Local dairy farm families will get an extra paycheck from Uncle Sam just in time for Christmas.
The one-time federal stimulus checks are expected to hit local mailboxes Christmas Eve, but farmers say they won’t be shopping with the money. At least 35 dairies in Benton and Washington counties should qualify for a piece of the $290 million stimulus pie, made possible by the 2010 Agricultural Appropriations Bill signed into law in October.
The payments are equal to 32 cents per hundredweight of milk produced this year. (Hundredweight is the standard unit of measure for milk and is equal to 100 pounds.)
For smaller dairies milking 70 to 80 cows that’s about $3,850 — based on the state’s average annual production of 15,000 to 17,000 pounds of milk per cow. Larger farms milking 200 head should receive roughly $9,500, according to the government payment plan.
The government imposed a 6 million pound per dairy limit, said Jackie Klippenstein, vice president of legislative affairs with Dairy Farmers of America. She said all the farms in this region should fall below the limit.
“Holding on to the dairies we have left is so important,” said Ryan Anglin, owner of a large dairy in Centerton. He also serves on the National Dairy Board for the southeast regional council for Dairy Farmers of America.
The industry has shrunk from 403 dairies to 133 in the past seven years in Arkansas. The top two milk producing counties in the state are Benton and Washington, according to the Arkansas Health Department. Dairy processing is located here as well — Hiland Dairy in Fayetteville and Kraft Foods in Bentonville. “If we continue to lose dairy farms and the majority of milk has to be imported, how long do you think these local processors will stay open,” Anglin said.
He admits the federal help couldn’t have come at a better time as farmers struggle to pay feed bills before year end.
Local farmers estimate dairy cows eat $4 per day in feed — the farm’s largest expense regardless of herd size.
“Most will use their checks to pay their feed bills so they can get another load delivered next month,” Anglin said.
He and other local dairymen were hoping the government would use the $290 million to buy up excess dairy products providing more long-term price supports for the industry.
After much discussion, the Farm Service Agency division of the U.S. Department of Agriculture opted to send the one-time direct payment before the end of the year.
“This program provides eligible dairy producers economic assistance to help stabilize their operations during these tough economic times,” Agriculture Secretary Tom Vilsack said in the release.
With a local milk production cost of $18 per hundredweight, dairymen have consistently lost money throughout 2009.
“I can’t think of any dairymen who will owe income tax this year,” Anglin said.
Base milk prices averaged between $11.70 and $12.80 per hundredweight from February to August, down 40 percent from the prior year, said Wayne Kellogg, dairy expert at the University of Arkansas.
Milk prices rose to $13.50 in September and have stayed near $14 — but remain short of the $18 benchmark production cost, leaving many farms with a loss.
John Robert Hart of Farmington said he’s watching his mailbox closely for the government check.
“I have a feed bill to pay and that will just about wipe out the proceeds,” he said.
Hart has been milking for 40 years and said this is the first time he can remember receiving a direct payment from the federal government.
He said between the state’s price stabilization plan that pays dairymen a monthly stipend to offset low prices and this federal payment the business is looking a little brighter as 2010 approaches.
Anglin agreed the state’s stabilization plan has gone a long way in helping local dairy farmers stay in business.
“The governor set aside $9.2 million toward the helping stabilize milk prices over the next years for Arkansas farmers. We got our November checks on Saturday for $2 per hundredweight. It’s not making anyone rich, but it’s a tremendous help to make up production cost defi cits,” Anglin said.
Farmers should continue to get a state stipend until July and by then prices may have recovered enough where it’s not needed.
Bill Haak of Gentry has been milking cows since 1979. He too, is thankful for the government assistance but would like to see a longer-term solution to combat low milk prices that occur after farmers ramp up production when prices are high.
“I would like to see the government institute some type of supply management plan to reward disciplined producers who maintain the same levels of production year to year,” Haak said.