Dairy farmers across the country are trying to figure out what the new farm bill means for them. The bill was signed by President Bush this month. While many Minnesota farmers agree with the president when he says the bill isn't perfect, some say it's a step in the right direction.
The new farm policy moves the focus of the nation's dairy industry from Eau Claire, Wis., to Boston. Under the old system, Eau Claire was seen as the center of dairy country. The federal government paid dairy subsidies based on how far a producer lived from the western Wisconsin city. The greater the distance, the more a producer was paid.
Now subsidies are linked to a base price for milk in Boston. If it drops below $16.94 per 100 lbs. of milk to the dairy farmer, then the rest of the country's dairy farmers will get ripple payments from the government.
It's too soon to tell whether the Boston price will be beneficial to Midwest dairy producers. But many Midwest farmers say a new price standard was long overdue.
"The whole system needs to be overhauled, and this is probably a step in the right direction," says Andy Kronebush, who milks about 60 cows on a farm just south of Winona. "We need supply management so we don't need any government program at all - farmers get paid what they deserve, and the cost of production is beneficial to taxpayers and farmers."
Kronebush says he makes a comfortable living. But he wouldn't if the government didn't offer subsidies or deficiency payments. He says as long as the U.S. continues to import dairy products, farmers will need government assistance.
"When I started milking on my own in 1983, my first milk check was $14.44 (per hundredweight). Today the base price was $11.55, so we've gone backwards," says Kronebush. "There aren't a lot of other industries that are still working with '83 prices, which is why the government is stepping in."
Kronebush says he's not sure where all the money goes.
"Yesterday we went shopping. Chocolate milk was $4.93 a gallon. I get $1 out of the same gallon," he says.
Kronebush and others hope the new price standard will help unify the dairy industry. But some dairy producers oppose the new approach.
Carl Hanson milks 40 cows in northern Minnesota. He says the new policy is no more than a short-term solution.
"It's supposed to be a market-driven economy, and they basically got us on the welfare system," says Hanson. "When you have to rely on market loss as a mandatory part of your income, and that comes from the USDA, that's welfare. The only one who benefits is Kraft."
Hanson worries about the future of milk producers. He says it doesn't matter whether they're a small or large operation. Everyone's at risk.
Bill Rowekamp has a 230-cow dairy operation near Lewiston. He says many dairy farmers who are critical of the new bill need to accept change and find new ways to be profitable.
"What other business do you know that's still around that hasn't had to change? What gives us the right to think that just because we're dairy farmers we don't have to change?" he asks.
Rowekamp says he wants to stop the shrinkage of the dairy industry in Minnesota. Twenty years ago Minnesota had more than 800,000 head of milk cows. Now that's down to about 500,000. Rowekamp says the new farm bill helps the small to medium-sized dairy operation the most - that means the majority of Minnesota's farmers.
"In the state of Minnesota, it's going to bring in a tremendous amount of money into the economy. The larger dairyman - the cap is 2.4 million pounds (of milk production) - there's a lot of producers that won't qualify for that. In my situation here, that takes care of a little over one-third of my production," says Rowekamp.
It will take a few months before the new farm policy actually takes effect. In the meantime, many farmers wonder about the bill's long-term impact. It could increase milk production nationwide, which would lower milk prices.More Information