12/4/08 Dairy Industry Challenges

Dairy Industry Challeges. I'm Greg Martin with today's Line On Agriculture. Gas prices have been coming down and we are beginning to feel a bit of relief but prices at the grocery store are still hanging in there and that includes diary prices. According to Chris Galen of the Dairy Farmers of America, dairy farmers are in a bit of a catch 22. GALEN: The good news is that input costs are coming down Greg, whether its energy prices or feed; the bad news is that if you are a dairy farmer your milk price is headed down too. That's one of the reasons why our Cooperatives Working Together program is now in the middle of our sixth herd retirement including the second time this year because we think now is the time to take some additional cows out of the herd and hopefully that will arrest the decline in milk prices and try to give us a little more positive momentum going into 2009. The implementation of the 2008 Farm Bill is also frustrating the dairy industry. GALEN: The USDA has yet to implement one of the things we fought the most for and that is getting the Dairy Checkoff, the promotion assessment to apply to imports. That is something we tried to do in the last farm bill, it was in this farm bill. They don't have the formal rules and regulations out yet so we are monitoring that very closely. But Galen says they are excited about other parts of the bill. GALEN: They've improved the dairy price support program. Producer really won't notice much of a change in that although there has been product moving to the price support program this fall, skim milk powder or non-fat dry milk as been sold to the price support so it's important that we have that still and then the milk income loss contract program was actually expanded. It applies to a larger volume of milk. There is now this feed cost adjustor so that the target price will change when input costs rise as they did earlier this year. China recently was beset with melamine tainted milk issues and Galen says that is just not possible here. GALEN: One of the first things we did as an industry association at National Milk was we said, the melamine scandal, could it happen in the U.S. and actually the answer is no. And we listed why and it's both regulations, it's the inspections on the farm; it's what happens to that milk when it's processed into cheese at the plant level. And really the issue is that in China this abuse was rampant the farmers were buying this phony protein powder, which is really melamine, feeding it to cows for years because it was a way for them to water down the milk, have a higher milk volume and still get paid for the same protein content and everyone turned a blind eye. That's today's Line On Agriculture. I'm Greg Martin on the Northwest Ag Information Network.