The Portales News-Tribune reports (http://bit.ly/SZdS7U) that experts believe the U.S. Farm Bill could give dairy farmers relief by ending old price support systems.
New Mexico State University Extension Dairy Specialist Robert Hagevoort told the newspaper that the proposal would create a regulated producer-paid insurance program. He says the program would make sure that if margins are upside down, insurance will pay out.
Most of New Mexico's dairies are located in Curry, Chaves and Roosevelt counties, an area of the state most affected by the drought and high feed prices.
Troubles began in 2009 when producers experienced an 18-month stretch of "unbelievable losses" caused by extremely high feed prices.
Challenges continued into 2011 and 2012 with a hard-hitting drought.
"The prices dairymen paid for forage was insane," Hagevoort said, adding that dairymen had to get hay transported from Canada. "The rest of country could recuperate but in New Mexico, we couldn't. It's been three to four years now in a row where we've basically been upside down."
Hagevoort said dairymen had to take all the equity out of their operation to pay the banks financing their farms.
"What these families had built up in generations, all that equity was gone in two
Beverly Idsinga, executive director of the Dairy Producers of New Mexico, said her organization supports the farm bill.
"It needs to be passed because it will help out producers," Idsinga said. "We are in a crisis."
Idsinga said the gap between the cost of milk and production can be as large as $4.
"They're losing money every day," Idsinga said. "The dairy title inside the bill provides a safety net to protect producers. It doesn't treat producers inequitably based on size of region as other insurance programs have."
Hagevoort added that banks would be less hesitant to work with dairy producers with the provisions in the farm bill.
"If these banks know there's a bottom on the downside because insurance will kick in, they're much more likely to extend credit," Hagevoort said.
Walter Bradley with Dairy Farmers of America said feed prices are still high and eastern New Mexico has yet to see the full impact of the drought.
"We lost a 6,000-cow dairy near Muleshoe nearly two weeks ago," Bradley said. "That impact will make a significance difference. We're struggling to meet our order demands already."
Information from: Portales News-Tribune, http://www.pntonline.com