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Dairy dilemma

Tennessee, Kentucky producers share frustrations with administrators, learn more about diverse factors impacting the market
By Glen Liford 6/28/2018

 

The Tennessee and Kentucky Farm Bureau Federations arranged a meeting at the University of Tennessee Agricultural Campus on May 16 to allow producers to express their concerns about the current state of the dairy industry to representatives of the USDA Agricultural Marketing Service.
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As the ag community continues to close ranks and support dairy farmers impacted by recent disruptions in the market, the Tennessee and Kentucky Farm Bureau Federations arranged a meeting at the University of Tennessee Agricultural Campus on May 16 to allow producers to express their concerns to representatives of the United States Department of Agriculture’s Agricultural Marketing Service (USDA-AMS).

According to producers in attendance, the market is in crisis. Current conditions are forcing many dairy operators to examine the viability of their farming enterprises. The market is suffering from an excess supply of milk, and declining consumer demand is amplifying the situation. Lack of marketing opportunities make it difficult for smaller and even many medium-sized dairies to be competitive.

Farmers are searching for answers. And USDA administrators opened the meeting by admitting the agency didn’t have any quick solutions and stating the purpose of the meeting was not to provide answers, but rather to listen to producers.

The important first step was bringing these two groups together, said officials.

“I’m convinced that despite the recent changes and issues that have come from adversity and distress, it has given those of us in the agriculture industry an opportunity to better connect with the men and women who are our consumers, who really want to be supportive of our industry,” said Tennessee Commissioner of Agriculture Jai Templeton as he thanked the farmers for coming to the meeting during the busy spring season.

The idea for the meeting originated when Tennessee Farm Bureau Federation President Jeff Aiken and Kentucky Farm Bureau Federation President Mark Haney traveled to Washington to share the concerns of their members with Greg Ibach, under secretary of agriculture for marketing and regulatory programs, and Dana Coale, deputy administrator of USDA-AMS dairy programs, and others.

The meeting, headlined by Coale and other officials, allowed time for input from producers, explained how the Federal Milk Market Orders (FMMO) work, and detailed how a proposed change to Multiple Component Pricing (MCP) might affect producers.

“As producers and as an industry, it is key we have as much information available to make the right decisions as we move along,” said Coale.

Coale acknowledged that the industry is saturated with an “incredible surplus of milk” and the challenge is what to do with that surplus.

“Our manufacturing capacity isn’t quite in sync, or it is out of sync in different places,” she said. “We have a surplus of milk and nowhere to move it. We have seen a change in the handlers who are processing the milk. We are seeing some new plants being built. Those plants are having a ripple effect across the U.S. in how milk is being supplied. It’s a great storm. Unfortunately, I am not here today to give you answers. I am here to listen to you and make certain your voices are heard back in Washington.”

Producers were allowed to share comments, ask questions about the current system, and learn about the process that must be followed to make any changes to the system.

The purpose of the FMMO is to ensure that U.S. processors and consumers have access to a sufficient supply of milk and dairy products at all times, explained Erin Taylor, USDA-AMS's acting director, dairy program order formulation and enforcement. The program establishes monthly, market-based minimum prices paid to farmers. And the USDA-AMS also provides certificates so that dairy products can be exported.

The FMMO does not regulate producers or guarantee a market for milk, regulate from whom a handler may buy milk, set wholesale, retail milk, or maximum prices to producers, or restrict production, said Taylor, who emphasized that any changes must be industry driven.

The USDA-AMS is evaluating a request for a hearing to consider the implementation of MCP for Federal Milk Marketing Order 5 (Appalachian) and FMMO 7 (Southeast). The proposed change, submitted by 14 dairy cooperatives and several dairy trade associations, would implement MCP in those regions, paying producers for milk based on components in milk (protein, butterfat, and other non-fat solids), along with a somatic cell count adjustment, rather than the current skim/butterfat system that the regions currently use.

USDA-AMS received two additional proposals by the June 1 deadline for industry comments. The first, submitted by The Kroger Company, expressed support for the implementation of MCP for the Appalachian and Southeast FMMOs. The second, submitted by the Tennessee Dairy Producers Association, opposes the change.

The USDA-AMS Action Plan on the proposed amendments includes a “possible hearing date” of July 30, 2018. Should USDA decide to proceed, a Notice of Hearing detailing the date, time, and location of the hearing and the proposals under consideration would be published in the Federal Register.

Coale encouraged farmers to contact USDA-AMS with any questions that they might have.

“We are here to make sure you have information and the best education materials we can provide so you can understand how you play into the overall system for the dairy sector,” she said. “It all begins with the dairy farmer. Without you all, there wouldn’t be a milk supply. There wouldn’t be anything for the consumer to drink. I can assure you that those of us who are working with the federal order program recognize that and appreciate all the hard work you do.”

The phone number for Coale’s office is 202-720-4392. The USDA-AMS website also has more in-depth information at https://www.ams.usda.gov.

 
 
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