Milk prices could spurt up, dairy farmers say
MILWAUKEE — Dairy farmers expressed frustration this week with Congress’ failure to pass a farm bill, saying the uncertainty made it hard to do business and some could go under without changes to the federal milk program.
Farmers also worried that if a current ninemonth extension of the 2008 farm bill expires with no action, a 64-year-old law will kick in, sending milk prices spiraling. While that might provide short-term profits, they say, it’d hurt them in the long run because no one wants to buy milk at $6 a gallon.
The U.S. House voted down a farm bill June 20, about a week after the Senate approved a different version. It was the second year in a row that the House failed to pass the every-five-years bill that sets funding for agriculture and food programs. Last year, it didn’t even vote, prompting the passage in January of a slimmed-down extension of the 2008 law — largely to avoid milk prices sharply increasing.
The Agricultural Act of 1949 sets a much higher price for government purchases of cheese, butter and other dairy products than the U.S. has seen in decades. The government cut the price in recent decades because if it didn’t, more companies would sell to the government than to retailers.
Farmers fear if the higher prices kick in on Jan. 1, dairy prices will rise until consumers just stop buying their products.
“I don’t think that’s good for anybody because we would destroy demand,” said Pete Kappelman, a Wisconsin dairy farmer and board chairman of Land O’Lakes, a farmer-owned company that markets milk, eggs, butter and many other products.
The farm bill failed in the House mainly because of disagreement over food-stamp funding and dairy program reforms.
The government currently pays dairy farmers when milk prices get too low. But the problem in recent years has been the high cost of feed due to the ethanol industry’s demand for corn as well as the drought. Farmers say milk costs almost as much to produce as they can sell it for — and sometimes more.
Kappelman, who has a 450-cow farm in Manitowoc, Wis., worked on a national dairy industry committee that proposed a margin protection program that pays farmers when the price difference between milk and feed shrinks to a certain point.
He also supports a market stabilization program that would require farmers to either reduce the amount of milk produced when prices drop too low or give up a portion of their margin protection payments. The U.S. Department of Agriculture would then use that money to buy and donate dairy products to food banks and help low-income families.
The margin protection and market stabilization programs would be voluntary, but farmers couldn’t participate in one without the other.
The Senate passed a farm bill last week that included both the margin protection and market stabilization programs, but House Republicans voted to remove the market stabilization program. Minnesota Rep. Collin Peterson, the senior Democrat on the House Agriculture Committee, said a number of Democrats changed their vote to no at that point.
Randy Roecker, 40, was among those desperately hoping the complete package would pass. He and his wife farm with his parents in Loganville, Wis.
They were doing well in 2008, when they renovated to expand from 50 to 300 cows. The next year, milk prices plummeted and feed prices rose. At one point, they were losing $100,000 a month.
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NEWS CORP. BECOMES 2
NEW YORK — News Corp. formally split in two after the market closed on Friday, with existing shareholders getting one share in the new publishing entity for every four shares they hold in the media company. Since Wednesday last week, preliminary shares of both sides of the company have been trading as if the split already occurred. Any buyers of preliminary shares will receive them next Friday. Preliminary publishing shares closed Friday at $15.25. The recent trading valued the publishing division, to be named News Corp., at around $8.8 billion. That’s about 12 percent of the entire company’s value. It had a market capitalization of about $75.5 billion before the split. The movie and TV division is being renamed Twenty-First Century Fox Inc. Its preliminary stock closed at $28.99 on Friday.
FORD RECALLS VEHICLES
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HONDA ISSUES FIRE WARNING
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ACTIVE RIGS DECREASING
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PHONE MAKER’S SHARES FALL
TORONTO — Shares of BlackBerry maker Research In Motion plunged nearly 30 percent Friday after the company posted a loss and warned of future losses despite releasing its make-or-break new smartphones this year. RIM also announced that it will stop developing new versions of its slow-selling tablet computer called the Playbook. Analysts were looking for insight into how phones running RIM’s new BlackBerry 10 operating system are selling. It wasn’t good. RIM said it sold 6.8 million phones overall versus 7.8 million last year. That includes older models. It wasn’t until well into a conference call with analysts that RIM announced that 2.7 million of the devices sold in the quarter were BlackBerry 10 models.