Milk Builds Strong Bones, Not Strong Profits
April 12th, 2009 by ccavan1
Many consumers wouldn’t know it based on the high selling prices of milk and cheese at grocery stores, but the dairy market is hurting, badly.
Much like the oil industry, prices per unit of milk fluctuate depending on the market and even the slightest disturbance can send the wholesale price of milk into a nosedive.
“Dairy farmers have gone from boom times to hard times within the last year. People are eating less often at restaurants, where many dairy products like cheese are consumed. Weak demand has slashed prices dairy farmers get for their milk at a time when rising feed prices and other factors have increased operating costs,” the Kalamazoo Gazette reports.
Dairy farmers have traditionally had to deal with nominal profit margins for milk and cheese. Of the retail price per gallon, most dairy farmers only take in about $1 of the cost to consumers. These tight profits were acceptable a few years ago, but in recent months the costs of producing the dairy products have outweighed the profits gained through resale.
“According to local dairy farmers, with feed, fuel and fertilizer included, it costs about $15 per hundredweight just to produce their milk, a pure loss when they receive anything under that.”
The Kalamazoo Gazette reports that many Michigan farmers can only sell their milk for $10 per 100 pounds (or roughly 85 cents a gallon) and in numerous cases the cost of producing the milk is actually higher than what they are able to sell them for in retail.
“Kalamazoo County dairy farmer Fred Vlietstra said he’s been losing $1000 per day since December and that the state of the industry is the worst it’s been in 50 years.”
Many rural communities fear that as this economic recession persists, more and more small dairy companies are going to be facing such large debt that they will be forced to close up shop.
For the hundreds of local farmers across the country, there is little to nothing they can do to improve their fortunes – they just have to wait the recession out and hope they come out intact.
Tags: Cam Cavanaugh, Cameron Cavanaugh, Dairy Industry, Economic Woes, hard times, Kalamazoo Gazette, loyola, Loyola University Chicago, Milk