Higher Costs, Lower Milk Prices Take Toll On California Dairy Farmers

SEBASTOPOL (CBS 5) -- A growing number of California's dairy farmers are going bankrupt, as they get caught between rising feed costs and milk prices set by the government. On Tuesday, the state rejected a request by dairy farmers to raise prices on milk.

According to the Western United Dairymen, a Modesto-based group, more farmers are throwing in the towel. Mike Marsh of the association acknowledged that suicides are up as well as bankruptcies.

Domenic Carinalli's family has been in the dairy business since 1924. It has never been easy work on his Sebastapol farm. But according to Carinalli, these days it's becoming nearly impossible.

"A year ago I was probably paying $240, $230 (a ton) for corn. Today, it's $380 a ton," said Carinalli.

The Midwest drought has driven the price of feed through the roof and many dairy farmers are choosing to slaughter their herds and go bankrupt, rather than suffer any more losses.

"Today, the cows are worth more for meat than they are for milk. So, if you can't make it in the milk industry, no other dairyman is going to buy your cows to milk them." Carinalli said.

Milk products are sold on the commodities market and their prices are set by the government. But prices have not kept up with skyrocketing costs. The Western United Dairymen appealed to the state for an emergency price increase.

Speaking before Tuesday's announcement, Marsh predicted things will get even worse if the hearing for a price hike wasn't granted.

"If we don't get it, we will have more families closing their doors. It is a sad state. Every one of these businesses is a family owned operation, which means another family owned operation goes out of business in the state of California," Marsh said.

Even if the drought ends soon, it will take years to rebuild the herds and consumers are facing higher prices at the store. The situation is so bleak that one group in the Central Valley has set up a suicide hotline for desperate farmers facing bankruptcy or foreclosure.

Carinalli is lucky. He has 100 acres of wine grapes that are keeping him afloat. But if things don't improve by year's end, Carinalli said he may also have to abandon the life he has always known.

"If they don't turn around by the first of the year, I don't have a clue what will happen. There's going to be a lot less of us around, a lot less."

The California Department of Food and Agriculture denied the farmers' request for a hearing late Tuesday. A letter from Kevin Masuhara of the CDFA said, "…a temporary price increase will not make dairy margins positive again." Masuhara suggested that the "Secretary wants to work with industry to help create long-term solutions for problems now facing our dairy families."

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