Dairy Farmers of America Inc., the co-op that also delivers milk to market for nonmembers through subsidiary Dairy Marketing Services, last month backed off its request to use a federal law provision granting flexibility to sell milk for a lower price, and also pay less to farmers who produce it.
Although the co-op rescinded its request five days later citing lack of industry support, one dairy activist says nothing’s stopping the co-op from depooling at any time.
The provision would allow the co-op to do two things:
■Depool farmers, essentially stripping them of their power to receive a single price for milk.
■Sell the milk outside the designated market area, which could also drop the price farmers received.
In a Feb. 12 request letter, DFA Vice President of Fluid Marketing and Economic Analysis Elvin Hollon reiterated that milk supply, especially from the northeast marketing region, continues to outpace demand, which makes it difficult to sell.
Free from pool restrictions, the marketing service could potentially preserve relationships between buyers and farmers, he said. Depooling would allow buyers to pay market value for the milk instead of a higher pool price.
Use of the provision would have lasted from April 1 to Sept. 30 and applied only to the government’s market region that includes the region from Virginia to Vermont.
In a letter to the U.S. Department of Agriculture’s market administrator dated Feb. 17, Dairy Farmers of America withdrew its request citing “lack of support from segments of the industry.”
Hollon stood behind the spirit of the co-op’s request and said, without flexibility found in depooling, the market conditions could become “even more disorderly.”
Progressive Agriculture Organization, or Pro-Ag, a dairy farmers’ advocacy group based in Meshoppen, had asked that instead Dairy Marketing Services would be allowed to make the same marketing deductions from milk checks as the co-op. The independent farmers wouldn’t pay co-op dues, which is one incentive for remaining independent.
The department later threw out Pro-Ag’s request the same day the co-op withdrew its request.
“If our resolution had been authorized, they would have gotten the same price that their co-op members would,” said Progressive Agriculture Organization’s manager, Arden Tewksbury.
He added that nothing’s stopping the co-op from simply depooling members under a different provision.
Pennsylvania has more than 6,500 dairy farms, according to the Center for Dairy Excellence, the second most dairy farms in the nation. Most of them are small.
Many farmers forsake independence for some market stability found in co-ops.
That’s what Brian Smith, a first-generation Damascus Twp., Wayne County, dairy farmer did years ago when his six children were growing up and he was paying off his farm.
“The economics on every individual farm are so different,” said Smith, who is also a Wayne County commissioner and has a school bus business.
“A lot of those farms who wanted to remain independent were debt-free, generational farms that had been in the family for years,” he said.
While it appears the co-op wants to get out of pooling milk, Tewksbury accused them of putting pressure on independent farmers to join.
“It’s double-talk,” he said. “(They say) ‘if you don’t come with us, there’s no market for your milk. But if you come with us, we can market your milk.’”
Source: CitizenVoice
Link: http://citizensvoice.com/news/independent-milk-farmers-face-depooling-fight-1.2163275