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Global Recession Impacts Dairy Prices, Farmers

Amid the economic slowdown, the dairy industry is being hit with high costs and lower profits, forcing many farmers to make tough decisions. NewsHour special correspondent Jeffrey Kaye looks at how some California farmers are responding to depressed global demand.

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  • JIM LEHRER:

    Next, the latest in our series of snapshots on the recession and its impact on different industries. Tonight, special correspondent Jeffrey Kaye reports from California on the dairy business.

  • JEFFREY KAYE:

    When the economy went sour, the milk industry took a big hit. After years of cows and dairy farms becoming larger and more productive, milk prices went down, demand dropped, and farmers found themselves in trouble.

    Geoffrey Vanden Heuvel, who runs two dairies in Southern California, estimates he is losing over $70 per cow per month because, despite the dried-up market, he still needs to feed them.

    GEOFFREY VANDEN HEUVEL, dairy farmer: If you do the math, I milk 1,400 cows. And so the $70 — we're looking at a little over $100,000 a month on my operation that we're actually expending more in expenses than we're taking in income.

  • JEFFREY KAYE:

    Ken Cook of the Environmental Working Group, a nonprofit that monitors agribusiness, compares dairy to other struggling industries.

    KEN COOK, environmental working group: You have a series of bad policy signals here, too, just as we've seen in banking, just as we've seen in the housing industry, too. Basically, they're upside down, like many mortgage-owners are now, too, with their homes, except they're upside down with multimillion-dollar dairy operations that they can't pencil out a profit as far as the eye can see.

  • JEFFREY KAYE:

    The situation is particularly alarming for smaller dairies.

    JOHN ANKLER, cattle trucker: Every time you see a milk truck go down the road, that dairyman just lost $3,000.

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