Area dairy farmers fear the fallout from scandal

[Desperadoe]

A default by Italy's Parmalat could ruin suppliers.
By Suzette Parmley
Inquirer Staff Writer

The financial scandal of Italian milk conglomerate Parmalat has reached around the world, threatening hundreds of dairy farms in Pennsylvania and New Jersey.

Millions of dollars in milk payments could be lost by the farmers if the financially troubled food company defaults on payments to suppliers.

Fallout from Parmalat's woes comes as dairy farms in the two states already are disappearing at an alarming rate, in part because of two years of record-low milk prices.

Pennsylvania farmers could lose as much as $5 million a month in milk payments and New Jersey about $1 million a month, according to officials in each state.<snip>

http://www.philly.com/mld/inquirer/7820422.htm

[UpInArms]

1. that's funny

(and I don't mean humorous) - but I don't see that milk prices are at historical "lows" in the grocery store.

So who's getting the money?

[ewagner]

2. We've been asking the same question

In "America's Dairyland" I've seen historically low prices for milk to the farmers and it didn't make 2 cents difference (literally) in the price of milk or cheese on the grocery shelf.

[UpInArms]

3. could this be a case of

large conglomerates forcing lower prices on suppliers (fewer buyers mean that they have more clout) and then, as middlemen suppliers those savings are not passed on to consumers, but are kept to make corporate profits higher and payments to their upper management greater while the Boards of Directors rake in added bonuses?

how nice that we have such a lovely godless capitalist system as opposed to the evil godless communist system.

:mad:

[sybylla]

5. Bingo - give this DUer a cookie.

And you know what kind of advise the farmers are getting when they ask for commodity controls? Cover your losses by investing in futures. So the advise is, if you have no money, gamble.

Even heard this from my congressman on Friday and nearly spit my teeth out. He says he expects nothing will happen with milk pricing reforms because each part of the country wants its own dairy industry protected. So while everyone bickers, the dairy industry is going down the crapper and soon there will be nothing left to defend.

[0007]

10. 'Tis correctly called cooking de milk

Show me a competitive system and I'll you a Joe College looking for an edge. Gotta have them CEO's.

[sybylla]

4. Middlemen like Parmelat, Kraft, Land O Lakes, Morning Glory, Sargento, etc

Milk prices in the stores are at near-historic highs, yet the farmer gets paid the same price they got in 1975. The cooperatives were supposed to prevent this kind of thing from happening by acting as the middle man and returning profits to the farmers. But the bean-counters got a hold of cooperatives and now they are run for profit and the betterment of the management, not the farmers.

[ewagner]

6. Well said n/t

[UpInArms]

7. and according to the conservative gospel of "free markets"

the way to "earn" money would be to invest in the always increasing stock market so that the average person can then profit from the bankrupt farmers and help finance the CEOs salaries.

According to Greenspin, no one would work for $2 an hour (so how much are the farmers actually earning since they generally live and work on the farm and never leave and animals so allow you to have vacations or days off.

[Justice]

8. Those Companies Are Not Cooperatives, They Are Manufacturers

The Cooperatives are owned by the farmers.

The co-ops sell to the manufacturer who bottles the milk and sells it to the retailer.

The manufacturers are the ones who buy low from the farmers/co-ops - the manufacturer and the retailer make money.

Here is the reason retailers don't discount milk --

you can't stock up on it, it will go bad, so it doesn't go on sale

everyone buys milk, it is a necessity, so there is no incentive to sell it low

not a loss leader - except at convenience stores (always in the back of the store so you go by the high priced stuff on your way to the milk).

In MA a convenience store was sued/investigated for selling milk below cost. The investigation revealed that in fact the convenience didn't sell below cost -- it was just that the grocery stores marked milk up so much (we are talking a dollar difference per gallon).

[sybylla]

9. Some are coops and some aren't

But you can't tell the difference any more, can you? That's my point. Some of the cooperatives have gone into production as middle men but the farmers don't see any of that money back like they used to. You can't drive past a cooperative's corporate headquarters in this state (WI) without a clear understanding of exactly where the money is going - executive salaries, million dollar buildings, and more.

Same is true of insurance companies. "Mutual" insurance companies are essentially a cooperative. But their headquarters look no less grandiose than the for profit insurance companies and their executives get comparable pay.

Of course retailers won't discount milk. Never implied that they should. There is no profit margin in it for them. The answer is a minimum selling price that pays the bills - if we are at all interested in protecting the farming industry from total collapse.

[ewagner]

12. What do you think about the Canadian system?

I worked in the dairy industry for 10 years and found many of the same problems you have described, and, yes, almsot every farmer I talked to said the same thing about buying milk futures...they thought it was their salvation.

The Canadian system allocates a quota to each producer that guarantees a set price for every 100cwt produced within that quota. There is no guarantee for prices for milk produced above the quota. The quotas themselves can be traded like stock, so Ma and Pa who have a quota can sell it off when they want to retire or they can pass it along to the kids. At least, that's what my understanding is.

[sybylla]

13. Haven't paid much attention to the Canadian system

Sounds like a good way to protect family farms by giving them the equivalent of a living wage while leaving the factory farms (that can produce 10 times what the family farm produces) to fend for themselves.

I'll have to check in to it more. My resident expert is my brother-in-law who is very politically active and all over farming issues. He is always interesting to talk to. I'm sure he'll have a fair deal of insight on the subject if I get a chance to ask.

[donsu]

11. Kraft is laying off 6000 - can they then hire aliens at a lower pay?

or is mad cow causing the layoff?

[Bandit]

14. Just received a price increase from my major Ice Cream Company

Ice Cream products are going up Feb. 1 by at least 20%