Milk prices plummet, dairy farmers in deep crisis

After lifetime highs in 2007, raw milk prices have fallen by nearly half and farmers are struggling, Keith Good reports for Farm Policy.com. “Pennsylvania producers received about $11.50 per hundred pounds of milk in February, while production costs ranged from $15.50 to $18.50,” says the state’s Center for Dairy Excellence. Dan Piller writes for The Des Moines Register that “The American Milk Producers Federation says the average cost to produce milk in January exceeded the price of milk by 25 percent.”

“The number of dairy cows being sent to slaughter has risen by about 20 percent from last year, as desperate farmers cull their herds and sell at fire-sale prices,” Sue Kirchoff writes for USA Today. “Adding to the problem, banks are less willing or able to extend farmers’ loan payments amid the financial turmoil.” John Murawski reports for the News & Observer in Raleigh, "Several dozen dairy farms in North Carolina are expected to go under this year." (Read more)

A letter to President Obama from the National Milk Producers Federation warned that without more aggressive strategies, thousands of farms and jobs could be lost. “There are several reasons for the implosion: oversupply, falling export demand and continued high prices for supplies such as feed,” Kirchoff explained. “The dairy sector in the past has been less prone to huge price swings than other areas of agriculture, but that’s changing as the industry relies more on the markets and less on government programs.”

On Wednesday, Agriculture Secretary Tom Vilsack responded to the crisis. “The U.S. government will shift 200 million lbs. of nonfat dry milk surpluses to domestic feeding programs, helping low-income families and dairy farmers hit by high feed costs and low prices,” , Christopher Doering reported for Reuters. Read more.

USDA's action may have helped. "Daily Dairy Report notes that contracts for the second half of 2009 now average $16.00, up $2.31 from a month ago," notes Bob Meyer of Brownfield.