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| GLEANINGS
Just who got milked?
National Farmers Union President Dave
Frederickson lays out the gross inequities in the current
dairy market that are milking farmers and consumers while
processors and supermarket chains are getting fat on dairy
profits.
By Dave Frederickson |
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On
the raw edge
of dairy disaster
For a more intimate perspective on what’s
happening to dairy farmers in this country, check
out Brenda Cochran's column, Dispatches from Dairyland,
in which she shares her thoughts, observations
and stories gleaned from listening to dairy farmers
who call her hotline. Click
here for Brenda's latest column
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Consumers are paying more for dairy products and dairy farmers’
net income is down 50 percent, yet certain dairy processors
are earning record profits. This would lead one to wonder, "Just
who is getting milked?"
Dean Foods, the largest fluid milk processor in the country,
recently announced record earnings for 2002. The processor attributed
the increased earnings to reduced raw milk costs, the synergy
of mergers, and the success of its specialty lines.
Meanwhile, at least two ice cream makers are admittedly skimping
on the amount of ice cream in a half-gallon container and scooping
up profits from the sales of new 1.75-quart containers, for
which they are charging the same price as the conventional two-quart
containers. Processors and retailers cite rising ingredient
costs for their actions. The opposite is true.
The costs for butterfat and nonfat solids, the main dairy ingredients
in ice cream, have dropped by one-third since January 2002.
Prices paid to farmers for their milk have dropped more than
50 cents a gallon in some parts of the country since that time.
Nationally, U.S. dairy farmers will receive $4 billion less
in milk receipts this year than last.
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"The lack of
market competition that exists in the dairy industry allows
the few largest companies to dominate the market not
through efficiency, but through monopoly." |
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At the same time, the administration is proposing additional
changes in dairy programs that would cost dairy farmers as much
as $1 billion in lost income. Additionally, the United States
is seeking to open borders even further to cheap dairy substitutes
from Australia and New Zealand, further flooding the U.S. market.
Consequently, dairy farmers are receiving the lowest prices
for their products since 1979 and are continuing to go out of
business at a record pace. Unfortunately, economic projections
predict that dairy prices paid to farmers have little, if any,
chance of recovery in the coming months.
Manufacturers, on the other hand, are paying only 50 cents for
the dairy ingredients used in a one-half gallon of ice cream.
The retail price of that same ice cream is around $5. And, milk
prices paid by consumers have held steady or increased. Recent
surveys have shown that certain dairy processors and supermarket
chains may be earning more than $1 a gallon in profits.
Dairy farmers are not against processors and retailers having
a successful year. However, a competitive market situation would
reward dairy producers and consumers as well.
America’s dairy farmers and consumers currently appear
not to be gaining any visible benefit in the market place. The
lack of market competition that exists in the dairy industry
allows the few largest companies to dominate the market not
through efficiency, but through monopoly. A competitive market
would benefit both consumers and dairy producers.
National Farmers Union is urging Congress to hold hearings to
determine whether lack of market competition within the dairy
industry is resulting in price gouging that is harming both
consumers and producers. In years past, consumers benefited
when cereal manufacturers responded to congressional questions
by announcing they would lower cereal prices.
Similar action is now needed in the dairy industry to stop the
unjust milking of American consumers and those who produce their
food.
National Farmers Union represents nearly 300,000 farming
families nationwide through legislative representation, educational
opportunities and support for farmer-owned cooperatives. You
can contact the NFU at (202) 314-3104 or nfudclj@sso.org. |
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