Clock ticking on dairy industry
Oct 20, 2009 10:49 AM, By Aaron Kiess, Executive Director, CAFA
Two “drive-by” evaluations of California’s agricultural crunch were a reminder that President Ronald Regan was right on when he joked: “I’m from the federal government and I’m here to help you.” In late August, Secretary of Agriculture Tom Vilsack was in California to help the dairy industry, and Sen. Dianne Feinstein made an appearance to help find solutions to water shortages in the San Joaquin Valley.
Before Vilsack arrived we received a letter from a dairyman member asking for support in helping stabilize milk prices. The letter also mentioned a meeting in Modesto where Vilsack was slated to make a stop during a rural tour. Whenever a sector of the ag industry is in trouble other commodity groups should help as much as possible and expect the same in return if needed.
In the case of the dairy industry, the forage industry obviously has a reason for seeing its No. 1 customer rebound. In CAFA’s September newsletter, hay market analyst Seth Hoyt summed it up this way: “While alfalfa hay prices will improve in the months ahead, the slow recovery in milk prices will also slow the recovery in hay prices.”
Hoyt, who produces a hay market newsletter (www.thehoytreport.com), noted that earlier in the year some dairy analysts predicted $15 cwt milk prices by September. But he added, “The overbase milk price in California is estimated at $10.50 cwt in August and around $10.85 in September. The August price is set and it would take some positive developments to move the September price higher.”
Only time will tell what kind of relief is on the horizon for the dairy industry, but one comment Vilsack made caught our attention. In a conversation about the USDA purchasing cheese, the secretary was quoted as saying that funds for making a large purchase would not be available until Oct. 1, the beginning of the next fiscal year. He went on to explain that the USDA had spent more than $1 billion from the surplus account and most of the money had been spent. Evidently, clunkers and all the pork projects in the stimulus bill take precedent over food.
Sen. Feinstein’s appearance in California with other government officials also had the feeling of promises that won’t come to fruition until there’s an even bigger water crisis. Vilsack, House Majority Leader Steny Hoyer and others got a good look at what the Endangered Species Act has done to the West Side. At a meeting in Coaligna, Feinstein expressed her concerns about reduced production and the need to import food. No water! What does the senator expect?
The solution Feinstein dialed up was to have the Department of the Interior appoint a panel of scientists within 30 days who would examine factors that have created a man-made drought. If the 30-day timeline isn’t met, the senator would tap the National Academy of Sciences. The latter is a better solution given the stance the Department of the Interior has taken. But, regardless of who is appointed, how much more time will it take? The clock is ticking and there’s no urgency to apply common sense.
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