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MILK PRICE NEWS A publication of the Minnesota Dairy Producers Board 123 1/2 E. Broadway, Little Falls, MN 56345, 320-632-5867 or 616-5847Volume 1 June 1999 Number 5 Farmers launch "$.30 resolution campaign" for fair volume premiums; consumers join in |
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June 1999 |
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| In a major move to restore fairness to their
milk prices, dairy farmers recently launched a statewide resolution
campaign with their co-ops to equalize volume premiums at $.30 between
family farms and large operations, according to a coalition of farm and
consumer groups. Volume premiums are added to the farmers’ base price
according to the amount of milk produced. (See page. 5)
The more milk produced, the higher the premium which means 40-cow to 150-cow farms get $200 to $8,000 in annual premiums compared to $85,000 to $250,000 premiums paid to large-scale operations of 500 to 1000 cows. High premiums are paid at farmers’ expenseIs this inequity compounded by the unfairness that these high volume premiums are paid at the expense of mid and small-sized farmers? Each co-op only has so much money to spend on premiums which means that the more the co-op pays the large operations, there’s less money for the majority of the other members in the co-op. They are going out of business at the rate of three per day in Minnesota due to base prices that are already low and unstable. As more farmers are going out of business and as premiums flow more generously to large-scale operations, the question of centralized milk production in the state is being raised by concerned consumers. Top premiums soared since 1994 when the 1921 state law banning processors from paying them was lifted.
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$6 price drop highlights
injustice of big volume premiums in the free market
High premiums tend to keep the base price low for all farmers, so when it dropped $6, the injustice of premiums was highlighted. Because the dairy farmers’ profit margin is so tight, the lower premiums paid to mid and small sized farmers takes away their ability to compete with the large-scale operators who get the big premiums. This difference in premiums, not the free market, determines who stays in business which makes the system unfair. Farmers using member rights to get "$.30 resolution" signed by their co-op boards Farmers are using their co-op member rights to restore fairness by recommending a farmer-crafted resolution to their co-op boards calling for a working legal standard that is cost justified at $.30 per hundredweight (cwt.) of milk. (See Resolution for Volume Premium Equity, page 3.) Their goal is to get all of the state’s 46 co-op boards to sign the resolution and send it to the seven processors that they do business with in Minnesota. The processors then will have the basis to voluntarily set the premium at $.30/cwt which will require unanimous agreement among all of them to work. This uniform code of distribution will allow for a higher base price for all farmers and absolve the need for co-ops to escalate premiums to be competitive.
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