Got milk?
August 27, 2008
Think you’re paying a lot for a gallon of milk now? Just wait.
An association representing more than 40,000 dairy producers across the country is using the basic economic principal of supply and demand to increase milk prices. The National Milk Producers Federation, to which the 1,500 member Maryland & Virginia Milk Producers Cooperative Association belongs, is planning to take thousands of milk producing cows out of the production line to help drive prices up.
According to the American Farm Bureau Federation Marketbasket Survey, the average price for a gallon of whole milk was $3.88.
Jerry Kozak, president and CEO of the National Milk Producers Federation, said that even with “above-average farm-level milk prices,” the average dairy farmer was still getting crunched due to high livestock feed and diesel gas prices. Kozak said in two years, dairy feed has gone up 35 percent, while diesel jumped 60 percent.
The answer, he said, is a “herd retirement program” that would cull 25,000 cattle from the ranks of milk producers. The 210 cooperative farms that agreed to the program will be paid the difference between the slaughter value of the cows and their value if they had been sold as productive milk producers.
“Some questioned whether it was prudent to use [the organization’s] resources in this fashion at a time when consumers are still looking at relatively high dairy prices,” Kozak said. “But this is a producer-funded and -focused program, and they expect and deserve to have the program operated in a way that recognizes the challenging playing field of 2008.”
The final list of farmers (none in Maryland) opting for the program was shored up on Friday, and the cattle are scheduled to be taken out of the production loop by the end of the summer. The question then will be how high will the cost of a gallon of milk go and will it drive down demand?
BEN MOOK, Assistant Business Editor
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