September 29, 2009
To: Members of Congress
My faith in my industry leaders and co-ops is greatly shaken. This is why I muster enough confidence to write to you on my behalf and for the behalf of the hard working dairy farmers in our nation that have had to endure these difficult times and lay mercifully at the hands of those who are to be representing us and looking out for “best interests”.
I am a third generation dairy farmer married to a third generation dairy farmer. We have experienced highs and lows in the past but now the highs are very short lived and the lows carry on for months and months. Dairy farmers have been in the worst economic situation since the Great Depression. Yet, I sit here today and we are short milk nationwide with the price that we receive still below the cost of production.
Did our leaders not see this coming? We have just completed retiring many healthy cows because there was too much milk, yet we are now bringing milk from Kansas and Oklahoma to California. That doesn’t make any sense!
We do know that Kraft and Dean Foods both recorded record profits. We also know that retail prices for Cheddar was up 4%, Ice Cream up 5%, American Processed Cheese down 1%, Butter down 14%, Fluid whole milk down 20% (Q-2 2009 vs Q-2 2008). Yet the U.S All-Milk price to farmers down 47%.
Another injustice is the use of MPC’s in our domestic market. MPC imports are up and our milk price is down! It would make sense that we would restrict MPC’s from being used in our domestic supply. These MPC’s have a direct impact on our price at the Chicago Mercantile Exchange which is a thinly traded market. It would make sense to produce these MPC’s here in the United States.
We have been blessed to have $350 million allocated to help the dairy farmers. I urge you to use some of those funds to put dairy farmers on a level playing field with “Big Food”, co-ops, and processors.
Our milk price has not increase to date due to the “ample” inventory supplies. Dairy futures are driven by the NASS surveys. Only about 800 are required to report. With this reporting there is a two week lag time.
More disturbing to me is that there is NO AUDITING FUNCTION what so ever. Even a slight miscalculation of reporting is an indirect factor on our milk price. I would like to see some of the money allotted to help dairy farmers to go toward the implementation a mandatory auditing function and quite possibly to daily reporting which would add to much needed transparency and improvement of our price discovery. The Beef/Pork producers have daily reporting with an auditing function that has worked very favorable for their industry.
As in all business, a balanced supply for demand is needed. We already have a faulty price discovery system with inventory reporting that has no accountability. With those factors in place it takes away our ability for necessary triggers that we need to balance our supply with demand. Dairy farmers are in a different situation than most, as we can not just “shut down” and not produce milk at the drop of a hat, as the health and well being of our cows are at stake. I think that many have benefited from this lag and lack of supply triggers.
I am also asking of you all, to help implement a National Supply Management Program. This will enable us to stay in alignment with demand. Highs and lows are inevitable at times but this will be manageable and keep us from devastation. It would put us on a level field. It would put us in a situation of control in our industry and relieve dependence of government assistance and alleviate the need to retire perfectly good and healthy animals to balance supply with demand.
I am asking you to please consider these solutions. Allow us to help ourselves by improving and changing the systems that are now in place. As most can agree, what we have now is failing miserably. It is time for change in our industry!
Thank you for your time and consideration.
Tony Martin Dairy
6240 21st Ave
Lemoore CA 93245