Hooker Pushes Unhooking Class I Milk

N.Y. commissioner sides with New England on a Class I price floor.

Compiled by staff

Published: Mar 9, 2010

De-coupling fluid milk from manufactured products could help strengthen and stabilize prices for Class I milk. That was New York Ag Commissioner Pat Hooker's request to U.S. Ag Secretary Thomas Vilsack.

Establishing a national floor for the Class I prices would ultimately de-couple fluid milk from manufactured classes of milk. The latter are typically lower and drive down the price farmers receive for their product as a whole.

"I'm adding our voice to those you heard in New England in saying our current system is outdated," Hooker told Vilsack. "In fact, the current system devalues fresh, locally produced milk by directly connecting its price to the value of manufactured products, which primarily compete in a national and international market."

If implemented immediately and at the suggested level of $18.50, establishing a Class I floor could help ensure farmers a reasonable and more stable milk price that more fairly reflects the higher costs of production and distribution of fluid milk. In New York, that could mean an extra $15.5 million per month for dairy farmers. And it could mean an annual potential of $465 million for the upstate economy when one includes the economic multiplier effect of milk production in New York State.

Doing nothing is, in fact, a choice, he adds, predicting it'll have potentially disastrous consequences on the nation's dairy farmers.

New York belongs to a region that produces more than 20% of the nation's total milk supply. The Northeast – New England, New York, New Jersey and Pennsylvania – also has the highest Class I utilization by volume and, outside of the southeast region of the country, the highest rate of Class I utilization.

Based on the January to September, 2009 period, flooring the Class I mover at $18.50 would have resulted in a blend price of about $14.91. It would have increased the price paid to producers $3.34 per hundredweight.

That still wouldn't have been enough to reach break even, contends Hooker. But it would have dramatically lessened the impact of the overall milk price decline and consumers would have avoided price fluctuations experienced at the marketplace.