Some are calling it a crisis on the dairy farm and that is what it is. With milk prices to dairy farmers so low, they are losing from $3 to $6 a hundred pounds of milk or from 36 to 73 cents a gallon for every gallon they produce. That is a crisis and there doesn't appear to be any immediate relief in sight. And the stress and concern can be seen in the faces and eyes of the dairy farmers and their families.
As one local dairy farmer said to me, "Dairy farmers seem to be hanging tough." He was saying that they are somehow staying in business, in spite of losing money. But continued low prices will eventually put a number of them out of business, and that is always very difficult for them. Many families have spent a lifetime making a living on their family dairy farms, large and small. To be forced out of business is a heart-breaking, tough decision.
Most experts say milk prices won't increase until the supply in the U.S. has dropped three to four percent. More dairy farmers will have to make the tough decision for that to happen. Or our use of milk will have to increase by the same amount, which is unlikely.
Some sharp drops in milk production are being seen in far western states such as California, Arizona and Idaho. Texas, on the other hand, has an increase. Midwestern and northeastern states' dairy farmers are still staying in the business, according to production figures.
Why the sharp drop in milk prices? Two main reasons: the huge loss of dairy exports and too much milk in the U.S. Estimates are that exports for 2009 will be down 30 to 40 percent. That amounts to an extra 3 to 4 percent of our total milk supply that needs to be sold in this country.
Some major interests would like to see a cost of production figure used in a government milk pricing program. This seems fair and would increase prices - but in the past dairy farmers have responded to higher prices with big increases in production. One group, the Holstein Association USA, has proposed a pricing formula that includes the cost of milk production. Their proposal also includes a system of quotas that would discourage too much milk from being produced beyond what the market needs. Their proposal is worth dairy farmers' consideration.
With these disaster prices on the farm, have you seen lower milk and dairy product prices in the store? Fluid milk in gallon and half-gallon containers has dropped some. Local specials have priced it at $1.98 to $2.50 a gallon compared to $3 and higher four months ago.
At the same time, milk buyers or processors have been making record profits these past nine months. Some officials are calling for an investigation of their buying and selling programs.
Ice cream, a favorite this time of the year, has not dropped much, if any. And many major ice cream manufacturers have quietly reduced their package sizes from a full half-gallon to just one and one-half quarts with no corresponding price reduction.
Many store brands of ice cream are still full half-gallons so it pays to read labels and shop carefully. There are some good store brands available. This is also true for milk, cheese and butter.
Milk and dairy products continue to be one of the best buys at your local grocery, from price and health points of view. So buy and use them on your table at least three times a day. They are good and good for you.
Parker grew up in Trumbull county, is retired from the Ohio State University and works with the local Farm Bureau Board.