Dairy Industry Downside Part 2

Dairy Industry Downside Part 2. I’m Greg Martin with today’s Line On Agriculture.

The dairy industry is experiencing one of the biggest slumps ever and it may very well get worse before it gets better. The price farmers are being paid for their milk is barely keeping pace and even then the price of a gallon of milk at the grocery store is not as high as it could be according to David Darr, vice president of sustainability and public affairs for the Dairy Farmers of America.

DARR: The resale prices never change quick enough and we know that’s on the hearts and minds of dairy producers across the country. We are starting to see some positive trends in that. We’ve seen some major retailers running promotions across the country, promotions such as 10 half gallons for $10. We’re starting to see retail cheese prices under $3 a pound, starting to see more gallons go on special for $2 or less across the country and we know that that does lead to consumers buying an extra half gallon or gallon of milk or a package of cheese.

Bottom line for the dairy industry is selling more products both at home and on the export markets. Darr says they are affected by the worldwide economic downturn.

DARR: Long term we are still very bullish an optimistic about the U.S. providing dairy products for consumers around the world. In 2008 the United States exported a record amount of dairy products to countries around the world. It exceeded for the first time 10% of U.S. milk production was exported but a lot of it is similar to the recessionary pressures we feel here in the United States.

Even with all the extra push that DFA is doing on the export market, those export figures are down.

DARR: In recent months we are now exporting about half of the non-fat dry milk that we were six months ago and declines in cheese exports have been similar to that. And it’s really going to take a few months and stronger – more trust and optimism and global economies for that demand to come back.

On the extreme side Darr says that unless we see a turn around soon, many producers will just not make it.

DARR: Unfortunately declining farm numbers are something that all segments of agriculture face whether it’s in the cattle industry, the pork industry, the corn industry or definitely in the dairy industry and we do see a decline in farm numbers from one year to the next and slowly we see larger farms but smaller numbers of them and in cycles like this unfortunately it is going to help accelerate that and there will be a larger number of producers and families that exit the dairy business.

That’s today’s Line On Agriculture. I’m Greg Martin on the Northwest Ag Information Network.