—Lancaster Farming, Saturday, May 19, 1973
8
Milk Price Questions & Answers
(Editor's Note: The American
Dairy ‘ Association recently
publicized a series of questions
and answers on milk price and
the dairy price support program.
The material was prepared by
Truman Graf, an extension dairy
economist from the University of
Wisconsin. The report is
reprinted here.)
Question: Why is there a dairy
price support program when
farm milk prices are at an all
time high - some 30 cents per
hundred weight above “sup
ports”?
Answer: As a protection against
disastrous declines in the future -
in the past year, dairy con
centrate feed costs went up 21
percent while farm milk prices
increased only 6 percent. Unless
the dairy farmer has some price
protection, rapidly rising
production costs could hurt him
badly and jeopardize needed milk
production in the future. Fur
thermore,'milk prices are low,
not high - at average U.S. wages,
it now takes 9.9 minutes to earn
enough money to buy a half
gallon of milk, compared to 15.4
minutes in 1953.
Question: What is the present
milk price support situation?
Answer: The announced support
level for manufacturing milk of
average butterfat test for the
next year (April 1, 1973 - March
31, 1974 is 75 percent of parity -
$5.29 per hundredweight. (This is
about $5.15 per hundredweight
for milk testing 3.5 percent
butterfat). This is an increase of
$.36 per hundredweight over the
previous support level of $4.93 per
hundredweight for milk of
average butterfat test, which
applied for the period April, 1971 -
March, 1973; and which was 82
percent of parity when
established in 1971. On this basis,
75 percent of parity then Would
have been only $4.51 per hun
dredweight. Since “parity”
measures “purchasing power” to
farmers, the $.78 per hun
dredweight increase to maintain
a 75 percent support level (5.29 -
$4.51) indicates the tremendous
increase in production costs
farmers have sustained in the
past 2 years. The actual increase
in supports was, of course, only
$.36 per hundredweight, but this
was because supports were
reduced from the previous 82
percent of parity to 75 percent of
parity.
Under the law, milk must be
supported at from 75 percent to 90
percent of parity.
Question; How is the $5.29 per
hundredweight support level for
manufacturing milk ac
complished?
Answer: By the Commodity
Credit Corporation (USDA) of
fering to buy cheddar cheese at 62
cents per pound, skim milk spray
powder at 37.5 cents peri pound,
and butter at 60.92 cents per
pound (at Chicago). This is an
increase of 7 1 /* cents per pound in
the buying price for cheese, 5.8
cents per pound for skim milk
powder, and a decrease of 6%
cents per pound for butter.
Question: How could the butter
purchase price be decreased and
still achieve an increase of $.36
per hundredweight in support
prices for milk, and why was the
butter purchase price decreased?
Answer: The skim milk powder
purchase price was increased
enough to offset the butter price
decrease. Butter prices were
decreased to make butter prices
more competitive with
margarine prices, and hopefully
help butter reclaim some of its
lost market. Butter consumption
has fallen over 12 pounds per
person per year since 1940, and is
now only 4.2 pounds.
Question: Will the USDA “sup
port” price for
butter, skim milk powder, and
cheese cause any problems for
the dairy industry?
Answer: Yes, if farm milk prices
fall back to the support level of
$5.29 per hundredweight for milk
of average butterfat test, and the
I XX my crops self-
JL X propelled with Uni. And at
real savings. I run about 100 acres of corn
through my Uni-Sheller; the rest through my
Uni-Picker. My soybeans, well, 1 get them
with my Uni-Combine. I also do a lot of cus
tom work.
Oliver Johnson, Grain Farmer
CAN DO machines
f rom the CAN DO pco})le.
A. L. HERR&BRO.
Quarryville
KINZER EQUIP. CO
Kinzer
LONGENECKER
FARM SUPPLY
Rheems '
USDA starts buying these 62 cents per pound for cheddai
products to support milk prices to cheese, 37.5 cents per pound foi
farmers. skim milk powder, and 60.9:
At the USDA purchase prices of
canyou?
CHAS. J. McCOMSEY
&SONS
Hickory Hill, Pa.
LANDIS BROS., INC,
Lancaster
(Continued On Page 9)
That’s how grain farmers
feel about Uni. They
like what it does.
Spending on their needs,
it lets them plant
nd harvest self-propelled,
make haylage and silage
self-propelled, make ear
corn feed, even remove
snow quick and easy
self-propelled.
j 1
g!S*u.
If you haven’t
seen Uni lately, stop in.
It’s the coining thing
and we’re trading big.
STOLTZFUS
FARM SERVICE
Cochranville, Pa.
ROYH. BUCK, INC.
Ephrata, R.D.2
N.G. HEIJSHEY & SON
Manheim