One Year Later: Milk Law Stabilizes Industry

Though the first images that spring to mind at mention of agriculture in Arkansas may be a field full of soybeans or cotton, or the sight of a slowly moving combine harvesting a rice crop, the dairy industry is also an integral part of the state's rich agricultural heritage. However, it's an industry, like many others, that nationwide, has taken a hard economic hit in recent years.

The high feed and production costs, coupled with lower output prices have been detrimental to many dairy farmers around the country. Nationwide, last year's milk-to-feed price ratio, which is the measure of profitability of producing milk, was the lowest it has been in 25 years, and that has taken a toll. Currently, there are 132 dairy farms in Arkansas. Just a decade ago, that number was 800. Experts say the number of dairy farms in the state would have dwindled even more over the last year if not for a milk stabilization program that passed the Arkansas Legislature in 2009 and took effect last July. Act 968 of 2009 created a program that distributes grants to Arkansas dairy producers any time the price of milk falls below 70 percent of the average cost of production. (The program uses 70 percent of the average cost of production in Tennessee and Missouri as a measurement, because the USDA does not calculate the cost in Arkansas.)

Around $9.1 million in grant money, left over from a fund for biofuel development incentives, was designated for the program. A farmer can get up to $2 per hundredweight, which is 12 gallons of milk. During the first months of the program, that amount was raised to $5 per hundredweight to help get more money out to struggling dairies and into the economy. Now, a year later , the proof is in the numbers.

Over the course of the last fiscal year, the milk production in the state was down about ten percent. After a year with the stabilization program, production is only down two percent. According to Mike Fisher, a dairy farmer and member of the Arkansas Milk Stabilization Board, production loss could have been disastrous without the grants. "You can call any dairyman in the state of Arkansas. They'll tell you the same thing. If it hadn't have been for this program, they would've gotten out if they could," said Fisher.

Arkansas Agriculture Secretary Richard Bell says there are once again positive indicators in the state's dairy industry. "We're back to that point where people are beginning to buy cows again, and we see that as good. That means they're not as worried as they were before," said Bell. Not only has this program given producers a much needed boost, it has helped stabilize an industry important to our state and its economy, and that benefits us all.



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