Published: August 08, 2007 06:48 pm            

Bought milk?

PURDY, Mo. — Hitting a record high of $20 per hundredweight, or roughly $2 per gallon, raw-milk prices paid to farmers likely will peak this month and then drop again, dairy economists say.

Consumers, though, will continue to pay more per gallon of milk.

“We are the beneficiaries now after suffering some horrible, horrible years the last two or three years when we were paid less for milk than we were 30 years ago,” said Purdy, Mo., dairy farmer Larry Purdom.

Purdom, who is chairman of the Missouri Dairy Association, said that compared with fuel or bottled water, milk remains inexpensive.

“Milk is still a good buy compared to everything else you buy,” he said. “A lot of the cost is simply in movement.”



Retail prices

According to a U.S. Department of Agriculture dairy market report, the cost for a gallon of milk at grocery stores will continue to climb through 2007.

The USDA forecast predicts an increase in raw-milk prices into the fall, an indicator that the retail price of milk also will rise. The national retail price for a gallon of whole milk rose from $3.29 in January to $3.80.

Last July, Missouri dairymen received $1.30 per gallon of milk, compared with $2 this July, said Joe Horner, dairy economist with University of Missouri Extension. Most observers believe raw-milk prices will peak this month and remain robust through early 2008, he said.

Horner said international demand is strong, but eventually dairymen will produce enough milk to drive prices down.

“Rising prices normally spur dairymen to make more milk and ruin their own party,” Horner said. “A year from now, we’ll have significantly lower prices.”

Horner said milk prices follow simple supply and demand patterns. A booming world demand for dairy ingredients such as lactose, dried whey and powdered milk contributed to all-time high milk prices this year, he said.



Farmers’ cut

Consumers’ milk prices do not relate to how much farmers spend to produce it, Purdom and Neosho dairyman Mike Wilson said.

“That’s what is frustrating to us,” Wilson said. “The price goes up in the stores, but our price doesn’t. For a number of years lately, we received record lows, but it wasn’t low in the stores.”

Wilson said it is not up to farmers to tell processors how much to pay them for the milk they produce.

“We had to buy hay this year, the first time in years,” he said. “Corn prices also had a big impact on us.”

Wilson said he considers advances in ethanol production positive, but the movement has created hardships for dairy farmers. Fewer acres are available for soybeans, a key ingredient in dairy feed, and corn prices are much higher, he said.

Wilson said that last fall he spent $180 per ton on feed, compared with $220 per ton now. He said his cattle consume 6 tons per week in summer and 6 1/2 tons every four to five days during the rest of the year.

At that rate, Wilson said, he is spending about $1,000 more per month for feed than he did last August.



Linda Greer writes for The Joplin (Mo.) Globe.





Council advice



The National Dairy Council recommends that Americans drink at least 3 cups of milk, or the equivalent in dairy products, per day. Children 9 to 18 and adults older than 50 should drink 4 cups daily, or about 1.75 gallons per week, the council says.

        

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