SCHUMER: GAP BETWEEN PRICE PAID TO DAIRY FARMERS AND PRICE OF MILK IN STORES DRAMATICALLY INCREASING, HURTING BOTH FARMERS AND CONSUMERS; CALLS FOR IMMEDIATE FEDERAL INVESTIGATION
Prices Paid To Dairy Farmers Have Free-Fallen By Almost 50%, But Retail Milk Prices Have Only Fallen 15%, Costing Both Dairy Farmers and Consumers Millions
Schumer Calls For Federal Trade Commission And Department Of Justice To Immediately Investigate Discrepancy; Says It Defies Logic That Dairy Farmers Are Receiving Rock Bottom Prices When Price Of Milk In Stores Is Still High
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With dairy farmers across New York State in crisis and difficult economic times squeezing consumers' pocketbooks, U.S. Senator Charles E. Schumer today announced that he is calling on the Department of Justice and the Federal Trade Commission to immediately investigate the disconnect between the rock bottom prices that are being foisted on dairy farmers and the still sticky price of milk at the store. Schumer today released a report showing that while the price paid to dairy farmers for milk has cratered by almost 50% since January 2008 to historic lows that threaten the viability of countless dairy farms, the price consumers pay in grocery stores has fallen a mere 15% over the same period. Additionally, the amount of revenue dairy farmers receive per dollar consumers spend on milk has precipitously declined. That share has dropped from $.48 per dollar to $.30 per dollar since January 2008. This has lead to an astounding drop in the amount of revenue New York dairy farmers receive from retail milk sales - down to approximately $46 million from $84 million per month. At the same time, the profits of the nation's largest milk processor, Dean Foods, have doubled over the last year.
"At a time when our dairy farmers are struggling just to make ends meet, it is absolutely essential to find out why they are seeing such a small share of the profits from retail milk sales," said Schumer. "If some entity along the line is abusing or unfairly gaming the market, then we must stop them dead in their tracks. That is why I am asking the DOJ and FTC to investigate the baffling gap between the plummeting price farmers are receiving for their milk and the stickyhigh price of milk on stores' shelves."
Schumer today said that the U.S. dairy industry is in crisis and more must be done to help our dairy producers and family farms. Although the price that dairy farmers are paid remains lower than in nearly four decades, less than $1 for a gallon of milk, the cost that consumers pay for milk in stores remains relatively high, with a gallon of whole milk priced at $3.01. There seems to be a disconnect between the rock bottom prices that are being foisted on dairy farmers and the still sticky price of milk at the store. As a result of these plunging wholesale prices, family dairy farms across the country have gone out of business or are in severe danger of doing so. This is a disaster not only for the thousands of rural communities that rely on the dairy industry for support, but also for the many consumers who want fresh and locally produced food. Further, a reduction in the diversity of the supply of wholesale milk would likely lead to further vertical concentration in the dairy industry, concentrating market share - and pricing power - in the hands of a very few operations, an outcome that would weaken the interests of both dairy farmers and consumers.
Schumer today released a countybycounty report showing that while the price paid to dairy farmers for milk has dropped by almost 50% since January 2008, the price consumers pay in grocery stores has fallen only 15% over the same period.
In the Capital Region, dairy farmers are making $3,762,270 per month less than they were making in January of 2008 from retail milk sales.
In the Western New York Region, dairy farmers are making $8,292,600 per month less than they were making in January of 2008 from retail milk sales.
In the RochesterFinger Lakes Region, dairy farmers are making $4,974,030 per month less than they were making in January of 2008 from retail milk sales.
In the Central New York Region, dairy farmers are making $6,735,060 per month less than they were making in January of 2008 from retail milk sales.
In the Southern Tier Region, dairy farmers are making $4,730,760 per month less than they were making in January of 2008 from retail milk sales.
In the Hudson Valley Region, dairy farmers are making $1,078,650 per month less than they were making in January of 2008 from retail milk sales.
In the North Country Region, dairy farmers are making $8,326,260 per month less than they were making in January of 2008 from retail milk sales.
In addition to low prices, the amount of revenue dairy farmers receive per dollar consumers spent has declined from $.48 per dollar to $.30 per dollar since January 2008. But, as producers of dairy-our family farms-struggle, some buyers and distributors of the product have enjoyed a correlating surge in profits.
One particular firm, Dean Foods, the largest fluidmilk buyer in the country, recorded record profits in the company's first fiscal quarter of 2009. Profits more than doubled from slightly more than $30 million in 2008 to $76.2 million in 2009. On Wednesday, in the midst of the deepest recession since the great Depression, Dean Foods reported that their second quarter profit rose a staggering 31%.
Dean Foods manages large portions of the market for fluid milk in a number of regions of the United States controlling approximately 90% in Michigan, about 80% in Massachusetts, 80 to 90% in Tennessee, 70% in New England, over 80% in Northern Alabama, and over 70% in northern New Jersey. Schumer said that without such concentrated market conditions, farmers would have greater options as to where they sell their product and would see higher prices on the farm, while consumers would see more competitive prices in the store.
Schumer said that Dean Foods is just one of his concerns, but that the source of the disconnect between the prices consumers are paying and prices dairy farmers are receiving needs to be identified immediately and appropriate action needs to be taken to correct it.
In an effort to reduce the pressure on struggling dairy farmers, Schumer today announced that he is calling on the Department of Justice and the Federal Trade Commission to take a hard look at the dairy industry and identify where the problems lay.
Schumer has taken other actions to increase aid to dairy farmers over the last several months. He recently helped provide increased aid to dairy farmers by urging the United States Department of Agriculture's (USDA) to increase the prices paid for dairy products through the Dairy Product Support Price Program, a move that will result in millions in additional revenue for Upstate New York's dairy farmers this year.
"It defies logic that dairy farmers are getting raked over the coals and consumers have seen such a minimal drop in price," Schumer said. "Something is clearly rotten in the state of Denmark - and it's not the milk that our family dairy farmers produce."