Md. dairy farmers say livelihoods in jeopardy

January 27, 2000|By ANDREW SCHOTZ

Maryland dairy farmers say falling milk prices, caused in part by a glut in the market, and the inability to join a multistate commerce pact pose a potentially serious threat to their future.

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In Washington County, the number of dairy farms has dropped from 200 five years ago to around 160, according to Don Schwartz, a Maryland Cooperative Extension agent in the county.

Other farmers can't predict how long they will last.

David Herbst, a second-generation dairy farmer who runs Misty Meadow Farms in Ringgold, said it hurt his business when the basic price for 100 pounds of milk - about 11.6 gallons - as set by a federal formula, dipped from more than $16 to under $10 in just a few months.

"That's down to the cost of production," he said.

Herbst, 46, who is farming about 400 acres and has about 130 dairy cows, said he knows of two Washington County dairy farms near him that are about to fold.


"They just decided they're not going to fight it anymore," he said.

The Maryland General Assembly voted in 1998 to join the Northeast Interstate Dairy Compact, which is made up of six New England states.

The compact, authorized by Congress, establishes a minimum price - higher than the federal minimum - that dairy processors must pay farmers. The price factors in the costs associated with producing and selling fluid milk, as opposed to milk byproducts such as cheese.

The compact was formed in 1996. Six states were included at the start - Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. Six others - including Maryland and Pennsylvania - were given the right to join later, as long as they bordered a member state and if Congress approved their entry.

Maryland, Pennsylvania and other states have tried to join but have been unable to overcome successful lobbying of Congress to limit the compact's size.

West Virginia is among 14 states trying to form a Southern Dairy Compact.

The distress of dairy farmers in the East is compounded by low prices for milk as production in the nation has outpaced consumption, said Philip Wagner, an agent with the Pennsylvania Cooperative Extension Service in Franklin County.

In Washington County, Schwartz said the cost of producing 100 pounds of milk is just over $14, including equipment and overhead expenses. With the federally established floor price falling below $10, "someone is starting to lose real serious money," he said.

Meanwhile, Schwartz said large Midwestern farms have the advantage of cheaper labor, feed, water and supply costs, so they can produce milk at $8 per hundredweight and turn a profit.

West Virginia's dairy farmers "are in exactly the same boat" as Maryland's, said Steve Miller, executive director of eastern operations for the West Virginia Department of Agriculture.

The number of dairy farms in West Virginia has dropped from 460 to about 200 in 10 years, Miller said.

In Pennsylvania, there are about 475 dairy farms in Franklin County, down from more than 500 five years ago, Wagner said. However, there are about 45,000 cows, more than there were 10 years ago.

The Pennsylvania Milk Marketing Board sets milk prices by region, of which there are six, according to its director of consumer affairs, Tracey Jackson.

In Region Four, which includes Franklin County, the January minimum price is $15 per 100 pounds for all fluid milk produced, processed and sold in the state, said Jackson. That is lower than the $16.94 minimum for Northeast Interstate Dairy Compact states, she said.

The Region Four price will dip to $13.53 in February, Jackson said.

The Pennsylvania fluid milk price is based on the federal price plus a travel differential for each region, depending on how far milk will be shipped for sale.

The minimum price includes a statewide "over-order" premium based on farmers' production costs. The milk board must hold a hearing to change the premium. This month, the premium rose from 50 cents to $1.20, Jackson said.

Ronald Hissong, a Franklin County dairy farmer with 225 cows on 700 acres, said the established minimum prices aren't saving his business. Hissong said "it doesn't seem fair" that a gallon of milk sells for $2.51 in the store, but he gets just $1.09. A half-and-half split is more reasonable, he said.

Schwartz said Maryland's dairy farmers just want to compete on equal footing.

"Farmers don't want subsidies," Schwartz said. "Give us an opportunity to get a good price for the product."

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