California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

The federal government is stepping in to help California's struggling dairy
industry. California dairies are producing milk below cost. The Western United
Dairymen estimate farmers get an average of 85 cents per gallon; however it
costs $1.70 per gallon to make it.

The Obama administration hopes to generate $243 million in revenue for the
industry by boosting the price the government pays for milk and cheese for
the next three months. That may be long enough to keep more dairies afloat.
Farmers had been begging for help to slow the rate of dairies shutting down.
An estimated 70 have already gone out of business this year in California,
threatening its status as the number one dairy state. About 1,800 dairies
produce $7 billion worth of milk.

But some economists question whether government intervention is good for the
long term. "Markets will eventually work. They'll correct the supply and demand
imbalance and lead to a more stable and successful environment later on,"
said Bill Schiek, PhD from The Dairy Institute of California.

The following is an overview of California’s dairy industry and how its production
of milk is being used today:

Milk (Total production)                             41.2 B lbs
Cheese                                                  2.11 B lbs
Butter                                                  555.5 M lbs
Ice Cream                                              133 M gals
Yogurt                                                    581 M lbs
Cottage Cheese                                     99.5 M lbs
Nonfat Dry Milk                                       819 M lbs