After being scarred by allegations in last year's milk futures contracting scandal, the board and management of Dairy Farmers of America, Inc., announced this week that it's working on several initiatives to help member producers through what's anticipated to be a severe squeeze.
Milk prices in many parts of the country recently dropped below $10 a hundredweight. That's well below break-even for many dairies, particularly smaller ones in the Mid West.
"We expect to have to manage through volatility in this industry. But this down cycle is an especially bad one," acknowledged Tom Camerlo, DFA's chairman and a dairy producer from Florence, Colo. "We are seeing drastically low milk prices at a time when on-farm costs are at historically high levels.
"Compounding this is the fact that we are in a global economic crisis. As a cooperative, we are concerned about the stress this difficult situation is placing on our members."
DFA has initiatives underway designed to ease the burden on members. Among them are:
Continued support for the Cooperatives Working Together program, a dairy farmer-funded self-help initiative designed to strengthen and stabilize milk prices by balancing supply with demand.
The establishment of a DFA Cares Hotline, a 24-hour support system to offer assistance to members. By calling a toll-free number, producers can speak to a DFA staff member, and seek market information or, in some cases, receive consultative assistance.
DFA members also have access to a Member Assistance Program, operated by a third party, which offers financial and legal advice and resources to deal with farm and family stress.
The co-op is also seeking better utilization of government feeding programs for domestic and international consumption, and supporting Dairy Management Inc. on initiatives such as the recently launched specialty pizzas from Domino's, which use 40 percent more cheese per pizza.
DFA also offers programs and services aimed to help members manage on-farm costs and price volatility risk. Forward contracting services through Dairy Risk Management Services and bulk-buying programs are two examples.