Local milk producers found out Thursday that they'll be getting checks from the federal government for losses incurred during a major dairy downturn this year. The money will come from a $290 million pot approved by Congress earlier this year.

"Right now, anything we get helps," said Jamie Bledsoe, who milks 950 cows on a dairy in Riverdale.

High production costs and a milk price crash caused farms to bleed red ink for much of 2009. Between February and July -- the period covered by the $290 million set aside -- Bledsoe said he lost about $110,000 a month.

The direct payment program will pay him about $19,200 in one lump sum, he said.

His check could have been as much as $30,000, but the program capped out at 6 million pounds of milk produced. Bledsoe's herd produced between 10 and 12 million pounds from February to July, he said.

California dairy organizations weren't pleased with the way the formula was set up. It favored smaller dairies in the Midwest at the expense of higher-volume western producers, said Mike Marsh, CEO of Western United Dairymen. The organization represents 60 percent of the milk produced in California.

"The way it turned out was clearly at the direction of Midwestern politicians" facing difficult re-election prospects, Marsh said.

The original proposal called for $350 million to be set aside. Western United Dairymen had argued for all the money to go toward purchasing cheese off the market and distributing it to food aid programs.

WUD argued that doing so would raise the cheese price and help hungry people. The organization didn't want it to turn into a direct payment cash program that would encourage any ramp up in milk production, Marsh said. If the money had all been used to purchase cheese, the price of milk would be about $18 per hundredweight now, he said. A hundredweight is 100 pounds of milk, or about 12 gallons.

Currently, the average price paid to California producers is $12 to $13 per hundredweight. Producers say they need to average about $15 to break even.

The danger of a direct payment program is that it could keep cows in the milking stream that would probably go out if the market operated freely, said Dino Giacomazzi, with a 1,000 cow dairy near Hanford.

If the program hadn't favored smaller producers, California would have gotten double the payments it actually received, Giacomazzi said.

"We're not even getting close to leveling the playing field," said Bledsoe.

Bledsoe said it personally bothers him to take the payment. "We shouldn't be in the situation where we have to take it," he said.

"It's a handout, and we should be thankful," he said.

The reporter can be reached at 583-2432. To comment on this story, go to www.HanfordSentinel.com.

(Dec. 18, 2009)