What is up with milk?

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Johnny Oxygen's picture
Johnny Oxygen
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What is up with milk?

A year and a half ago milk was $1.80 a gallon now it's around $4.00 a gallon. So supply and demand would dictate that the reason for the 120% inflation is due to scarcity. But in fact there is too much milk on the market, way too much. The average dairy farmer makes $15,000.00 a year and they are going out of business faster than ever. So why is that? Is it happening in other industries?

I'd like to hear your thoughts.

Davos's picture
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Re: What is up with milk?

No idea. When I taught flying some students were dairy farmers. Tough business, lots of hours, lots of work, hard work, loads and loads of debt, they did all the work, assumed all the risk and made the least of everyone in the chain, save for a few large farms.

If I had to guess I'd say fuel and the growing worthlessness of our dollar. From what I have heard, Cap and Trade will pummel farmers, I'm sure now that Health "Care" is on it's way this will be the next one.

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Re: What is up with milk?

"A: Unlike any other food, the base price of milk in California is calculated each month from a formula. State officials plug in the market prices for the four globally traded dairy commodities -- butterfat, dry milk powder, whey powder (a byproduct of cheese-making) and cheddar cheese -- and churn out the price that bottlers must pay farmers for their milk."

Q: Is the demand for corn to feed ethanol refineries leading to higher dairy prices?

A: No -- or at least not yet.

Corn is a staple feed on large dairy farms, and it is about 35 percent more expensive this year than last, largely due to the demand from new ethanol plants. But feed costs are not part of the formula that determines the price of milk, so there's no direct way for dairy farmers to pass on their costs to bottlers and consumers."

http://www.foodandfuelamerica.com/2007/06/why-milk-prices-are-high.html

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Re: What is up with milk?

You certainly are right, it seems to have been skyrocketing since July.  I am speculating but, in addition to rising fuel costs, I wonder if they (the corporations, not the farmers who inevitably get hurt it seems)  are able to increase prices to anticipate futures costs re: impending feed shortages since grain production (soy in particular) has been reported here as being off.

http://future.aae.wisc.edu/data/monthly_values/by_area/10?tab=prices

 

Units : $/cwt
Source : USDA National Agricultural Statistics Service

 


1961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009

Month Prices
Jan 13.30
Feb 11.60
Mar 11.80
Apr 11.90
May 11.60
Jun 11.30
Jul 11.30
Aug 12.00
Sep 12.90
Oct 14.20
Nov 15.30
Dec 16.30

Close

  •  
  •  

 

   

© Brian Gould, Agricultural and Applied Economics, UW Madison    
crazyhorse's picture
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Re: What is up with milk?

My grandfather, uncle, and father were all dairy farmers.  Cows need milked twice a day...EVERY day.  There were not too many vacations for dad as the family farm would not hire help to milk the cows (if one diseased or bad cow was milked, the whole batch would be ruined...guess our family didn't trust anyone else with that responsibility).  Our family got out of the dairy business in the late 90's.

Davos hit the nail on the head...the farmer takes on the most liability but makes his living at the whim of others in the supply chain.  I don't know how dairys are making a living today.  Most have assumed the "go big or go home"  approach to keep afloat. 

There is nothing like the taste of fresh whole un-pasturized, un-homoginized milk!  Wish I still had access that that...

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Re: What is up with milk?

It's always the little guy that gets it.  I don't drink milk but feel bad for these farmers who are just trying to make a living.

There is a special place in (fill in the blank)  for the corporate heads who run these factory productions. 

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Re: What is up with milk?

Goldman Sachs has moved into Milk Futures speculating?

(Milk is $2/gal where I live)

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Re: What is up with milk?

I've known a fair number of dairy farmers going back to the 70's.  It has been an economically marginal profession for a long time with milk prices fluctuating frequently for reasons that are not always clear.  The family dairy farmers who are still farming are not doing so for the income, but for family tradition or the absence of options.  Oil intensive modern factory farms will shut down too when energy prices head north, or we'll have to resign ourselves to paying a lot more for food...or we'll have to localize our food production.

Doug

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Re: What is up with milk?

Milk price must vary a lot by region. $2.89/gal (nonfat) where I live!

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Re: What is up with milk?

 My son works on a dairy .  They are being told the overseas market has crashed .  They are getting $8 a hundred pound .  It is not the dairies making the money .   They are Debt free smaller operation ... hoping to hang in there.

  I buy mine straight from the Amish ( organic Raw milk ) for $2 a gallon and they are grateful for that price .

