Dairy farmers turn sour as government skims fat Price-support cuts would cost consumer, opponents say

November 07, 1995|By Peter Jensen | Peter Jensen,SUN STAFF

Forget bad weather, low milk prices, rising costs, health-conscious consumers or the encroaching suburbs, the biggest threat to Myron L. Wilhide's dairy farm can be found 50 miles south in Washington.

With Congress trying to meet its budget-balancing goals, a wealth of entrenched programs has been put on the chopping block from Medicare and student aid to public transportation and environmental cleanup.

In Republican-dominated western Carroll County, the effort to reduce spending on social welfare programs generally met with approval -- until, of course, it came time to take up the billions paid annually to the farm industry.

"The government is going overboard as they do with everything," said Mr. Wilhide, a fourth-generation dairy farmer. "I'm for taking away supports that aren't needed. But this just doesn't do anybody any good."

If Congress abandons its system of setting prices for dairy products and no longer purchases cheese, butter and powdered milk when there are surpluses, Mr. Wilhide calculates that it will cost him at least $35,000 per year. Since his farm has been operating in the red since the mid-80s, that additional loss could be enough to drive him from the business he loves.

"We're not really making a living. We've been eating equity," he said. "This could accelerate the process."

Mr. Wilhide, 55, and his brother Richard, 57, are partners in a farm in the rolling hills around the tiny village of Detour near the Frederick County line. Much of the property has been in the family for 130 years. The brothers own 350 acres and farm another 250 to support 180 Holstein cows.

In their grandfather's day, a dairyman made money by raising a herd and sending milk by train to Baltimore. Today, the brothers are more akin to small businessmen with a computer and ledgers recording everything from each cow's butterfat content to feed prices, production volume and stud success.

Modern dairy farming also relies on government intervention. For instance, the Wilhide farm is paid annually by the U.S. Department of Agriculture not to till 30 acres. The owners also receive low-interest loans based on their grain production.

But it is the federal government dairy program that has the greatest impact on the farm. Without the government setting a minimum regional price, the Wilhides would see their dairy income fall more than 10 percent. If the government didn't buy dairy products in times of surplus, price fluctuations might be disastrous for them.

"The only farms that could survive would be the ones with deep pockets like corporations," Mr. Wilhide said. "It would just be chaotic."

Yet the Wilhides don't see themselves as government beneficiaries. They will send a $5,155 "assessment" check to Washington this year. The money they and other farmers pay annually finances more than half the cost of the government's purchasing program.

And the government's price-setting costs it little, Mr. Wilhide said, but guarantees small farmers can stay in business and plentiful milk supplies.

"We're working for ours," he said. "This is a long-term investment. The government can't just turn it on and off."

Mr. Wilhide also proudly points out that he will spend $266,072 this year on Maryland products such as fuel, trucking, repairs, veterinarians, taxes, utilities and wages for his two part-time employees. The Maryland Department of Agriculture estimates that the state's 1,200 dairy farms represent a $179 million industry.

The Wilhide farm produces about 400,000 gallons of milk per year for a national cooperative that markets it in Maryland as "Cloverland Dairy" or "Greenspring Dairy."

A lifelong Republican, Mr. Wilhide said he supports efforts to cut the budget, although he doesn't "fully understand" some of the specifics such as how it will affect Medicare.

"Somebody has to draw the line some place," he said. "I support trimming with caution."

Critics have called the nation's dairy program obsolete, and suggested that price-setting costs consumers as much as $851 million annually in higher prices for dairy products. The industry, they have argued, has become inefficient because processors have no incentive to take risks.

"There may have been more validity to the system at one point in time," said John E. Frydenlund of the Heritage Foundation, the conservative think-tank. "Without it, you'd have better availability of milk and probably lower prices."

The National Milk Producers Federation, which represents most of the country's 112,000 dairy farmers, doesn't see it that way. It claims consumers have actually benefited from price supports that have kept small farms in business and guaranteed plentiful supplies of milk everywhere at reasonable prices.

"If the dairy industry were cut loose, you would see a smaller industry with greater fluctuations in prices and possible shortages in some areas," said Thomas L. Wilborn, a federation spokesman.

Conservatives have promoted the House version of farm legislation, which would end the price-setting system. Dairy farmers have looked to the Senate where price supports on butter and powder would be eliminated, but so would the annual assessment paid by the farmers.

Ultimately, a compromise will have to be incorporated in the giant overall budget bill that is expected to be presented to, and then vetoed by, President Clinton later this month. Whatever the final outcome, farmers are expected to receive about $13.4 billion less from the federal government over the next seven years.

Mr. Wilhide has followed the farm bill debate closely, mostly through newsletters from farm and dairy industry groups. There are signals that a conference committee probably will choose a plan closer to the Senate version, and that has given him some reassurance.

"I have faith that Congress will come around. They're going to be rational," Mr. Wilhide said. "They'll realize how important agriculture is."

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