May 27, 2004

Dairy Farmers Milking More Dollars Out Of Consumers

While $2.00 a gallon gas is stealing the headlines, $4 a gallon milk will mean more money for local producers.

Higher gas prices may have locals wishing they could buy an oil well. Several local farmers may have found the next best thing thanks to skyrocketing milk prices.

The Scotland County Livestock Market hosts a monthly dairy sale at the barn in Memphis. At the May 5 dairy sale cows were going at a considerably higher rate.

“We sold several cows that had been going in the $1,200 range for as much as $2,000 today,” said Barb Blomme who owns and operates the livestock market with her husband Jerry.

Blomme pointed the finger at the huge jump in milk prices in 2004. The price paid to dairy farmers more than doubled in April with milk going as high as $19.65 per hundred weight.

When the January issue of the University of Missouri’s Dairy Business Update newsletter was published on January 26, 2004, the Class III futures price for April milk was $12.05. Just three months later the April Class III price announced April 28 was around $19.60 per cwt. That is a jump of 62% in the price of Class III milk.

It stands to reason that the cows responsible for producing this now higher priced milk, would in turn cost more.

Agriculture experts raise a number of factors for the milk price increase. However the largest factor is declining cow numbers, which have resulted in lower production numbers.

According to the Missouri Agriculture Statistics Service (MASS), dairy cow numbers dropped two percent this year to 8.99 million nationwide. The Missouri dairy herd dropped some 9,000 head to 125,000 cows as of January 1, 2004.

Scotland County ranks in the top 30 among the state’s 114 counties (the county’s highest ranking in any agriculture product) for dairy herd size with 1,200 dairy cows. Nodaway County is top in Missouri with more than 36,000 dairy cows.

The price increase from the farm is having an impact on the retail end as well. The United States Labor Department reported the average price for dairy products jumped up 10.4 percent in April, the biggest jump in the past 60 years.

According to the United States Department of Agriculture, milk prices at the store have gone up an average of 50 cents this year.

The USDA’s federal milk order market administrators reported the average price paid for a gallon of milk in the U.S. at this point in May is $3.43. The Seattle, WA market is paying the highest price at $3.91 while Cincinnati shoppers can still buy a gallon of milk for $2.81. Locally the price is hovering around the $3 mark.

How long will the higher prices last? Experts are forecasting the $19 price level during the second quarter will drop to the $15.50 to $16 range next quarter before declining even further in the fourth quarter to $13.30 to $14.30. That’s still higher than the $12 price early in 2004 so don’t look for too many bargains at the June 2 dairy sale at the Scotland County Livestock Market.

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