Dairymen gathered Saturday at St. John's Hall to discuss the latest issues and challenges facing California's dairy industry in the coming year.

Among the highlights of the annual meeting were concerns over milk over-production, low support prices, fair trade, and updates on impending legislation negotiations.

"Where this industry is headed and where we're coming from, there's going to be a lot of change," said Kevin Abernathy, executive director of the California Dairy Campaign and the California Farmers Union.

California's dairy industry is one of the most prolific in the world.

However, the industry must now contend with the hangovers of such rampant growth - one of which is low milk prices, and a subsequent low-government-support price. The new Congress is expected to address these and other key issues when it re-authors the 2002 Farm Bill, legislation which will set the pace for the farm and dairy industries for the next five years.

"This year is really critical," said Tom Buis, president of the National Farmers Union, the major lobbying group for farmers and dairymen.

David Palecek of the McKinsey Group kicked off the roundtable with his presentation of a study funded by the Milk Advisory Board, which analyzed the California dairy industry's successful past, projections for the industry's future, and made advisories on steps the industry can take in order to continue to thrive.

Currently the cost of milk production in California hovers at $13.58 per 100 weight.

However, government support prices, the price at which the government buys excess supplies is only about $9 per 100 weight. This is down from approximately $12 per 100 weight back in the 1980s.

Palecek told the group, which included representatives from dairies all over the valley, that the best way they can ensure the industry's healthy growth is not to depend upon outside factors, such as changes in World Trade Organization rules, or a rise in milk product consumption to come to the rescue.

The most feasible way to make milk prices rise is for dairymen to keep milk production constant, rather than increase it, said Palecek.

Some in the audience were quite vocal in their opinions of the study, calling some aspects of it unrealistic.

Others said the ultimate health of the industry depended upon solidarity in order to curtail milk production, a difficult feat at best.

"We have to get universal agreement," said Jim Fontes, of Riverdale-based Fontes Dairy, "Other than that, it's just a waste of the industry."

Aside from the above issues, this year's farm bill is also expected to touch upon food labeling, and for the first time, energy production from natural sources, said Buis.

For years, farming unions and co-ops have lobbied for country-of-origin labeling on food.

Clothing and other items have labels which tell consumers where the item came from, "yet, the food you put in your body is not labeled," said Buis, with the National Farmers Union.

If food products had labels, Buis said, he believes consumers would be more apt to purchase items grown and produced in the United States over those of foreign countries.

However, one major question is whether U.S. food producers can compete with the low cost of food production in foreign countries.

Under current World Trade Organization rules, producers from other countries which import food products here are not held to the same standards as U.S. producers, said several speakers at the event.

Although the farming industry and environmental groups have a history of butting heads, this year the two groups could finally had a meeting of the minds.

In the 2007 Farm Bill, corn, and even methane gas from cows may turn into energy, which would reduce the country's dependence upon foreign oil.

If these measures are passed, farmers would "produce the food, clean the environment and create energy," said Buis.

At the end of the conference, Rep. Jim Costa, D-Fresno and Aseemblywoman Nicole Parra, D-Hanford, each gave speeches on the various issues surrounding the agriculture community, including the recent freeze.

Costa said he expects federal aid to help those growers and workers recover after being affected by the freeze.

The reporter can be reached at 582-0471, ext. 3062.

(Jan. 22, 2007)