A22-Lancaster Farming, Saturday, July 29,1989 CCC Butter Inventories At 5-Year High By Blair Smith And Robt Yonkers, PSU BUTTERFAT “The natural fat of milk.” This definition of butterfat by Webster sounds innocuous enough, but oh what a dilemma this “natural” substance presents to the dairy in dustry! It wasn’t too long ago that non-fat dry milk powder was in chronic surplus, now it is butter that the Commodity Credit Cor poration (CCC) is having trouble getting rid of. Cheese and powder stocks are virtually non-existent, but uncommitted CCC inventories of butter are at a five-year high. And growing. Changes In Consumption The primary reason* butterfat is in surplus is because consumers want less of it in most of the milk and dairy products they buy, at the prices they must pay for the higher fat items. Of course, it is not just price but a growing concern about the overall levels of all fat, of saturated fat, and of cholesterol in our diet that persuades us to re duce our consumption of butterfat Sales of American and Italian cheeses have provided the major undergirding for the butterfat mar ket, but recent data suggest a slow-down in the growth in per capita of such products. In fact, preliminary estimates for 1988 actually show a decline in cheese consumption on a per capi ta basis. CCC Purchase Prices Change Again The increase in the support price beginning on April 1, and iie subsequent return to earlier levels on July 1 (from $10.60 to SI 1.10 to $10.60) resulted in es ientially no net change in cheese mrchase prices. Powder prices, towever, are up about 8.6 percent £m NOT L10N... THE CLASSIFIED LIVESTOCK SECTION HAS BEASTLY SELECTIONS! 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II ij < rOSITIVE APrKOAC,i for REVITALIZING SOILS) 1585 Landis Road Elizabethtown, PA 17022 Phone (717) 367-2667 Cal TOLL FREE F.r fha Nam OT Your Local Reprcmnlallve Touch Tone Phoaco ll«Uu,for lone, then pfiu 4757 Dial ,hoao» t-717-M7-2M7, Ull .pcrlOr "Car 4 Number 4757” (Da Not Dial 7171 T Collin* From Within Thli Aroa Code) from 72.75 to 79.00 cents per round), and butter prices are down ibout 8.7 percent (from $1.32 to >1.205 per pound). The purpose of hese changes, presumably, is to ower prices of butter relative to lowder so that less butterfat is iroduced and/or more butterfat is onsumed in the commercial mar ket. Will It Work? It seems unlikely much less but terfat will be produced in the near term future. The conversion from high- to low-fat dairy breeds is about over, and butterfat pre miums are still much more im portant determinants of milk prices than solids-not-fat or pro tein premiums throughout the United States as a whole. Chang ing the production ratio of the sol ids-not-fat to butterfat compon ents of milk is a slow and uncer tain process, and it will take years before the results of such efforts are likely to show up in the farm milk tank. The overall direction of the ef fect of lower butterfat prices rela tive to powder prices will be to en courage the consumption of high er butterfat and discourage the consumption of higher solids-not fat products a reversal of the trends actually under way in the market. Swimming against the tide always makes change more difficult. So, will the price change work? To some extent, yes. Less butter will be offered to the CCC. Butter purchases, stocks, and uncommit ted inventories should all fall as a result of lower purchase prices. The short-term goal of reducing CCC costs will be aided. The longer-term industry problem of what to do with the declining de mand for butterfat will remain un resolved. 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Significant historical Pennsylvania newspapers