Big Island milk producers want the state to raise prices they are paid for milk by about 26 cents a gallon to account for rising labor, feed and insurance costs.

Unlike any other commodity, the price of milk is controlled by the state. Currently, Big Island dairy farmers get a fixed $2.28 per gallon for their drinking milk. That's the wholesale price paid to farmers. Consumers paid an average $6.96 for Meadow Gold milk on the Big Island in October and $4.81 a gallon for store brand milk.

The state introduced a minimum wholesale milk price in the 1960s to help local producers survive competition from the Mainland and maintain a secure source of fresh milk in an emergency. The controls, however, are not preventing a decline in local milk production.

The Big Island is self-sufficient in milk and ships a small amount off island. On O'ahu, however, about half of the milk consumed is imported from the Mainland, up from only 20 percent imported in 1999, according to the Department of Agriculture.

During the past 18 months, two out of five Big Island dairy farms closed. On O'ahu, the number of dairy farms dipped from five in 1999 to two today, and one of those — Pacific Dairy — plans to shut down on June 30, 2007. High land, labor, feed and transportation costs coupled with environmental issues and urban encroachment are making it increasingly difficult for farms to survive.

"It's just getting out of hand," said Kees Kea, general manager and part owner of Island Dairy in 'Okala on the Big Island. He said grain prices have risen about $50, including shipping, to $324 per ton in the past year or so. Meanwhile, the price paid for Big Island milk by Hawai'i's lone processor, Meadow Gold, remains fixed at $2.28 a gallon.

"We are just hanging in there because of the higher feed costs," Kea said. "I think 20 cents isn't a lot to ask for, if the people want to keep fresh milk" produced in Hawai'i.

The Board of Agriculture is scheduled to vote on whether to increase Big Island milk prices today. However, any such hike would have to go up for a public hearing and be cleared by the attorney general, the Small Business Regulatory Review Board and the governor, which could take up to a year.

The state last raised the wholesale price of Big Island milk by 25 cents a gallon in 2005, the first such increase in 13 years. And in August, the state prevented O'ahu wholesale drinking milk prices from falling below $2.36 a gallon. Big Island farm prices are set separately from O'ahu because production costs are lower with more grazing land available.

Any authorized increase in milk prices won't come soon enough to reverse a steep slide in milk production in recent years. Through September, Hawai'i milk production was down 19 percent from a year ago. That's on top of a nearly 14 percent decline in 2005.

The drop in milk production comes amid an overcall decline in livestock operations. Since 1999, 26 commercial livestock operations in Hawai'i have shut down — a 41 percent drop, according to a survey by the University of Hawai'i College of Tropical Agriculture and Human Resources. During that period, the state's poultry sector has been nearly wiped out, while the number of milk, egg and pork producers have fallen sharply.

"It's because of (rising) labor costs, insurance costs and feed costs," said Jeri Kahana, commodities branch manager for the state Department of Agriculture. "It's hard to produce milk and eggs because of feed costs and transportation costs."

At issue for Hawai'i families is the continued availability of basic food products in the event of shipping problems.

"You're looking at food security," Kahana said. "Because we're an island state, we're at a disadvantage if there's a disruption in shipping at any point."

Reach Sean Hao at shao@honoluluadvertiser.com.