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Re: What is up with milk?
Doug wrote:

I've known a fair number of dairy farmers going back to the 70's.  It has been an economically marginal profession for a long time with milk prices fluctuating frequently for reasons that are not always clear.  The family dairy farmers who are still farming are not doing so for the income, but for family tradition or the absence of options.  Oil intensive modern factory farms will shut down too when energy prices head north, or we'll have to resign ourselves to paying a lot more for food...or we'll have to localize our food production.

Doug

 

I recently saw "Food, Inc." which has great footage of the beef ammonia processing plant (importing beef bits from South America and the US to sanitize) and also talks at length about federal subsidization of grain prices.

Is the dairy industry given the same kinds of governmental support as other areas of agriculture?  If so, perhaps the government has a hand in such prices changes as well. Again, just speculation.

 

FWIW soy milk here is around 2.89 a Quart (not gallon).  Odd since soy is so much less expensive to produce.  Again, I assume it is because of price supports of the dairy industry. Either way inflation seems to be hitting food prices in my area WRT meats, fresh fruits (we had 5 dollar a pint berries this summer), and my veggie burgers have gone up about 30 percent as well. Just the beginning, of course it doesn't get counted in the CPI...

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Re: What is up with milk?

You guys don't know how lucky ypu are......  We pay AU$2, minimum, per LITRE!  Since there are 3.8 L/gallon, that's AU$7.60/gallon, and organic unhomoginised milk is AU$5.50 (to as much as $6,25!) a Litre.....  Goat milk is even more expensive. Oh and the Aussie dollar is fast approaching parity.

Your dairy farmers are being screwed alright.....

Mike

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Re: What is up with milk?

Since last July I've gotten all my milk and milk products, except some butter, from my two Nigerian Dwarf goats.  I milk once a day and love my goats; they are like dogs in that they follow me around, meet me at the gate, etc.  Plus the milk is fresh and whole.

Getting off the "dairy grid" is one of the best things I've ever done!  Try it, you'll love it!

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Re: What is up with milk?

Great comment, Lauren....same thing is happening with backyard chickens as well.  Good defensive move with regards to food quality as well as cost.

Dwarf goats can often be kept in your backyard with a small house/yard-- pygmy fainting goats are apparently much less inclined to wander over the fence! But I bet the milk from the Nigerian Dwarfs is better...Wink

juli

 

 

 

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Re: What is up with milk?

Really great responses guys.

As usual, thank you all very much.

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Re: What is up with milk?

Hey Juli and Lauren

I'm getting ready to 'go goat' for dairy. The literature I've read seemed to recommend the more traditional varieties (Nubians etc. ) for milk production. Your posts got me thinkin' about Nigerian Dwarf. What are the advantages/disadvantages of either breed in your opinion(s)? I've got plenty of space (four acres) so that's not an issue. Also, I've got three small children so kid friendly (pun?) is important. Any comments?

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Re: What is up with milk?

In my locale the local dairies' CEO absconded with the $ and left them in a bad position.  For some reason they reorganized with a huge corp. instead of joining the cooperative of Organic Valley which guarantees better prices.   Also, as the topic had come up, this caught my eye today:

...In my own region of the country, thousands of dairy farms have gone out of business. Did those farmers just hate their work and voluntarily give up the ghost? Nope - I know these guys and they are my neighbors. My town had twice as many dairies 10 years ago, and twice as many as that 20 years ago. It has been a long and painful process of agonizing attrition, farmers hanging on just one more year, trying to make it work as they are undercut by people with 4,000 cows and with an agricultural system that would rather invest money in research to make the poop less toxic than simply recognize that none of us are served by the consolidation of dairy farming. It would haven't taken a massive shift in subsidies and practices to keep those guys in business, and I know 10 who would go back in a heartbeat, if they could be promised something other than another disaster. These are guys who love their cows, who know their 60 cows, who wanted nothing more than to keep getting up at 4 in the morning for the rest of their lives so that you could drink a glass of milk.
 
A few days ago, the New York Times ran an article about the problem of manure handling on large farms. . From the title "Down on the Farm, an Endless Cycle of Waste," which completely misses the point that manure is not "waste" to the end, the article failed to ask any of the really pertinent questions raised by really large scale industrial agriculture and its chronic problems with manure handling.
 
Lots of cow manure. A typical lactating Holstein produces about 150 pounds of waste -- by weight, about two-thirds wet feces, one-third urine -- each day. Mr. Volleman has 3,000 lactating Holsteins and another 1,000 that are temporarily "dry." Do the math: his Wildcat Dairy produces about 200 million pounds of manure every year.
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Re: What is up with milk?

mallard, you hit the nail on the head......  today's consumer society treats everything that can't be easily/cheaply consumed right now as waste, and then replaces the potential input with a fossil fuel one.  It's funny how things turn up like this, but if you visit my blog (URL at the bottom of every post) you can see what we do with our goats' droppings, and it isn't wasted! I only wrote it up a few days ago.....

