'Dairy Month' ends with soured milk prices

From Staff Reports

As June "Dairy Month" comes to an end, the state's milk producers are facing some of the lowest prices for their product.

The June 2003 Market Administrator's Report for the southwest marketing area reported producers who delivered to handlers in the Dallas/Tarrant counties received a May statistical uniform price of $11.30 per hundredweight for their milk. While that price is up 11 cents over the statistical blend price of $11.19 in April, the price is down from the $12.42 they received in May 2002.

Several producers were featured in Country World's recent Special Dairy Edition (which is mailed only to dairies in six states) commented about the current conditions.

In the Central Texas town of Fredericksburg, one of the two remaining dairies near the town has been in operation for over 150 years. Ricky Boos, who's great-great-grandfather started the dairy, said, "He started it because of the money. At the time, it was a great source of income." Today, Boos said he is disappointed in how the dairy industry is doing.

Further south, near Weimar, four generations of the Keiner family have produced milk at their South Central Texas farm. Eugene Keiner, who works the dairy along with two sons, agreed there is concern about the price of milk for producers. While the retail stores continue to raise prices for the consumer, producer prices have fallen in the past few years to a 1970's level, he pointed out.

In East Texas, a second generation dairy farmer, who serves as an area councilman on his cooperative's board, knows first-hand how the low prices are affecting farms and farm families. Gordon McCool of Gilmer is second vice president of Dairy Farmers of America (DFA)'s southeastern area council. He pointed out the new Cooperatives Working Together (CWT) plan should increase the price paid to the producer.

"I am very optimistic about the CWT program," he said about the program which is designed to clear U.S. milk inventory. "If you look at it from the big picture standpoint, there is no commodity that can be produced in unlimited quantities and have expectations of a reasonable price."

The CWT program, expected to begin at the end of June, will be funded through an 18-cent per hundredweight assessment fee on the participating producer's milk. The impact of this plan should result in farmers receiving abut $1.30 per hundredweight more for their milk. A time frame of when the impact would occur varies among experts.

One expert, Dr. Ken Bailey of Penn State, praised National Milk Producers Federation (the organization which developed the program) for responding to farmers' calls on their milk cooperatives to do something. Bailey, as reported in the Dairyline column published in last week's Country World, said the CWT program can work but "it depends on whether or not the big Western states step up to the late and participate."

National Milk's CEO Jerry Kozak said the program was designed "so farmers all across the country would benefit equally."

But in Texas, the 840 milk producers are looking for better prices. The CWT program can directly affect individual producers who choose to participate by either reducing, or deleting, their milk production. Producers can agree to limit the amount of milk they generate, or they can participate in the "cowherd purchasing" option of the program.

DFA figures show the removal of 125,300 head of dairy cattle is equivalent to an annual reduction of 2.07 billion pounds of milk.

In related interesting figures, the latest Market Administrator's report shows Texas' 840 producers generated 511,474,552 pounds of milk in May 2003. The same report shows New Mexico's 177 producers generated 589,176,775 pounds of milk.

In Central Texas, Erath County Extension Agent Joe Pope noted "there were approximately 24,000 head of milking cows in 1978, and today there are over 80,000 head. The largest dairy in 1978 had around 500 cows, with most dairies milking between 150 and 300 head. Today, the average size dairy is well over 500 cows."

The Market Administrator's report shows Erath County continually holding the top milk producing county spot for many years. This past May, the county showed 113 producers generating 112,910,181 pounds of milk. The number two county, Hopkins, shows 162 producers generating 50,349,940 pounds of milk. (Obviously, in the East Texas county, the average size dairy is below the average seen in the Central Texas county.)

Pope concluded with insight: In the past, having 300 dairy cows was enough to financially provide for a family. "Today, 700 to 1,000 is more like it. At the present time, the price of milk has gone down. When you look at the expenses of a dairy, you notice that the cost of these things has increased dramatically. This makes it hard on the dairy farmer."

(Country World reporters Lynn Montgomery, Mandy Spikes, and Monette Taylor contributed to this story.)