Milk Price Plan Parts Farmers, Processors

Dairy farmers and processors are at odds over a proposal to set a minimum price for milk that could increase the cost of a gallon by 10 cents but which might save many farmers from insolvency.

The Agriculture Department begins hearings Tuesday on a petition filed by Dairy Farmers of America to set the floor price at $13.50 per hundred pounds of milk sold for drinking and for such products as ice cream and yogurt.

The Springfield, Mo.-based Dairy Farmers cooperative, which represents about 22,000 producers nationwide, says the floor price is crucial to slow a trend that has seen more than 32,000 farmers quit the dairy business since 1992.

“The bottom line is, the price isn’t high enough compared to the escalating costs of production,” said John Wilson, the co-op’s vice president for fluid milk. “Farmers are getting more production per cow, but not enough to keep up with costs.”

The current, market-driven basic milk price paid to farmers is about $13.25 per hundred pounds, but it has fluctuated widely over the past few years and was as low as $10.70 earlier this year.

But a coalition led by the International Dairy Foods Association, the Grocery Manufacturers of America and the Food Marketing Institute is gearing up a lobbying campaign to defeat the floor price proposal.

Those groups contend the $13.50 price would be far higher than any government milk support since the 1980s and would boost the price of a gallon of milk by about 10 cents.