Drought not to blame for recent hike in milk prices

Drought not to blame for recent hike in milk prices

July 12, 2007

By KRISTIN FARLEY
6 News Anchor/Reporter

ATHENS (WATE) -- If there's a silver lining in this year's drought, it's that it's not to blame for the recent hike in milk prices.

A gallon of milk jumped 15 cents. Then we saw another 26 cent hike in July and another 10 cent hike is being projected for August. 

The USDA sets the price that farmers get paid for their raw milk nationwide. That price has gone up due to increased exports to China and Europe. But that's not to say the drought couldn't be a factor in the near future.

Since January, the price paid to farmers has gone up close to 60 cents a gallon. As you've probably already noticed, that hike is reflected in what you pay at the store.

And while Mayfield Dairy Farms President Scottie Mayfield assured 6 News Thursday the hike is not due to the dry weather, he says area farmers really need these prices to stay up.

"So these local dairy farmers are benefiting from the higher milk prices and they need these higher milk prices because the drought is severe," Mayfield says. 

So severe that Mayfield knows it may eventually trickle down to his processing plant in Athens, where they pump out an average of 180,000 gallons of milk a day.  

"I don't think it will be a quality issue. I mean, the cows are...I mean, it may be an issue of where we can't feed the cows quite as much food and so they don't produce quite as much," Mayfield says. 

All factors considered, Mayfield says a meeting has been scheduled for the next week where they plan to look at ways to streamline their operations.

"We're looking at that. We have a meeting next week to look at a lot of different cost savings we can try to do. But we don't want to cut any quality corners at all," Mayfield says. 

6 News asked Mayfield if any of those changes could possibly come to his workforce in Athens.

There are more than 800 dairy farms in McMinn County and nearly 600 people employed at Mayfield's Athens plant.

When you combine those two numbers, that means that more than 5 percent of the county's workforce is somehow tied to the dairy industry. So Mayfield is looking at streamlining its processing plant.

"I don't think we'll have any layoffs. I mean, the people we have here, we need," Mayfield says. 

While farmers are struggling to feed their cows, Mayfield says the USDA is essentially responsible for driving up the raw milk prices right now.

Mayfield has been in the dairy industry for more than a century. But it may surprise consumers to know the company no longer produces its own raw milk.

In the early 1900s, Mayfield Dairy Farms produced its own milk with its own cows. But in the 1990s, the company sold its last dairy cow.

Now, the company get all its raw milk from other area farmers.

Earlier this week, farmers from Tennessee took part in a group of farmers suing over milk prices. The farmers said Dean Foods Company used its pull in the industry to control prices paid to farmers.

The lawsuit claims the company flooded the region's wholesale milk market with milk from other parts of the country to limit the price Southeastern dairy farmers are paid.

Dean Foods is the company behind such well-known brands as Purity Farms and Mayfield Dairy. Dean Foods and Mayfield Dairy are not commenting on the pending litigation.