March 23, 2006

US dairy co-op says milk supply driving prices down

US dairies may be selling more milk but are doing so at much lower prices, said Diary Farmers of America on Mar 21.

The country's largest dairy network of about 20,000 farmer-owners sold a record 27,079 tonnes of milk last year and generated US$8.9 billion in sales, a 5-percent increase over 2004.

However, profits for the industry declined 84 percent to US$10.2 million as increased supply put downward pressure on prices.

Rick Smith, the co-operative's chief executive said that they will find it challenging in 2006 to get supply and demand back in alignment.

Many dairies bought more cows and increased milk production when milk prices reach record highs two years ago.