As many as 25 dairies in Kings County could face bankruptcy in the coming weeks, because the credit lines they were surviving on have run out amid falling milk prices. The crisis has already driven two local dairymen to suicide.

If the industry �” whose domestic supply already fails to meet the demand �” continues to shrink, the country will soon begin to rely on imports, much in the same as it does with crude oil. And away will go hundreds of local jobs.

Those are the grim pictures Joaquin Contente, a Hanford dairyman who presides over the California Farmers Union, painted earlier this week before members of the Hanford City Council as he urged them to acknowledge the dire straits facing the dairy industry �” the No 1. sector of Kings County agriculture and the backbone of the local economy.

“I’ve been around a few years, and I’ve never in my lifetime seen our industry in the shape that it’s in today,” Contente told the council.

Milk has been selling for $11 or less for each 100 pounds for the last several months. The federal dairy product price support �” a safety net program �” does set the minimum prices of milk at $9.90, but it’s not helping much, Contente said.

That’s almost $6 less than it costs farmers to produce, he said, adding that every month that goes by, farmers are losing hundreds of dollars per cow in their operations.

“Most of the people are not able to be profitable,” Contente said. “I don’t think there is actually any who are profitable in today’s conditions.”

In 2007 and the early part of 2008, the dairy industry was enjoying record high commodity prices. The rising feed cost caused by the ethanol boom that deprived the farmers of 30 percent of corn available was an issue. But high milk prices made up for that.

Then came the market crash in fall 2008.

When lines of credit were harmed worldwide, the United States lost export sales. Sales from exports of U.S. dairy product were 5 percent of the gross production nationwide during the first eight months of 2008. Right after the market crash, the industry lost half of its exports, causing a glut that subsequently led to a dramatic drop in domestic milk prices, Contente said.

Since last year, the prices that dairy processors pay farmers for their product dropped by almost half, but farmers are still facing the high costs of feed.

“We were set up by the high cost. Then we were hit by a financial collapse that disrupted the market. People couldn’t move their product around. They couldn’t sell as much. Sales went down. Exports were down.”

Even though there is no dairy within Hanford city limits, City Council members acknowledge the economic benefit the industry brings to the city.

“(The dairy industry) is one of the mainstays of the Kings County economy, and we as city residents do benefit from this industry,” said Mayor David Ayers. “I think it’s important that we support it in whatever way we can.”

Hanford city leaders voted 4-0 Tuesday to formally acknowledge the importance of the dairy industry and factors that led to the current state of the industry through a resolution stating that the California dairy industry contributes more than $61 billion each year to the economy and supports half a million jobs, the dramatic drop in dairy product prices and inadequate federal support are putting Kings County dairymen out of business. Councilman Dave Thomas abstained, citing a conflict of interest because he owns a dairy.

The council’s action came at the urging of Contente and the dairy co-op that he represents.

“I want to bring awareness and attention to the situation at all levels, because when we’re successful and profitable, everybody in the city benefits from that,” Contente said.

But his ultimate goal is bigger than that.

Merced County also approved a similar resolution Tuesday calling for President Barack Obama to provide relief to dairy producers.

Contente said his organization will continue to seek the adoption of resolutions in support of dairy farmers from municipalities around California before they pressure the state Legislature to do the same.

The reporter can be reached at 583-2429.

(June 18, 2009)