BARNHART, Mo. — A collapse in milk prices has wiped away the profits of dairy farmers, driving many out of business while forcing others to slaughter their herds or dump milk on the ground in protest.
But nine months after prices began tumbling on the farm, consumers aren’t seeing the full benefits of the crash at the checkout counter.
The average price for a gallon of milk at grocery stores last month was down just 19 percent from its peak of $3.83 in July.
Farmers, on the other hand, got $1.04 a gallon in April — 35 percent less than they were paid last fall. This winter, wholesale prices were down as much as 45 percent.
Price disparities are a fact of life both for farmers and anyone who shops at a supermarket, but the nature of milk — how it’s stored, priced and sold around the world — makes the gap all the more dramatic.
Today, frustrations are spilling over as the price crash creates widely divergent fortunes within the milk industry, boosting profits for the middlemen like dairy processors while pushing farmers to the edge of bankruptcy.
Darrell Kraus, a dairyman in Barnhart, spends almost as much today on hay and other supplies for his herd of 160 cows as he did a year ago, but he’s getting paid less for a gallon of milk than his father received in the 1970s.
"Somebody’s getting a cut of this, but it’s not the dairy farmer,” he said.
At the heart of the problem is the nature of milk. Unlike grain farmers who can hold out for better prices by storing crops in a silo, dairymen must sell raw milk to processors or else it spoils. And cows keep on producing whether the national economy’s expanding or in recession.
The price paid by processors to farmers is set by the U.S. Department of Agriculture based on commodity markets, which rise and fall with global demand. Some of the raw milk is processed into milk for stores as well as butter, yogurt and other products for U.S. consumption.
U.S. milk exports soared last year. U.S dairy exports jumped to $3.82 billion, or 11 percent all milk production in 2008 according to the U.S. Dairy Export Council.
But once the global recession accelerated last fall, demand, particularly exports, fell off a cliff.
U.S. farmers were suddenly faced with too much milk and too many cows. Wholesale prices crashed. Farmers found themselves spending more to maintain their herds than they were being paid for raw milk.
by the associated press
But nine months after prices began tumbling on the farm, consumers aren’t seeing the full benefits of the crash at the checkout counter.
The average price for a gallon of milk at grocery stores last month was down just 19 percent from its peak of $3.83 in July.
Farmers, on the other hand, got $1.04 a gallon in April — 35 percent less than they were paid last fall. This winter, wholesale prices were down as much as 45 percent.
Price disparities are a fact of life both for farmers and anyone who shops at a supermarket, but the nature of milk — how it’s stored, priced and sold around the world — makes the gap all the more dramatic.
Today, frustrations are spilling over as the price crash creates widely divergent fortunes within the milk industry, boosting profits for the middlemen like dairy processors while pushing farmers to the edge of bankruptcy.
Darrell Kraus, a dairyman in Barnhart, spends almost as much today on hay and other supplies for his herd of 160 cows as he did a year ago, but he’s getting paid less for a gallon of milk than his father received in the 1970s.
"Somebody’s getting a cut of this, but it’s not the dairy farmer,” he said.
At the heart of the problem is the nature of milk. Unlike grain farmers who can hold out for better prices by storing crops in a silo, dairymen must sell raw milk to processors or else it spoils. And cows keep on producing whether the national economy’s expanding or in recession.
The price paid by processors to farmers is set by the U.S. Department of Agriculture based on commodity markets, which rise and fall with global demand. Some of the raw milk is processed into milk for stores as well as butter, yogurt and other products for U.S. consumption.
U.S. milk exports soared last year. U.S dairy exports jumped to $3.82 billion, or 11 percent all milk production in 2008 according to the U.S. Dairy Export Council.
But once the global recession accelerated last fall, demand, particularly exports, fell off a cliff.
U.S. farmers were suddenly faced with too much milk and too many cows. Wholesale prices crashed. Farmers found themselves spending more to maintain their herds than they were being paid for raw milk.
by the associated press
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