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Economists Say Milk Production Headed Up
fGSVILLE, OH The . agree on one point—milkproduc
of U.S. dairy policy tion is headed for an increase.
hazy. But economists
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w»i r ) nlfTßl/ KnnqT i iclnT
Ed Coughlin, director of the
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U.S. Department of Agriculture’s
dairy division, relayed this eco
nomic forecast to more than 250
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HOURS:
dairy producer delegates during
the annual mid-year meeting of
Milk Marketing Inc. (MMI).
Despite the fact that total U.S.
milk production in 1987 is down
from a year ago, Coughlin said that
a plentiful number of herd replace
ments, strong milk output per cow
and favorable milk/feed prices
ratios indicate that the nation’s
milk production trends will move
upward.
Furthermore, Coughlin said that
the most significant impact of the
whole herd buy-out on milk sup
plies and cattle resources has
already been felt.
“Approximately 100,000 (from
a total of 930,000) dairy cows
remain to be disposed of under the
buy-out program with calves and
heifers going to market ahead of
that. Consequently, we can say that
the major impact of the program
has already been felt.” said
Coughlin.
Such factors could help to trig
ger the Jan. 1, 1988 reduction in
the milk support price mandated
by the 1985 Farm Bill. The Farm
Bill calls for a 50-cent per hun
dredweight price cut if the USDA
projects Commodity Credit Cor
poration (CCC) purchases of dairy
products to exceed 5 billion
pounds of milk equivalent.
“The law doesn’t say that the
secretary of agriculture may make
the change, it says the secretary
shall enforce it,” said Coughlin
who estimated CCC purchases for
this fiscal year to range between 5
and 3.5 billion pounds of milk.
(Purchases from January through
June of this year have totaled about
4.3 billion pounds that’s a drop
from 9.4 billion pounds in 1986.)
Coughlin said that commercial
use of dairy products is probably
the brightest story on the dairy hor
izon. In the first four months of
1987, commercial disappearance
of total milk increased 3.6 percent
over the same period last year a
13.9 percent increase since 1983.
Despite this strong growth in
product disappearance, Coughlin
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said that increased consumption
would not be able to absorb the
expected rise in milk production.
MMI General Manger Gordon
Riehl echoed Coughlin’s produc
tion forecast and discussed price
and policy outlooks.
Riehl projects that the 50-cent
drop in the milk support price for
Jan. 1, 1988 is fairly certain. He
reminded producers that, on Oct.
1, 1987, the 1985 Farm Bill calls
for the removal of the 25-cent
dairy termination program assess
ment, and the enactment of a
25-cent milk support price cut.
Those measures will counteract
each other and, in fact, not affect
the current milk support price.
Regarding dairy policy, Riehl
said that any legislative changes
prior to the upcoming election
would be budget driven and that
inclusion of a supply/management
type program for dairy is highly
unlikely.
Riehl said that MMI will con
tinue to support the re-enactment
of a whole herd buy-out program
because it was directly effective in
lowering productin. However, he
added that farmers should not
expect such legislation.
“Lowering milk prices is not an
answer to milk production. If we
try to push cows out by price alone,
we also push a lot of farmers out of
business. The whole herd buy-out
efficiently lowered production by
getting directly to the problem of
too many milk cows, and it went
down a generation or two and
removed some unborn calves and
young stock,” said Riehl.
The program added an esti
mated 25 to 30 cents per hundred
weight to producer pay prices.
MMI is a 7,500 member dairy
fanner owned cooperative encom
passing an eight state midwestem
area including Ohio, Indiana, Pen
nsylvania, Michigan, New York,
Maryland and West Virginia. Last
year MMI marketed more than 4.5
billion pounds or 523 million gal
lons of milk.
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