Archive for Monday, October 28, 1996

MILK PRICES GETTING JUICED UP

October 28, 1996

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An increase in milk prices is giving dairy farmers a chance to rebound from hard times.

A rise in milk prices has dairy farmers breathing sighs of relief.

"We'd kind of been on hard times before, because milk prices were down and the cost of feed was so high," said Randal Flory, a rural Lawrence dairy farmer. "It helped us out tremendously. You try to meet your bills, but you just never seem to get ahead."

The USDA is projecting the 1996 annual milk price paid to dairy farmers will range from $14.80 to $15 per hundredweight, up from last year's average of $12.78 per hundredweight.

For Flory's 170 cow dairy operation -- and other dairy farmers throughout Northeast Kansas -- this means the family business has a better chance for a profitable year.

"It wasn't too long ago that dairy farmers were getting paid $10 to $12 per hundredweight," Flory said. "This last pay check we got was $16 per hundredweight. That's the most I've seen since I began dairying."

Dairy farmers are seeing an increase in milk prices for their product because this year's milk production is down.

The USDA is estimating 1996 annual milk production to be 154.7 billion pounds nationwide, a .5 percent drop from 1995.

Mark Reinhardt, the Kansas City, Mo., division manager for Mid-America Dairymen, Inc., said low milk production in the Northeast Kansas area can be attributed to high feed costs.

"Because feed prices have nearly doubled (this year), farmers can't feed their herds as well," Reinhardt said.

Flory said it was the high cost of feed and low milk prices that put a financial bind on his dairy business.

"When you pay $4 a bushel for corn and you're getting $12 per hundredweight, you just can't get by like that," Flory said.

"We have a semi that comes in here every nine days to provide two-thirds of our grain ration. That costs us about $4,000 a month and then we still provide one-third of our own grain, if that gives you any idea of the feed costs."

With this year's high yielding grain harvests in Northeast Kansas, farmers will get a chance to cut feed costs considerably.

A cut in feed costs combined with higher milk prices will give dairy farmers a financial break.

But Flory said farmers are far from getting rich.

"The milk prices go up and everyone thinks that the dairy farmers are going to be millionaires," Flory said.

"All we're doing now is catching up on the hard times we've had in the past two to four years."

Flory said he is happy to see the rise in milk prices, but it has come at a cost to consumers.

"It's kind of the middle man and the stores that make all of the money. We (dairy farmers) can't control the destiny of our product," Flory said.

"When we aren't getting much money for our milk, the store is still making a tremendous amount of money."

Lawrence grocery stores report that a gallon of vitamin D milk costs from $2.76 to $3.04, up 30 to 40 cents a gallon from this time last year.

Milk prices paid to dairy farmers are now higher.

But Reinhardt said a correction in milk prices will eventually occur, dropping milk prices paid to dairy farmers and the cost of milk in stores.

"If you hold to the rule of supply and demand, they'd (dairy farmers) better enjoy it (milk prices) now, because it will go back the other way," Reinholdt said.

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