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1509 PD: Letter to Congressmen

Robert E. Gilbert Published on 07 October 2009

The following is part of a letter sent to members of Congress by Robert E. Gilbert, Chairman of A. L. Gilbert company.

To the Members of Congress, I would like to discuss the parity pricing system which was based on the comparative price or prices of agricultural products versus the prices of all other goods and services during the 1912-1913 period.

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A discretionary formula based on seventy five to ninety percent of parity was used to set the floor price of milk. This served well for many years; from the 1940s to the 1980s. Seventy five percent of parity was usually below production costs but did not destroy the industry and gently corrected oversupply.

Also, ninety percent of parity encouraged production when needed. I don’t know where the present devastating $10.00 - $11.00 per hundredweight support price came from when there was already a $16.00 to $18.00 per hundredweight or more cost of production.

It is now absolutely impossible for even the strongest dairyman to survive long as they rapidly burn their equity. I have worked on dairy marketing problems including the 1983 Milk Diversion Program and the original “Cow Kill” program of 1987.

I used to discuss with legislators, some of whom are still in office today, the fine line dividing surplus and shortages and that even a perception can be market orienting. Going back to Biblical times, everyone has heard of the seven years of feast and the seven years of famine illustrating that a stored surplus is one of the greatest assets a nation can have, and especially in time of war.

Even the squirrels put some nuts away for the long winter ahead. Our nation is in uncharted waters regarding the economic recovery as more workers are laid off and more businesses go broke, such as in the dairy industry.

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As unemployment benefits expire it is essential that we have a reserve food supply to quell tensions. As a multibillion dollar dairy industry goes out of business when and how will the wonderful products on the grocery store shelves reappear?

There needs to be a marketing program developed to utilize over production of the food stuffs to satisfy the needs of everyone and not penalize efficient production. We are available to work with members of Congress, the USDA, and the California Department of Agriculture to expedite the utilization of our so-called surplus of milk before we create a shortage, which will have a devastating effect on all. PD

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