The Milk
Cluck
TOM JUHGHAK
County Agent
SCRANTON (Lackawanna
Co.) Farm milk prices continue
to drop but are declining at a
declining rate.
That's the economic term mean
ing the free fall in prices that you
felt the last half of 1990 is over and
more traditional seasonal drops
expected this time of the year will
be the trend.
The parachute has opened and
the ground is in sight. Looking at
the Minnesota-Wisconsin Price
Series, that free fall the last half of
last year took you from $13.43 in
July to $10.19 in December for a
drop of $3.24 or 55 cents a month.
Since then, from January to
March, the M-W went from $10.16
in January to $10.02 in March for a
drop of only 14 cents in three
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months, or about five cents a
month.
No question there's still a differ
ence, but the drop has flattened out
considerably in advance of the
spring flush.
The pattern is the same for the
uniform or blend price in Order 2.
The last half of 1990 saw a drop of
$3.20 from $14.43 to $11.23 in
December about 60 cents a
month. So far this year it has
dropped only 21 cents in three
months from $ll.ll in January to
$10.90 in March.
That $10.90 in March is only
nine cents less than February, but a
sickening $2.35 less than last
March. It’s better than the $4.24
difference in December.
Certainly you can argue that
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pices can't get much worse with
the support price at $9.90 and the
M-W at $10.02 but it can happen.
There have been times in the past
when the M-W fell below the sup
port price because milk supplies
were so excessive.
I don't believe that will happen
this year and I'm guessing that the
drops from now to June will be
minimal before prices start going
up this summer. The worst of the
price drops are about over and if
you can manage to survive the cuts
of last year you can make it for the
year ahead.
Decreasing Increases
Along with prices declining at a
declining rate, milk production is
increasing at a declining rate.
After increases nationally of 3
and 4 percent since last fall, Febru
ary production increased only 2
percent.
Even more significant were the
receipts in the three northeastern
federal orders where increases fell
from nearly 6 percent in December
to only 2 percent in February.
Nearly all the increases nation
ally have come from higher pro
duction per cow rather than
increasing cow numbers. In fact
cow numbers have been dropping
since last fall and in January and
February were below the same
months a year ago.
With feed prices showing no
Agway Farm Enterprise Service
relief and milk prices dropping
below last year the milk-pice to
feed-price ratio is down close to
the break even point.
These are reasons enough for
declining milk production, but if
you factor in a declining number of
cows you have a scenario for an
anything-can-happen situation.
You don't need a disaster like
the drought in the upper midwest
in 1988 (that was a factor in pro
viding the higher milk prices in
1989 and 1990), Just the normal
problems of making ends meet on
the average dairy farm may be
enough to continue declines in
milk production.
Suspension
One thing that will help a little
this spring is the suspension of
your Louisville Plan payments in
Order 2 and Order 1 in New Eng
land. These are payments many
producers are unaware of, but were
voted in by them in a referendum
many years ago.
They are part of an incentive to
encourage more milk production
in the fall months from August to
November and less in the spring
from March to June.
Payments of 20 cents in March;
30 cents in April and 40 cents in
May and June are deducted from
your milk check and returned to
fAGWAY}
Lancaster Fanning, Saturday, April 20, 1991-A23
you with the earned interest from
August to November.
This year however, after a peti
tion from the northeastern
cooperatives including RCMA
and the Milk Producers Voluntary
Agricultural Association that com
bined represent 80 percent of the
Order 1 producers and 32 percent
of the Order 2 producers the
USDA has agreed to suspend the
producer payments this year.
Of course, that means that you
won't get any payments in the fall
months, but the reasoning was that
you need the money now for plant
ing expenses and hopefully milk
prices will be better in the fall to
cover harvest expenses.
Emergency Legislation
I guess by now that every milk
producers is aware of what has
commonly been called the Leahy
Bill that was an attempt to raise
fluid milk prices this year to
increase dairy farm income.
In the original form it would
have meant $3 per hundred more
on fluid milk in all federal order
markets.
With varying Class I utilization
in different markets it would have
meant increases in the uniform or
blend price to farmers from 50
cents in the upper midwest to near
ly $3 in the southeast, with the
northeast in at around $1.50 a
hundred.
In an effort to make it more
equitable and get enough votes to
pass it, an amendment was made to
give everyone the same increase or
about $1.25 a hundred. This upset
other areas who had to give up
some of their $3; so the support
was by no means unanimous.
There were other parts of the bill
(Turn to Pag# A3S)
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