Volatile Year For Dairy Industry
(Continued from Pag* A 1)
Then, once farmers made it
through the drought, the crash
came. In November, milk prices
fell significantly. And in Janu
ary, milk prices were reported at
a 22-year low with the BFP price
at below $lO per hundredweight.
Farmers are still reeling from
the low milk prices. Some Penn
sylvania producers banded to
gether to picket dairies and call
for help from legislators. Others
pressed for a new pricing
system.
At the same time, federal
order reform took place, merg
ing 31 orders into 11. Some
things that came along with the
federal order reform were multi
ple component pricing, prices
based on the NASS survey, and
the elimination of the BFP price.
“We’re still trying to figure
out the impact of the order
reform,” said Bailey. “We know
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that prices are lower now than
they were last year. But most of
it is due to the increased cheese
stocks. The question is if any of
it is due to order reform.”
Pennsylvania farmers did get
some relief from the low milk
prices through the Pennsylvania
Milk Marketing Board’s over
order premium paid on all Class
I milk produced, processed, and
sold in Pennsylvania.
Earlier this spring, the PMMB
Board voted to add a 25 cent
temporary increase to the prem
ium to counteract high diesel
fuel prices. Currently the Board
is reviewing testimony to renew
the premium for the next six
months.
The federal milk support
price was also reported to have
helped the low milk price situa
tion. Data showed that without
the support price, milk prices
could have been much lower
than what they were this spring.
Price forecasts for the remain-
der of this year are very conserv
ative because national milk
production continues to surpass
last year’s levels. With the cur
rent low feed costs, farmers have
continued incentive to expand,
increasing production levels.
In April, milk production in
the 20 major states totaled 12.4
billion pounds, up 3.7 percent.
In Pennsylvania, April milk pro
duction was up 2.9 percent.
On a positive note, dairy
demand continues to increase.
In the USDA first quarter
report, commercial disappear
ance was up 4.4 percent on a
milkfat basis.
Butter consumption was up
6.4 percent, American cheese
consumption was up 3.5 per
cent, and other cheese consump
tion was up 8.5 percent. Nonfat
dry milk consumption was down
21.9 percent.
With the past year having so
many ups and downs, farmers
are starting to consider options
to protect their bottom line ~
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ward contracting and hedging
can level out some of the highs
and lows.
Niche marketing, such as pro
ducing organic milk, grazing
cattle, marketing dairy genetics,
and on-farm milk processing,
can also increase the bottom
line.
Farmers are also encouraged
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Lancaster Farming, Saturday, June 3, 2000-A3l
7
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to have a business plan and
know their cost of production to
help prepare for the highs and
lows of producing milk.
Whatever strategy they
choose, one thing is for certain.
After a year like this past one,
dairy farmers need to be more
prepared than ever to face the
challenges of a volatile market.
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