July 29, 2004

 

 

Milk Prices Falling In The US

 

US milk prices are starting to fall and should take another dip in August, grocers and dairy industry officials said Wednesday.

 

They noted that dairy farmers are beginning to rebuild their herds, and milk production again is on the increase.

 

It is still too early to predict where prices for whole, skim and low-fat drinking milk will settle in August, said a suburban St. Paul grocer. But he was informed earlier this week to expect his wholesale prices to drop by 30 cents a gallon at the beginning of the month.

 

The price drops now in the works mean wholesale prices for drinking milk products have backed down 27 percent from record highs set in June, the National Milk Producers Federation said Wednesday.

 

"We're hoping that retailers who quickly passed their higher input costs on to consumers this spring will be equally responsive as prices drop back down," said Jerry Kozak, president of the trade association for dairy farmers and their cooperatives.

 

Retail prices paid by consumers and the price for raw milk paid to farmers rose steadily from late summer a year ago. Two years of low milk prices prompted farmers to abandon the dairy industry and discouraged remaining dairy farmers from expanding their herds.

 

Drought conditions in parts of dairy country, and closing the border to replacement dairy cows from Canada last year, also reduced cow populations on American farms.

 

Low prices quickly became high prices, both at the farm and in the supermarket dairy case.

 

The average price paid to Minnesota farmers in June a year ago was $11 for 100 pounds. It climbed to $15.60 for 100 pounds in October, and reached a record $20.70 for 100 pounds in May this year. Milk from the farm still received $19 for 100 pounds in June, according the Minnesota Agricultural Statistics Service, while a record national average price was reached at $18.40 that month.

 

Regional differences in supply, demand and processing plants cause prices paid to farmers and prices paid by consumers to vary in different markets. However, Kozak said the average national wholesale price projected for milk in August will be $1.48 per gallon, down 28 cents from July and down 56 cents from June.

 

The dairy farmers, he added, receive about 30 cents of the dollar consumers spend on dairy products.