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Dairy in Crisis: Low Prices Means Less Cows, More Burgers

by: Jill Richardson

Wed Feb 18, 2009 at 15:08:44 PM PST

According to the AP (via FarmPolicy.com):

Hundreds of thousands of America's dairy cows are being turned into hamburgers because milk prices have dropped so low that farmers can no longer afford to feed the animals.

Currently, farmers are getting about $.80 per gallon - HALF of the estimated $1.65 it costs per gallon to produce it. Meanwhile, consumers are paying about $3.67 per gallon (twice the cost of the milk, but four times what the farmer receives!) We've currently got 9.3 million dairy cows in our country, and more than 1.5 million of them could be headed to McDonalds before the year is up if prices don't change soon.

Dairy farmers don't price milk by the gallon. They go by the hundredweight (i.e. 100 lbs of milk), abbreviated cwt. The average price for 2008 was $17.44/cwt. Currently, it's at $9.30/cwt and some estimate it will fall even more in the near future, keeping below the break-even price for another six months!

But there's more! This article treats dairy as if it were a simple issue of supply and demand, mentioning decreased demand abroad for U.S. cheese and butter, and a drop in people eating out at home. Fair enough, but as I wrote in a previous diary, the link between supply and demand in dairy is broken. There's a major problem with anti-competitive behavior by a powerful few. And even if the issue WERE supply and demand - if we've all got oversupply killing our prices, then why can't we get together on this and stop using rbGH to lower supply and quit allowing foods to include imported (and crappy) milk protein concentrate (MPC) to increase demand???

Jill Richardson :: Dairy in Crisis: Low Prices Means Less Cows, More Burgers

Tags: Milk Protein Concentrate, Competition, dairy, (All Tags)

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Dairy in Crisis: Low Prices Means Less Cows, More Burgers | 2 comments

dairy prices are weird (4.00 / 3)

as are egg prices. They always seem to be going all over the place. It wasn't that long ago that dairy prices (and not organic, either) were through the roof.

Organic milk has gone up a little where I live. Horizon is priced at about what the better brands were a year ago; a little under $4 a half gallon. Commercial half and half was close to $3 a quart sometime last year. I switched to organic milk then since both are ultra pasteurized and it was actually a bit cheaper to use organic milk (in my coffee). Organic half and half is really expensive but whole milk is just fine for coffee; I don't really like the extra fat from the half and half anyway.

Organic dairy farmers are doing all right with relatively stable prices, since have the extra burden of having to feed their animals organic food, and grain has gone up a lot, even non-organic grain. The organic labeling supposedly means it doesn't have any melamine in it, or at least if it does, it's there illegally. I can't guarantee they're feeding organic food that wasn't grown in China, though.

It would be really, really good to support any movement within the organic food industry to start labeling indicating where the food was grown, or where animals producing the food are living. I could easily see the OF industry spearheading this. I liked the idea (referenced elsewhere on this blog within the last day or so) of having a code on the product container you can use to access grower information on the web; that's really neat. You could do it with produce via tags as well. This is interestingly oriented towards decentralization as well, as it gives different farmers and regions ways to be perceived differently. I can't see any downside, myself, though I'm sure there will be lots of whiners in the food industry saying "it's too complicated, it's too expensive." But we already have lot number systems that are involved in recalls, etc.; in some ways this is just about making them more prevalent, transparent and consumer-friendly, and I think we really need that just to address food safety issues alone.

"If God were to appear to starving people, he would not dare to appear in any other form than food." - Mahatma Gandhi

by: Miep @ Thu Feb 19, 2009 at 01:40:08 AM UTC

my thought re: melamine (4.00 / 2)

which is totally a good point... if you are letting your cows graze, you know they aren't eating melamine :)

"I can understand someone from Iowa promoting corn and soy, but we are not feeding the world, we are feeding animals and soft drink companies." - Jim Goodman

by: Jill Richardson @ Thu Feb 19, 2009 at 02:50:07 AM UTC

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