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by Annie Cunningham

Retail milk prices are on their way up – a gallon of milk could cost as much as $4 by the end of summer – but the good news for dairy farmers is that demand for milk products has remained steady.

"This really shows us that the dairy check-off is working. Demand for gourmet ice cream and specialty cheeses have been steadily rising for a long time now, and we haven’t seen any indications that demand for milk products will decrease because of the increased retail prices," said David White, OFBF’s director of commodity relations.

Although the milk prices are going up, Ohio dairy farmers won’t go from rags to riches. They are dealing with higher feed costs, especially ones with protein. Another economic disadvantage for dairy farmers is that Monsanto is reducing its production of bovine somatotropin, or bST, by 50 percent, which could mean less efficient dairy production. The use of supplemental bST allows dairy farmers to produce more milk with fewer cows, thereby providing dairy farmers with additional economic security.

For close to two years, dairy prices were near record lows, forcing many dairies out of business. Also many farmers are culling more cows because beef prices are higher than they’ve been in a long time. In the past, 3 percent of the United State’s replacement heifers have come from Canada. Now that the border is closed because of BSE that also results in a decreased number of cows in the United States.

Because domestic dairy supplies are low and demand for dairy products is high, milk prices could be up as much as $4 per hundredweight from 2003.

White said the situation is simple economics. There are 71 counties in the nation that now market 50 percent of the milk, and 13 of those counties are in the western part of the United States and they alone market 25 percent of the nation’s milk.

"What consumers and retailers need to understand is that by and large this situation is out of the producers’ control," White said. "Eventually the supply will catch up with a demand, but this price increase is a great break for our dairy farmers who have endured many tribulations in the last couple of years."

Because prices were so low for so long, many farmers may now have a chance to pay off their debt load and get caught up on payments. "Higher prices may help our milk producers to break even when this is all said and done," White said.

Don’t blame the farmer
Early in the price increase a few grocery stores posted signs on dairy cases that many in agriculture felt pointed the finger at the dairy farmers. Ohio Farm Bureau and other organizations have worked with the Ohio Grocers Association and others to be sure the wording of any signs in grocery dairy departments does not blame producers for the increase. "We, along with the Ohio Grocers Association and others, have drafted more dairy farmer-friendly signage if stores want to inform their customers about the price increase. We encourage members to talk to the manager of their local store if they feel signage misrepresents the situation. Talking points have been sent to organization directors and county presidents," White said. "This is a time for all Farm Bureau members to take advantage of an educational opportunity. We can inform the public why the situation is the way it is."