Lancaster farmers review dairy economic situation
BY SUZANNE KEENE
LANCASTER Increasing milk
production coupled with billion
dollar government expenditures to
purchase the excess supply have
led to Farm Bill provisions calling
for a whole herd buyout program
and lower support prices.
But what are the factors that
have created this situation?
Lancaster County dairymen took
time out this week to look at the
dairy situation during an Ex
tension-sponsored program at the
Farm and Home Center Tuesday.
Extension farm management
specialist William McSweeney
noted that both cow numbers and
production per cow have been
increasing, while feed prices have
been down substantially.
In the past year, he said, “We
enjoyed a fairly substantial and
favorable decline in feed costs.”
Pennsylvania has seen a modest
jump in cow numbers, production
per cow and total production, while
California, Minnesota and New
York have had a “fairly sub
stantial increase in milk
production,” he said.
The end result has been an ex
cess supply of milk, with govern
ment CCC purchases estimated at
$l7 billion for 1986, representing,
“a fairly sizable jump over
previous years, with most of the
increase out of the midwest.”
The surplus supply has led to a
corresponding decrease in prices.
However, feed prices are sliding
faster than milk prices and far
mers are responding by producing
even more milk, said Extension
milk marketing specialist Jack
Kirkland.
Taking a look back, Kirkland
noted that in 1970, wholesale milk
prices ros* steadily until the ‘Bos,
when si »rt prices were lowered.
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In 1983 the whole price was bet
ween $13.50 and $l4. But in
December of that year, the support
price was reduced.
In the latter part of 1984, prices
began climbing again as a result of
the dairy diversion program, but
April and and July of 1985 saw
more declines in the support price.
“It bottomed out about June and
July,” Kirkland noted, adding that
since then, the price has been
fairly constant.
During the ‘7os the cost of the
CCC program was low, but in the
‘Bos “costs shot up dramatically,”
reaching $2.6 billion in 1983. Then,
in 1984, the diversion program
went into effect and CCC pur
chases again decreased. But at the
end of the program, CCC and
government purchases soared
again
In general, Pennsylvania far
mers got higher prices for their
milk than their counterparts
across the nation. Pennsylvania
dairymen received $14.40 per cwt.
for fluid milk and $13.20 for
manufactured milk, while Min
nesota dairymen were receiving
$13.60 for fluid and $12.85 for
manufactured. In Wisconsin,
farmers were getting $13.89 for
fluid and $13.28 for manufactured.
“So,” McSweeney said, “Penn
sylvania farmers did well on price
received for milk they marketed.
“In general, dairy farmers in
Pennsylvania are financially
healthy in relation to their coun
terparts in some of the other milk
producing states.”
The dairy industry is currently
undergoing some drastic changes,
including geographical con
centration, lower capital in
vestment, greater concern over
management and genetics and a
price/cost squeeze. “The net result
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is there will be fewer dairy far
mers in the country,” McSweeney
said.
“The price/cost struggle will
continue into the forseeable
future,” McSweeney said, noting
that the average price for milk was
$12.72 while the average cost for
milk sold was almost $2 higher, at
$14.68.
The two major expenses facing
dairymen are purchased feed and
interest, and those farmers with
high outlays in both categories will
have less chance of survival than
other farmers,” McSweeney said.
In considering participation in
the whole herd buyout program,
Kirkland urged farmers to con
sider career alternatives for the
five years they would be out of
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Penn State Extension personnel discussed the dairy economic situation with Lan
caster County farmers during seminar at the Farm and Home Center this week. From
left are Joseph Hlubik, Jack Kirkland, William McSweeney, and Glenn Shirk.
fanning. The buyout program is ded.
much different from the dairy Kirkland said the success of the
diversion program, he cautioned, buyout program will also depend
“We’re talking about a career on those dairymen who remain in
decision. the business. If they continue to
“In my opinion, I think it would increase their milk production,
be very hard to participate with they could offset any reduction in
the idea of coming back into surplus achieved by the buyout
production in five years,” he ad- program.
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FLEMINGTON, NJ - Woodson
Moffett, Jr., Director of the
Division of Dairy Industry, N.J.
Department of Agriculture, will
speak at the upcoming meeting of
the Hunterdon County Board of
Agriculture on Wednesday, Feb. 5,
a: 00 p.m.
“Woody Moffett is our state’s
leading authority on matters
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relating to the dairy industry,”
says Floyd Schwab, East Amwell
dairyman. “Mr. Moffett will bring
our local ag board up-to-date on the
current situation in the milk
producing industry.”
Schwab is chairman of the
County Board’s Dairy Advisory
Committee, responsible for
making arrangements for the
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