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Farmers fear another drop in milk prices

June 03, 1997

By GUY FLETCHER

Staff Writer

BOONSBORO - Craig Leggett has been working on a dairy farm since he was 12 years old.

His father was a farmer and Leggett, who is now 40, tends a herd of more than 80 cows, milking them every 10 hours. Maybe there will be something for his three sons if they decide to become farmers, he said.

But lately Leggett has begun to wonder. Since last fall, he and other area dairy farmers have seen their milk prices drop. Now they are concerned that milk prices are going to take another drop - one that could be a fatal blow to many, he said.

"I don't know when there's been any worse time in my or my dad's life," he said.

A variety of market forces, including the influence of excess cheese production in the Midwest, has been the driving force behind the milk price decrease, said John Wysong, professor of agricultural economics at the University of Maryland College Park.

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Wysong said farmers in the state are getting about $13 for 100 pounds of raw milk - the equivalent of 11.6 gallons - down from the approximately $16 they were earning last November. That is about equal to what they were making 15 years ago, he said.

"It's pretty hard to make it at that (price)," Wysong said.

Boonsboro dairy farmer Jere DeBaugh said the economics of running a farm are pretty simple: A farmer pays his bills and whatever is left over is his income.

"But the price (of milk) is now at the point where you are at a break-even or below break-even cost," DeBaugh said.

Leggett, who warned it could get worse, is bracing for another 75-cent decrease in price. How much further would prices have to drop before he is operating at a loss? "We're there," he said.

He said times are so tough he can't afford to hire any help on his farm or purchase life insurance for his family. When he adds up all the hours he puts into the farm, he figures he's making less than minimum wage.

"I'm not here to tell a crybaby story," Leggett said. "I would like nothing more than to say things are OK. But they are not."

In the Tri-State area, the three biggest dairy counties - Washington, Frederick and Franklin (Pa.) - combined to produce nearly 1.2 billion gallons of milk in 1996, according to federal statistics.

Philip Wagner, Franklin County dairy extension agent, said dairy is a $100 million-plus annual industry that accounts for about two-thirds of the county's overall agricultural business.

"It's very significant," he said.

Wagner said because farmers in Pennsylvania are part of the same federal region that regulates rates on the farm level, they also are seeing lower milk prices.

But Wysong said Maryland farmers are at a particular disadvantage because in Pennsylvania minimum wholesale and retail prices are set by a state milk commission. With prices protected in their home state, Pennsylvania processors can afford to dump their excess supply in Maryland at discount prices, he said.

"It's like having a basketball game and you have to tie one hand behind your back and I get to shoot with both hands," said Wysong, who supported legislation this year in the Maryland General Assembly to set minimum milk prices in the state.

Supporters of the bill said it would bolster an ailing $1 billion industry that has lost 40 percent of its farms in the state since 1988.

But opponents, who included some grocery store chains in the state, were able to kill the legislation by convincing lawmakers that the bill would only increase retail prices and not benefit farmers.

Nonetheless, one of the bill's sponsors, Del. J. Anita Stup, R-Frederick/Washington, said she would be willing to try again to get the legislation passed during next year's legislative session.

The alternative is disaster, she said.

"We're going to have farmers going out of business here in Western Maryland. The farmers cannot make it," Stup said.

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