Tuesday, May 26, 2009

All in the same boat

What's behind the low milk prices?

I can clearly remember the Dairy Profit Team meeting at which our team members assured us we would never see $12 milk again. It was at that same meeting they assured us buying a farm would be much better than renting one. At least they were right about the farm.

This return to single-digit milk prices is our first experience with "which bills do we pay this week?" It's like being a cow in negative energy balance, except nobody's putting more feed in front of us anytime soon.

We've been assured, though, that every other dairy farm is in the same boat we are – it's just that some of those boats are sinking faster than others.

Lately, the discussion around here has focused on trying to understand the impetus behind the price drop. What's the reason for the severity of this down turn? Is sexed semen is at fault, for increasing supply? Are retail prices the reason, for decreasing demand? Is this the price we pay (no pun intended) for continuing to improve production on our farms? Or is it truly just a perfect storm of supply and demand conditions, as some market analysts have lamented?

Everyone seems to have an opinion about what needs to happen next: Dairy farmers need to cull more cows. Dairy farmers need to unite to control supply. Dairy farmers just need to wait for retail consumption to return.

They say the cure for low milk prices is low milk prices. I just wonder how long we're going to be sick.

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