Hutchinson Supporting Dairy Farm Legislation

U.S. Rep. Asa Hutchinson (R-Ark.) and Gov. Mike Huckabee are among those who believe an interstate dairy compact would benefit Arkansas’ $91.4 million dairy industry.

Hutchinson and Congressman Bob Etheridge (D-N.C.) participated July 13 in a national rally to support dairy compact legislation. They joined U.S. Senators Jim Jeffords (R-Vt.) and Patrick Leahy (D-Vt.) in April to introduce the “Dairy Consumers and Producers Protection Act” in the U.S. House of Representatives and Senate.

Included in that bill is the proposed ratification of the Southern Dairy Compact, which would link 12 states from Virginia through Arkansas to Kansas. Dairy compacts, formal agreements between three or more states that are enacted through federal and state legislation, establish pricing mechanisms for fluid milk sales in the region.

A 1997 federal study of the Northeast Dairy Compact showed retail milk prices in New England averaged 5 cents per gallon less than the rest of the nation, and dairy producers increased their income from milk sales by 6 percent.

Randy Spears of Farmington, whose Spears Dairy is the largest dairy operation in Washington County, says he believes Hutchinson and Etheridge are on the right track. He says ratification of the southern compact would protect local dairymen from wide fluctuations in milk prices.

“We really need something like that,” says Spears, who is chairman of the Dairy Farmers of America’s Young Cooperators Program for the Southeast Region of the U.S.

“Our price has jumped from around 11 cents per pound, to 17 cents and then back down again. The problem is our fixed costs are steady. When the milk prices drop for dairy farmers, the way we think is, ‘Well, ‘If I can get another 10 cows I could keep the same cash flow.’ That mentality is how we end up with surpluses when the price comes back up.”

Spears has 350 milking cows and 600 heifers on a 1,000-acre operation. Spears Dairy, utilizing a double-10 parallel Westfailia computerized milk metering system, produces 22,400 pounds, or 2,604.7 gallons of milk per day.

Steve Davis with DFA in Springfield, Mo., says the average raw milk price currently is $13.13 per hundred weight. But Bob Gray, executive director of the States Ratification Committee lobbying organization, says that price was as low as $6 per hundred weight earlier this spring because of various factors including droughts and El Nino.

And despite the fact farmers saw a hefty drop in raw milk prices, the consumer got only a 12-cent to 14-cent reduction per gallon. The middle money goes to distributors, retailers and processors, who are able to purchase raw milk at federally mandated prices.

Wide price fluctuations in recent years have driven many dairymen out of business. The problem is maintaining multimillion dollar operations without a consistent level of gross income.

Arkansas has seen a 43 percent reduction in dairy farms over the last 10 years, and more than 20,000 total dairy farms across the South have ceased to operate, according to studies by the Arkansas Livestock and Poultry Commission.

The high cost of hauling milk from distant dairies is passed on to consumers. Hutchinson and his colleagues hope their legislation will lend more stability to dairymen across the South, and therefore keep the industry viable.

According to the USDA’s 1997 Census of Agriculture for Arkansas, the state has about 55,000 dairy cows with an estimated 5,100 in Benton County and 5,200 in Washington County. Northwest Arkansas on the whole, including Madison and Boone counties, has 36 percent of all the dairy cows in the state.

About 78 percent of the milk produced on Arkansas’ 506 commercial dairy farms was used for fluid dairy products in 1998.