Milk board debates fee to help dairies
Posted on Friday, August 15, 2008
URL: http://www.nwanews.com/adg/News/234290/
Arkansas dairy farmers are in trouble and need money to survive, said a state panel, which debated Thursday asking the Legislature to assess a fee on wholesalers to subsidize farmers in the shrinking field.
The five-member Arkansas Milk Stabilization Board considered a proposal offered by state Agricultural Secretary Richard Bell to assess an as-yet undetermined fee on wholesalers that would collect up to $ 5 million a year.
That money would then be divvied up among the state’s approximately 145 dairy farmers, most of whom operate in central and northwestern Arkansas.
Whatever fee is assessed may be passed by wholesalers to consumers, but Woody Bryant, the board’s chairman, said the idea isn’t a back-door grocery tax.
“It’s not a tax,” said Bryant of Lonoke County. Rather, the fee would be figured into “production costs” by assessing it on the wholesale level, rather than the retail level, he said.
Polly Martin, president of the Arkansas Grocers and Retail Merchants Association, said wholesalers make less than 1 percent net profit and the approximately 10 wholesalers in the state would just pass along the cost to the consumer.
“When your [profit ] margin is that thin, you can’t just start tacking on whatever,” she said. “Are you telling me their costs haven’t gone up, too ?”
Dairy farmers need help now, and the state needs a local, safe supply of milk for its children, Bell said.
Over the last several years, Bryant said, about 10 to 15 dairy farmers have quit in frustration over high feed prices for their cows and low milk prices. That was a factor in the lowering of milk production in the state by nearly 20 percent since 2006, according to the board’s figures.
Rodney Baker, director of governmental affairs for the Arkansas Farm Bureau Federation, said the fee proposal needed to get in the hands of key legislators this fall to familiarize them with the issue and frame the debate before a large class of rookie legislators arrives in January.
Gov. Mike Beebe doesn’t yet have a position on the issue, said his spokesman, Matt De-Cample.
The details remain sketchy, but the payments could be based on a ratio between feed prices and milk prices, Bell said.
New Mexico and Texas provide about three-fourths of the milk consumed or processed in the state, Bryant said. Most milk produced in Arkansas stays within Arkansas, he said.
Allowing Arkansas dairy farmers direct payments to balance out the gap between production costs and milk prices will ensure a local supply of milk and help the industry survive, and perhaps thrive, Bell said. He pointed to Indiana as a state that has recently burst onto the scene as a thriving dairy state after at least $ 60 million were spent by the Legislature to expand the industry.
In 2006, Arkansas dairy farmers produced 258 million pounds of milk. That slipped to 220 million pounds last year. So far this year, production is down another 9 percent, according to the board’s figures.
Baker said he thought legislators would be receptive to a fee that would keep Arkansas farmers in business.
Bryant, who owns a dairy farm 10 miles east of Cabot, said the proposal could also encourage the younger generation “to stay at home.”
Created by the Legislature in 2007, the board’s mission is to find ways to preserve and expand what the state deems “an essential agricultural activity of the state,” which forms an “integral part of the state’s rural communities.”