STATE APPROVES TEMPORARY INCREASE FOR STRUGGLING DAIRY FARMERS

Adjustment to Minimum Price of Milk for January through March

SACRAMENTO, December 16, 2009 — California’s struggling dairy farmers will receive a temporary adjustment in the minimum price of milk, the Department of Food and Agriculture announced today.

The decision comes after testimony from dairy farmers at a hearing in Sacramento on November 9 to consider numerous proposals to adjust minimum milk price levels. CDFA is increasing the minimum prices of all milk usage by varying amounts for a temporary three-month basis from January through March 2010.

The adjustment includes three cents per gallon on fluid milk products. The temporary adjustments on other dairy product classifications will cost less than one cent per container in production costs but are unlikely to have an effect on consumers at the retail level.

California dairy farmers are in the midst of a financial crisis brought about by recession in the global economy and a sizeable reduction in consumption of milk and dairy products.  In 2009 the prices that dairy farmers receive plummeted, dropping by over half the level they were in 2008. Dairy feed costs have kept milk production costs at levels that greatly exceeded farm milk prices. As a consequence, California dairy farmers lost an estimated $1.4 billion dollars in the first nine months of 2009.

More importantly, California’s annual milk production in 2009 suddenly reversed its 30-year trend and is running almost four percent lower than the total for 2008.  Additionally, a growing number of California dairy farmers exited the industry in the latter part of 2008 and into 2009.  For the first time in decades, the state’s milk production will be less than the total needs of its processing plants.

While the temporary price adjustment is not designed to recover the financial losses that California dairy farmers incurred over the past twelve months, it is designed to help dairy farmers sustain their operations as milk prices begin to return to near profitability.  Farm prices for fluid milk began to adjust in September after national milk supplies declined. The temporary adjustments end on March 31.

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The California Department of Food and Agriculture protects and promotes California’s agriculture.