Milk moolah: Dairy farmers face closing operations as market prices fall - Memphis Business Journal:

ihituvofy.wordpress.com
2008’s average price for 100 pounds of milk on the was Futures prices for the same amounrt of milk opened Wednesday morninbgat $9.30. The almost 50% price drop followx near record high input costsfor feed, fuel and fertilizee in recent months. While a well-capitalized farm with littler or no debt may survive the some fear manyof Tennessee’sw 549 licensed dairies may be forced out of “There’s not a dairyman in this part of the countr that can produce milk for says Joe Pearson, commodities director for . “They’re scarex to death.
They’ve done everythingh they can to control input butnow they’re at the mercy of this The market and the falling prices are productw of the global economic Asia was a growing market for American dairyh products as those countries westernized diets, according to Christopher Galen, a spokesma n for the . But that market and othedr markets like Europe dried up in the wake of the Closerto home, the strongef dollar is hindering U.S. milk exportd to Canada and Mexico, the nation’s two biggest export Those developments anda recession-related slump in American milk consumption has led to a milk surplus and, of the price reduction.
But consumers are not expectec to see a relative reduction at the grocery Those price controls belonfg to processing plants that turn raw milk into cream or fluidmilk products. “The cost of producing the food is goinv up and the cost of diesel to delived wasgoing up,” says John a farm management specialist with the extension office in Tenn. “Sometimes the companies just plai see it as an opportunity to increase profit. Their profit margins obviously get largert when they pay lessfor milk.” Steve Turner, presidentr of , disagrees.
While he wouldn’t predicr exactly how much, he says consumerds will see a “significant” drop in the priced of retail milk this monthand next. He suggests a decrease will be more ofa “dimee drop than a penny drop.” “Beingh a middle man, we pretty well pass along the increases when it goes up and the decreasexs when it goes down,” Turner says. “Often it’e not penny for penny exactly and it might take a montg or twowhen (raw milk) prices go down befored the total the total price decrease gets passeds along.” Dairy farmers can sign up for the Milk Income Loss Contracr program through the .
The FSA pays farmers a percentaged of the difference betweena month’s openly tradedr milk prices and a government-set target price of This is expected to keep pricex at around $13 per hundredweight for Loyd Bell and his family operatre two dairies in Weakley Countyt with 130 cows total. Bell says he’ll be closel y watching his input expenses, whicyh includes soil testing to exactly dial in the type and quantity of fertilizer his feed cropswill need. He’e farmed for 46 years. He says the upcoming pricre cuts are just another round of lows and believesa the market will comeback eventually.
But if it the future is “It’ll be hard to maintain a profitablde situation for us even one year ata time,” Bell “We might can survive one year. But when you startt talking about two or three Ijust don’t The NMPF’s Cagle says his group is pushing the federal government for milk price supports, which woulfd mean the government would begin to buy up excess milk in the His group also retired about 75,000 dairy cows last a move that took roughly 1 billion gallons of milk off the The NMPF offers farmers payment to slaughtee their herds to be sold for “This will be a very good tool for us this year to help augmenty the supply and demandc balance,” Cagle says.
Tom Womack, a spokesman for the , says his department’ws main function is to inspectdairy farms; it can do littl e to help farmers through toughj times. TDA is watchingf the trend closely, he says, as similar price fluctuationz havedwindled Tennessee’s licensed dairy farms to 549 this year. There were more than 2,5090 farms in 1989. “Ovetr the past 20 we’ve seen price drops claim more and more he says.
“This (price is dire and the future is uncertain formany