Where the manure don't stink

Too big to fail -- lenders to the CA dairy industry
 
If Washington had had any real concern for the dairy industry, in California or anywhere in the US, it would have dealt with the artificially low milk prices that have plunged the entire national dairy deal into unprecedented debt.
 
Perhaps, Western United Dairymens's Mike Marsh (WUD is a California dairy lobbying group) was correct that the USDA should have started buying the overstocks of bulk cheese months ago. The crisis, in the wake of the huge ethanol speculations of 2008 that pushed up feed prices, was known, seen, acknowledged. There was no mystery about what was happening and there were remedies -- in pricing and in badly needed programs like simply supplying food banks with commodity cheese, as Marsh suggested.
 
But, instead, the situation was allowed to simmer, the Washington opinion was "over-production" was causing the problem when, in fact, as almost always in agricultural commodities, the problem is distribution, as in providing food to hungry Americans for whom, if they live in places like Merced and Tulare counties in California -- the two largest dairy counties in the nation -- the economy sure looks more like depression than recession. The foreclosure rate in Merced increased to nearly 20 percent last month and is showing no signs of abating. Tulare County's August unemployment rate was 15.2 percent. Merced's was 16.7 percent. And that's "official."
 
In the simmering summer as debt was allowed to pile up in an industry whose prices are set by government to the point that hundreds of thousands of cows were "bought back" and slaughtered and smaller dairies went out of production and often into bankruptcy, government did nothing effective. If the "family dairy" corporation had not in recent years received the large capital infusion from a sale of Southern California real estate that provided a capital cushion sufficient for its new mega-dairy in Northern California to survive the 2009 prices, that dairy's chances of survival were smaller, regardless of the size of its herd.
The $350 million the Senate Boxer-Feinstein and House Costa-Cardoza political teams are demanding will go to banks. The reason for the rigged milk prices on the Chicago Mercantile Exchange, the "basis" for both federal and California milk prices, is the debt load incurred in the mergers and acquisitions that created the monopoly of Dairy Farmers of America and Dean Foods at the top of the dairy processor/distributor pyramid, coupled with its power to manipulate the CME dairy commodity prices in dual roles as sellers and buyers.
 
As the over-production propaganda and bank bailouts continue, August imports for milk protein concentrate soared. MPCs are not defined in the US as milk products, are not GRAS (Generally Recognized as Safe) milk products, are imported from countries like Belarus, Ukraine and the Peoples Republic of China (where dairies are not inspected by the USDA), and are used as cheap additives to cheese and other dairy products here. The "legal" basis for their importation comes from the World Trade Organization, not from any US agency concerned with food safety.
 
This is nothing but another public gift to banks. If dairy cost/price ratios continue along the same dismal path to keep profits high for Dean Foods/DFA investors, all it will really achieve is to allow mega-dairies to pay down enough debt to borrow more to buy smaller dairies to produce more milk at a loss until the banks again go to Congress for more taxpayer funds to get bailed out again so that even fewer, larger mega-dairies can again restore their credit and buy more cows, until the next time.
 
It is an absurd system, one of many now dysfunctioning along in the nation. Social status in the agrarian sector of the San Joaquin Valley is based on a size of one's debt. Our fine "family" dairies mortgage cows but their manure don't stink.

10-10-09
Merced Sun-Star
Boxer, other lawmakers push federal government for $350 million to help California dairies... CAROL REITER
http://www.mercedsunstar.com/167/story/1105910.html
Sen. Barbara Boxer, D-Calif., put her foot down and wouldn't budge.
That's the opinion of dairy experts who say Boxer, along with Sen. Dianne Feinstein, D-Calif., Rep. Dennis Cardoza, D-Merced, and Rep. Jim Costa, D-Fresno, went to bat for California dairy farmers to make sure they got their fair share of government monies to help struggling dairies.
"Any form of help is a blessing," said Kevin Abernathy, chief executive officer of California Dairy Campaign, a nonprofit dairy association based in Turlock.
Abernathy said he personally knows dairy farmers in the San Joaquin Valley who are losing more than $200,000 a month, and families who had no debt at all a year ago who are now mired in loans.
And that doesn't count the dozens of dairy farmers in the state who have lost their dairies and sadly watched their cows go for slaughter.
The money, $350 million, will come from the U.S. Department of Agriculture to help dairy farmers, who were hit with high feed prices, low milk prices, and the overall economic downspin.
Boxer said when the money was first up for grabs, California dairies, because they are bigger and more productive than most Midwest or Northeast dairies, were going to be pushed out of the money.
"I just wanted to make sure these funds would go to help struggling dairymen in California," Boxer said.
And they will.
Boxer said California dairies may be bigger, but they are almost always family farms. "Everything in California is bigger," she said. "We are not Vermont."
Abernathy agreed that almost all the dairy farmers he knows are family farms. "One dairy has three generations, and had four before Grandpa got killed in a car accident," he said.
Those family dairy farms in California produce about 20 percent of the milk in the United States, Abernathy said. The money from the government will definitely help, but he said dairymen will have to do something to help themselves also.
"We can't keep having this boom and bust cycle," he said.
Michael Marsh, chief executive officer of Western United Dairymen in Modesto, said he believes Boxer and the other politicians went out on a limb to keep California dairymen in the running for federal funds.
"The biggest thing would have been if we could have used all the money to purchase stored cheese and given it away to struggling food banks," Marsh said. "But this is almost as good."
The price of milk has been kept down to producers because of more than 100 million pounds of cheese above normal amounts held in storage by the government. Marsh said everyone would have won if the USDA had used the money to buy that cheese and given it to the needy.
"It would have stopped the artificially low prices for milk," he said.
Boxer said she also wanted to make sure that the money from the government would go to dairy farmers as soon as possible, and that looks like it will happen.
"This money should be out in the next couple of weeks," Marsh said. There are 67,000 dairies in the United States, he said, and the money will be used to buy $60 million worth of the stored cheese, and the rest will go directly to dairymen.
"This has been outstanding," Marsh said. "It should really help."
Abernathy said he's hearing that 2010 should be a better year for dairymen, and he hopes that's true.
"I don't want to see anyone else lose their farms," Abernathy said.
Reporter Carol Reiter can be reached at (209) 385-2486 or creiter@mercedsun-star.com.