Have you noticed the price in the grocery store for milk these days? Here in southern Michigan, the prices range from $1.48 per gallon to $2.78. Amazing!! The $1.48 milk is at a local grocer with a national chain, Kroger, competing for that market share. The $2.78 milk price comes from another national chain, Wal-Mart. You know Wal-Mart, who will beat any price, guaranteed?? Well, if you want that lower price all you have to do is ask, and they will oblidge. Who would have guessed that?
But, I'm wondering, why is milk that high priced? You see, the dairy farmer only receives about 50 cents from that gallon. This is not typical. The milk price paid to the farmer is so low that we are not even breaking even. How is that? There are many reasons.
As you have figured out this year, there is a recession. And there is a world recession also. That means that other countries who typically buy (import) from the United States have cut back dramatically or are not importing at all. The dairy supply of dry milk, butter and cheese is then stockpiled in the U.S. with no where to go but wait to get consumed.
Dairy product consumption is lower in the summer months. Ice cream may be higher, but overall, other dairy products are not consumed as much as in the Fall and Winter, when baking and holidays lead to stronger sales.
I want to mention that other businesses suffer from periodic market lows also. But there seems to be radical changes in agriculture these days. As anyone who is in business for themselves knows, you can only hold on for so long and then the time comes that you may have to sell out. Unfortunately, several large and small dairies around the country have had to do just that. This is very painful to all dairy farmers, to see someone who has devoted his life to feeding the nation, have to call it quits.
While we all hold on to the fact that agriculture is the core of this country, lets not forget that all consumers want "cheap" food. According to the United States Dept. of Agriculture, America has the cheapest food supply in the world, only 10% of a person's annual disposable income is spent on food versus 13.4% in 1974. Because of the increase in technology, our production has gone up and costs to the consumer have gone down. Other countries remain at a higher level of income vs. cost for food, such as Italy, where the annual disposable income spent on food is as high as 23%, and India where they spend around 51% for food.
What you can do. To help out the American Dairy Farmer, buy more milk products. Follow the Food Pyramid and make sure you get enough of the daily allowance of dairy. Encourage others to add milk products to their diets and like I always tell my friends: "Support your local dairy farmer"!
Until next time,
Get your "3 A Day", (dairy servings).
