start the 608(c)
18 process: a formal petition from dairy farmers (or
their cooperatives), requesting that the Secretary of
Agriculture hold a hearing on the subject.
Historically, USDA has never invoked these
powers, although we’re not sure that there has ever
been a petition requesting such. In the past, USDA’s
general response – when questioned about 608(c) 18
– has been to refer to the “ ... other economic conditions ...” section of the language and drop the ball.
Right now, for the vast majority of U.S. dairy producers, no “other economic conditions” exist, except
for low milk prices and high costs for limited supplies of feed/forages. Never before have U.S. dairy
farmers – in so many regions of the country – faced
such imbalances of feed and forage costs, in comparison to farm milk prices.
USDA’s own dairy data show the widening
imbalance between farm milk prices and dairy production costs.
To kick start the 608(c) 18 process, someone
must petition the Secretary of Agriculture. The Milkweed has created a proposed draft of a 608(c) 18
petition to Secretary Vilsack. That petition is found
on this paper’s Web site: www.themilkweed.com
Here’s the address to which to send 608(c) 18
petitions:
Tom Vilsack, Secretary
United States Department of Agriculture
Room 200-A Whitten Building
1400 Independence Avenue, SW
Washington, DC 20250
We urge concerned dairy farmers to take that
draft, put their own name on it, and send a copy of the
petition to Secretary Vilsack ... pronto! The nation’s
dairy producers should use a barrage of 608(c) 18
petitions – and related publicity – as a check-test to
see if Vilsack will follow the law. Certainly, the adequacy of the nation’s future milk supplies are challenged by the current ... and likely future ... imbalance of milk prices to production costs.
Ironically, Vilsack seems intent upon boosting
USDA Dairy Data Prove
Milk Prices Below Costs
By USDA’s own data, Secretary of Agriculture Tom Vilsack could not keep a straight face and
argue that feed costs weren’t way above farm milk
prices here in 2012. Let’s compare USDA’s own
2012 “All Milk Price” data with USDA’s “monthly
dairy costs of production per cwt. of milk sold data,
2012.”
All Milk Price vs. Costs
January-June 2012
(Dollars per Hundredweight)
Month
Price
Costs
Difference
January
19.00
23.05
-4.05
February
17.70
22.92
-6.22
March
17.20
23.43
-6.23
April
16.80
23.92
-7.12
May
16.20
24.55
-8.35
June
16.20
24.85
-8.65
Section 608(c) 18 Directs USDA to
Raise Milk Prices When Feed Costs Soar
(18) Milk prices
The Secretary of Agriculture, prior to prescribing any term in any marketing
agreement or order, or amendment thereto, relating to milk or its products, if such term
is to fix minimum prices to be paid to producers or associations of producers, or prior
to modifying the price fixed in any such term, shall ascertain the parity prices of such
commodities. The prices which it is declared to be the policy of Congress to establish
in section 602 of this title shall, for the purposes of such agreement, order, or amendment, be adjusted to reflect the price of feeds, the available supplies of feeds, and other
economic conditions which affect market supply and demand for milk or its products in
the marketing area to which the contemplated marketing agreement, order, or amendment relates. Whenever the Secretary finds, upon the basis of the evidence adduced
at the hearing required by section 608b of this title or this section, as the case may
be, that the parity prices of such commodities are not reasonable in view of the price
of feeds, the available supplies of feeds, and other economic conditions which affect
market supply and demand for milk and its products in the marketing area to which
the contemplated agreement, order, or amendment relates, he shall fix such prices as
he finds will reflect such factors, insure a sufficient quantity of pure and wholesome
milk, and be in the public interest. Thereafter, as the Secretary finds necessary on
account of changed circumstances, he shall, after due notice and opportunity for hearing, make adjustments in such prices. (Emphasis added.)
and championing the government policies for the
ethanol mandate for fuels – policies that now consume up to five billion bushels of U.S. corn annually. However, the diversion of corn to ethanol production has tightened available supplies – and driv-
en up grain costs for livestock and poultry producers
... to the point of threatening the nation’s supplies of
milk, meat, eggs. Does the USDA secretary know?
Does he care?
U.S. “All Milk Price” vs. Production Costs
Losses per Cwt., Jan. - June 2012
$12
$10
Loss per Cwt
by Pete Hardin
$8
$8.35
$8.65
May
June
$7.12
$6.22
$6.23
$6
$4.05
$4
$2
Jan.
Feb.
March
April
Source: USDA “All Milk Price” and “U.S. Monthly Dairy Costs of Production per
Cwt of Milk Sold” data.
Petition to USDA to
Raise Milk Prices
Get your copy of the petition
by clicking this link:
www.themilkweed.com/Petition to Secretary Vilsack.pdf
The Milkweed • August 2012 — 3