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New York’s dairy farmers face serious challenges: As milk prices plummet, Cuomo offers a distorted view of the industry

“We began in 2011 with our partnership to stimulate dairy production through our Greek yogurt industry expansion and it has worked … Our dairy industry is booming because the yogurt companies are consuming all the milk we’re producing. It has been a great victory and an important lesson, and besides having some cows suffering sore udders, it has been a great, great success.”

New York Gov. Andrew M. Cuomo, from his 2016 State of the State address, to the New York State Legislature on Jan. 13

Despite his phony concern for the udders of dairy cows, Cuomo’s brief reference to the overall condition of the state’s dairy industry implies current financial prosperity for New York dairy farmers. Nothing could be further from the truth. Here, the governor’s credibility is missing in action. For him to make such assertions begs the question: Where does he source this unfounded nonsense?

Those knowledgeable of the current situation must conclude his statement was based on blissful ignorance, delusion or deliberate disinformation.

Cuomo claims “our dairy industry is booming.” Hardly. Since peaking in the $25 per cwt. (hundredweight) range in 2014, New York dairy farmers have seen milk prices received plummet to the current $15 per cwt. range, a drop of some 40 percent. Clearly, Cuomo’s State of the State distortions must be challenged with some inconvenient facts.

New York State’s dairy industry and most of those dependent on it are struggling. Yogurt production peaked in the state in November 2013 and has shown significant declines since. U.S. Greek yogurt pioneer Chobani, which began its meteoric rise to the leading U.S. producer of Greek yogurt, got its start in an ancient former J.L. Kraft plant in South Edmeston. Chobani has since built a new yogurt plant in Twin Falls, Idaho. Completed in late 2012, when the new facility came on line, the result was a substantial draw down of production – 40 percent by some estimates – at the New York plant. This led to numerous job losses and seriously reduced the plant intake of milk.

Starting in May 2014, this reduction forced Chobani’s milk supplier, Dairy Marketing Services, to dump 100 to 200 tractor-trailer loads of redundant milk per month, with the losses deducted from farmers’ milk checks.

However, that milk dumping pales in comparison with the massive milk dumping that occurred in the Northeast during the late spring and early summer of 2015. The Federal Milk Marketing Order 1 includes eastern New York, most of New England, eastern Pennsylvania, New Jersey, Delaware and eastern Maryland. According to the order’s monthly statistical report, starting in May 2015, a decided surge in dumped milk was reported.

In normal months, the amount of milk listed under “Animal Feed and Dumpage” totals in the high 4 million to low 5 million pounds range. Dumpage rose from a typical 5.3 million pounds in April to 7.3 million pounds in May, then jumped to 22 million pounds in June and topped out at 22.7 million pounds in July. That equates to over 400 tractor-trailer loads of milk wasted in both June and July.

Compounding the milk dumping chaos, about two dozen New York dairy farmers had the terrifying experience of also losing their milk markets and having to scramble to find new milk buyers in an oversupplied market, as a direct result of the enormous underutilization of New York milk. Yet Cuomo insists, “our dairy industry is booming because the yogurt companies are consuming all the milk we’re producing.”

A glaring omission in the governor’s message was his failure to note the Dec. 10, 2015, announcement by PepsiCo and the Theo Müller Group that they were ending their Müller-Quaker Dairy, LLC joint venture in Batavia, after a two-and-a-half-year run.

When completed in 2013, this was billed as the largest yogurt production facility in North America. The closure put 170 production personnel out of work. Müller-Quaker should be sharp in the governor’s memory, since he made a rare pilgrimage to rural Western New York to tour the plant in August 2013 and take a bow for his oversight in financing the $206 million project.

The Empire State Development Corp. already has something in the neighborhood of $82,000 per worker invested in the Müller-Quaker project and it has announced it stands ready to shovel in more taxpayer money, when Dairy Farmers of America, the plant’s new proprietor, compiles its wish list of grants, tax perks and other government corporate welfare.

In a classic case of, “be careful what you wish for,” some three years ago, Cuomo and his sidekick, U.S. Sen. Charles E. Schumer, were calling on New York dairy farmers to “stimulate dairy production” by some 25 percent, to fuel the new Greek yogurt plants springing up across the Empire State. The then-rising trajectory of Greek yogurt sales potential proved unsustainable and has now leveled off.

In a more perfect world, it would be Cuomo’s and Schumer’s backsides that would feel the teeth in this fiasco, but, sadly, that will not be. Now New York dairy farmers are paying the price for these politicians’ clueless promises and unfounded optimism.

Ironically, Cuomo still has the audacity to style his underperforming yogurt initiative as a “great, great success.” One can only wonder what he thinks a great, great disappointment would look like.

Nate Wilson, of Sinclairville, is retired after 40 years as a dairy farmer in Chautauqua County. He is now an associate editor with The Milkweed, a national dairy industry monthly.