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April 29, 2002

Farm Bill Provides Safety Net For Farmers

Agri-Mark dairy farmers support this legislation

Methuen, Mass. -- Agri-Mark, the region's largest dairy farmer cooperative, says it supports the Farm Bill just approved by the joint Senate and House Conference Committee as it contains a crucial farm price safety net program geared toward assisting family farms throughout the region and the nation. Agri-Mark markets milk for 1,400 dairy farm families in all six New England states and New York, and is very active on legislative issues that affect farm income. When farm prices collapse, dairy farms will receive a monthly payment. For an average-sized dairy farmer milking about 80 cows, this could amount to more than $10,000 per year. If market prices remain at depressed levels, the amount could be even greater (see attached table). According to Agri-Mark economist and Senior Vice President Robert D. Wellington, "There is limit of 2.4 million pounds per farmer which is the equivalent of a farmer milking about 130 cows on a national average basis. Larger farms which support several farm families, such as parents with adult children or siblings working together, may qualify for a higher production payment limit." Wellington says that dairy farmers have seen their milk price swing dramatically in recent years, but the majority of time the price they receive has been below their costs of production. Unlike some other types of agriculture, dairy farmers can not switch to producing a different food commodity when milk prices are low. In fact, low farm milk prices most directly affect money available for family farm living income, because cows eat the same amount of food and require the same level of care regardless of whether the price is high or low. The payment level to dairy farmers will fluctuate according to market prices in the same way the Northeast Dairy Compact worked for several years in the New England market. When market prices rise, government payments will fall and even disappear. However when those prices collapse, as they did last fall, the safety net prices will trigger in. Agri-Mark Chairman and dairy farmer Carl Peterson of Delanson, N.Y., says "This is a much needed program for dairy farmers, and we are pleased that it resembles the Dairy Compact safety net program in many ways. Dairy farmers would prefer that this money come from the marketplace as it did under the Compact, instead of from government dollars, but concentration in the processing industry and the current political situation does not make that possible. This program is the next best thing and is cer - tainly needed by farmers. Farmers appreciate all the work that Vermont Senator Leahy and others in Washington have done on this important bill." According to Wellington, farm milk prices collapsed last fall and currently are almost 20% below the average price farmers received in 2001. Consumers and the general public are usually unaware of dramatic declines in milk prices to farmers because retail prices rarely fall similar amounts. For example, this past December the USDA minimum price that processors pay farmers for fresh drinking milk fell $.33 per gallon, yet few, if any consumers saw their milk price fall accordingly. All farmers, and particularly small to moderate size family farms, need a safety net when their price collapses. The following table was calculated by Wellington using USDA farm and price data. It shows the economic impact for several states in the Northeast.

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