Big Island consumers soon will be paying more for milk once a 26 cents a gallon wholesale price increase takes effect. The state Board of Agriculture last week voted unanimously in favor of the increase meant to offset rising labor, feed and insurance costs at the Big Island's three remaining dairies.

The change, which was originally proposed last fall, could take effect within a month. State agriculture officials and industry leaders characterized the increase a temporary "Band-Aid" for Hawai'i dairies, which are slowly becoming extinct.

"We're taking care of a big problem for a little while," said board member Doug MacCluer before voting for the price increase.

As recently as 1999, there were five dairies on O'ahu and five on the Big Island. Today there are two dairies on O'ahu, one of which plans to close this summer, and three Big Island dairies.

Through March, these dairies produced 12 million pounds of milk, down 22 percent from the same period in 2006. The decline of the state's dairy industry comes amid rising shipping and land costs, urban encroachment, environmental regulations and stagnant sales. Today local milk production satisfies less than one-third of demand, which is down from 100 percent in the 1980s.

The decline comes despite state milk price controls, which were put in place in the 1960s to protect local producers. 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.

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.

Big Island dairyman Bahman Sadeghi said the process for changing wholesale milk prices is flawed because it takes too long.

"We're already behind six months," he told board members on Tuesday. "I don't think it's a stop-gap because truly we're just adjusting to the cost of doing business. We're the only business that when our costs go up, we can't just pass that on."

Other pro-livestock initiatives recently put in place include the creation of a $3 million a year, two-year program aimed at subsidizing feed costs for livestock producers. Lawmakers also passed a nonbinding resolution requesting the Department of Agriculture create a task force charged with developing long-term solutions to protect Hawai'i's livestock industry.

The goal is to deliver that plan to the Legislature before next year's session, said Jeri Kahana, commodities branch manager for the Department of Agriculture. Long-term fixes could include changes to milk price controls, production quotas, subsidies and marketing plans.

"We have to address this now," Kahana said. "We're in a very critical situation."

Reach Sean Hao at shao@honoluluadvertiser.com.