Dairy industry sounds alarm: Government cuts could lead to higher prices

2013-03-26T00:00:00Z 2013-03-26T06:12:10Z Dairy industry sounds alarm: Government cuts could lead to higher pricesBy MIKE TIGHE | mtighe@lacrossetribune.com La Crosse Tribune

The dairy industry could suffer devastating effects and consumers could wind up paying more for milk after sequestration cuts led to the elimination of a key federal monthly milk production report used to set dairy prices.

Or, according to some dairy experts, nothing significant could change.

Dairy farmers use the U.S. Department of Agriculture reports to determine production, and milk processors and brokers use the information to judge and set the market. The reports were cut as part of federal sequestration measures.

“Not having the reports can have significant impacts because there is no way of knowing what the supply will be,” said Greg Bussler, a Wisconsin statistician for the USDA’s National Agricultural Statistics Service.

Eliminating the reports leaves farmers and processors “operating in the dark,” Bussler said.

Consumers ultimately could pay more as processors try to ensure profit in an information vacuum, he said.

Florida-based dairy analyst Jerry Dryer voiced alarm, saying, “It’s a huge, huge business, and (the federal government) is screwing with it in a big way. It’s a real mess. I can’t emphasize that enough.”

But Darin Von Ruden, a Westby organic dairy farmer who is president of the Wisconsin Farmers Union, isn’t so worried.

“We’ve counted on the federal government for the reports,” he said, “but with computers and technology we have now, we should be able to” pull figures together.

“It will take good communication between major retailers and processors to sit down and figure out a way,” Von Ruden said.

Although consumer costs could rise at the same time producer prices fall, “only time will tell,” he said.

Mark Stephenson, director of UW-Madison’s Center for Dairy Profitability, said any price hikes probably would be small.

“In fact, it’s probably going to be hard to measure,” he said.

Federal milk marketing orders, which produce data used to set milk prices in regions across the country, can be used as a temporary source until the report is reinstated when the next fiscal year begins Oct. 1, Stephenson said.

But if the USDA decides to eliminate the report permanently, the dairy industry will need a more stable substitute, he said.

Australia deregulated its dairy industry years ago and ended all governmental support, including production reports, Stephenson said. The dairy industry there created a private program that provides the data it needs.

Officials with the National Agricultural Statistics Service said the service would support continuing the milk and other reports that have been eliminated if another entity provided the funding.

That prompted Wisconsin’s Department of Agriculture, Trade and Consumer Protection to explore the possibility of finding the money, said Jim Dick, spokesman for the state agency.

“Part of our approach is to wait and see what happens, and whether it will become permanent” or be lifted, as the threatened furlough of meat inspectors was under a bill Congress has sent to President Barack Obama, Dick said.

The potential for problems within the dairy industry grows the longer it goes without data, said Brian Gould, an agriculture and applied economics professor at the University of Wisconsin-Madison.

A long absence of milk production data could lead to fewer plant expansions and equipment purchases, Gould said.

“The further we get from the last point of information, the more uncertainty there will be,” he said. “Therefore, the (negative) impact on investments will increase."

The Wisconsin State Journal contributed to this report.

Copyright 2015 La Crosse Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(19) Comments

    Report Abuse
    LAXTEA - March 27, 2013 7:19 pm
    I don't care if they are rich or not. Stealing from others is NOT a moral way to make a living.
  2. Cassandra
    Report Abuse
    Cassandra - March 26, 2013 5:46 pm
    We can pay it in higher prices, or we can pay it in higher taxes and subsidies to the industrial dairy industry. Let the free market do it's thing. People who want dairy products will just have to cough up the dough and the rest of the people won't be forced to subsidize it.
  3. ChopChop
    Report Abuse
    ChopChop - March 26, 2013 4:57 pm
    It is time for .gov to stop providing welfare (a.k.a. "subsidies) to agribusiness, oil companies, and pharmaceutical companies.
  4. ChopChop
    Report Abuse
    ChopChop - March 26, 2013 4:56 pm
    It is time for .gov to stop providing welfare (a.k.a. "subsidies) to agribusiness, oil companies, and pharmaceutical companies.
  5. NavyVet
    Report Abuse
    NavyVet - March 26, 2013 3:45 pm
    rip pull your head out of the sand! I have friends that are farmers and let me tell you they are far from rich! You are an ungrateful American that whines about things that don't affect him
  6. nels
    Report Abuse
    nels - March 26, 2013 2:24 pm
    my closest huge dairy farmer has been in florida all winter, the farm is ran by scores of mexican workers. don't appear to be too worried
  7. feeding the hungry
    Report Abuse
    feeding the hungry - March 26, 2013 1:32 pm
    Let me guess, you all have very clean shoes and full plates. No one with experience would make these comments. Clueless!
  8. deezus
    Report Abuse
    deezus - March 26, 2013 11:07 am
    I don't, and I agree with him :)
  9. deezus
    Report Abuse
    deezus - March 26, 2013 10:57 am
    Food prices have gone way up anyway since Obama was elected.
  10. rip
    Report Abuse
    rip - March 26, 2013 9:37 am
    Dairy products should be free with all the huge tax breaks, grants, low cost loans, huge subsidies and many more financial considerations that farmers receive. All the nation is doing is redistributing money from the seniors and poor families to the already land rich farmers.
  11. FUBAR
    Report Abuse
    FUBAR - March 26, 2013 9:07 am
    Not if Dictator Bloomberg has anything to say about it.
  12. superman
    Report Abuse
    superman - March 26, 2013 9:04 am
    Watch Fox News Much...
  13. Buggs Raplin
    Report Abuse
    Buggs Raplin - March 26, 2013 7:50 am
    If milk becomes too expensive, we can always turn to soda.
  14. ohmy
    Report Abuse
    ohmy - March 26, 2013 7:27 am
    Every time someone gets something for "free"....someone else had to sacrifice to give this...stand up on your own 2 feet like everyone else has to.
  15. LAXTEA
    Report Abuse
    LAXTEA - March 26, 2013 6:40 am
    Wow, go to heck farmers! I will gladly pay the market value for products without government subsidy if we can end this crony-capitalist nightmare.
  16. Mumbles
    Report Abuse
    Mumbles - March 26, 2013 6:10 am
    Just another use of sequester by Supreme Emperor Obama to "make it hurt" till his subjects fall into line. Burn them on the production end so they get stung on the consumption end, and all will feel his wrath!
  17. lostinparadize
    Report Abuse
    lostinparadize - March 26, 2013 3:57 am
    "Could" being the key word here again. Jeez Louise, people show a little initiative will ya. Like Mr Von Ruden states, we have the capabilities to gather this info ourselves. The sky didn't fall in Aussieland and people are still buying dairy products there I believe. We can live without all this government help.
  18. Mr Bluejeans
    Report Abuse
    Mr Bluejeans - March 26, 2013 1:39 am
    Free market - with loads of government subsidies. Those rugged individualists arent so rugged anymore, and the market aint free.
  19. ahasp
    Report Abuse
    ahasp - March 26, 2013 12:29 am
    It looks like the rugged individualists may have to face the free market without the protection of the government.
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