Our girls, BTW, are Nubian/Saanen crosses which after their first kidding produce a litre+ a day each (twice milking).  Ther mothers, after their third kidding, produce 3 to 4 times that much! IMO, goats are also more sustainable than cows, requiring way less water and producing 1/10th the amount of greenhouse gases. They're way more fun too.  I helped a friend move his cow to the neighbour's bull, and what an epic effort that was!

It's also interesting how your dairy farmers face exactly the same problems Australian farners do...

The whole debacle is thankfully unraveling, and I'm hopeful common sense will one day reign again.

Mike

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Re: What is up with milk?

Hey Earthwise,

Best breed really depends on your climate, amount of forage available (goats are browsers, by the way, think deer...not the same kind of ruminants as cows and sheep!) and temperament obviously --especially with children.

If you have the space and fencing available, you could consider one of the larger breeds like Saanens or regular Nubians--there are also other breeds like LaManchas...I suspect (maybe she can confirm?) that Lauren is dealing with fairly limited space --such as an urban backyard and lawn. Check out the dairy goat breeders in your area and talk to them about why they chose the breed they have.

If you opt for a larger breed, you'll get more milk and will need higher, tighter fences (remember the old saying about the perfect fence being bull strong, pig tight, and goat high.

Here's a link that shows the 6 major breeds --but the dwarfs are really cute...good luck!

http://www.goats4h.com/DairyGoats.html

juli

 

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Re: What is up with milk?

We have a couple of dairies local to Alaska, but the prices for their milk and dairy products are usually substantially higher than the prices offered by the Fred Meyers, Safeway and Walmart brands.  About $5 a gallon vs. $3-4 a gallon typically.  My family buys local whenever we can despite the higher cost, but we have the luxury to afford to do that, and I don't know how many other people here can and I worry how long the local dairies can hold out.  I don't know the specifics but I'm very sure it's more expensive to keep cows this far north than in more temperate states, at least at current energy prices.  Dairy products seem to be selling at discount prices, and while I've been taking advantage of some of the low prices for longer term food storage (especially with the good Tillamook brand cheeses!) I can't help but wonder if most dairies are selling at break-even prices or maybe even at a loss.  I hope that not too many local dairies die out before Peak Oil makes its presence known.

- Nickbert

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Re: What is up with milk?

since it appears the Robinsons have milked more cows-n-goats than most here,and i'm sure i've hand milked more than most.

I'ld proceed slowly into the ruminant arena,as dairy is cincerned. Goats are very seasonal and will require light in fall winter esp.northern lattitudes. unless your hands are small,milking a goat can be a two fingered affair. goats are more prone to sudden sickness esp to uninitiated. Their alot cleaner than cows and their cheese is better. most in usa don't like goat milk as a beverage. it goes on and on.

the Robinsons

350acres,100beeves,60goats,20sheep,50chickens,4dogs,3children,1wife,innumerable opinions,will communicate is sent PM,this am hand milked two jerseys and one irish dexter, one saanenXkiko,and two nubianXkiko                                

 

 

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Re: What is up with milk?

I recently visit an LDS cannery and bought quite a bit of dry milk which will keep for ten years. The head of the cannery states that the LDS distribution network says that dry milk prices are about to go up by another 40% in the very near term. They sell at their cost and are open to non LDS members. Might be worth stocking up if you have young children. I am not LDS but they were happy to serve a prepper.

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Re: What is up with milk?

 Robie ,   How do you like that Dexter and how much milk does she give ?   I am real partial to  Brown Swiss cow's milk . with Jersey as a second .    The idea of a small cow would seam to have many advantages .

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Re: What is up with milk?

Hey there Robie,

Good post as usual. Seeing that you've had your hands on more teats than an entire frat house, I hereby designate you as CM.com DAIRY EXPERT. (Admin.: Do I have the authority to do that? Oh well.)

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Re: What is up with milk?
earthwise wrote:

Hey there Robie,

Good post as usual. Seeing that you've had your hands on more teats than an entire frat house, I hereby designate you as CM.com DAIRY EXPERT. (Admin.: Do I have the authority to do that? Oh well.)

Not to be off-colour here but as we are discussing milking (ahem)...once as an absentee dairy sheep owner, as I sheared my first sheep, all I could think about as I guided the electric razor over her belly was "guard the teats! guard the teats!" Talk about tiny.

Not too easy to milk... But I do love sheep's milk cheese!

LOL juli

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