Dairy producers facing many challenges in ’13

Farm Forum

AMES, Iowa – As 2013 opens, dairy farmers feel the squeeze of tight margins and low prices. Producers’ share of the dairy dollar hovers at a level that doesn’t cover their cost of producing milk.

December milk prices paid to producers fell about $2 per hundredweight, to $18.66 for Class III milk, which is below their breakeven levels.

Dairymen’s share of the food dollar, as calculated by National Farmers Union’s The Farmers’ Share in December, landed at $1.81 for one gallon of fat-free milk, with a retail price of $4.19.

In addition to the price outlook, other challenges facing dairy producers are the consolidation and closing of several dairy processing and bottling plants, shrinking the number of available markets. This loss of market access reduces the competitive factor in the price levels available to producers.

Concurrently, there is a surge in the number of plants being purchased by foreign buyers. In a current issue of Dairy Food Magazine, six of the nation’s top 15 processors are now foreign- owned, and that number is expected to grow.

“As an agricultural marketing organization, we understand the importance of competition between processors and retailers in the agricultural industry,” says National Farmers President Paul Olson.

“We market for producers every day, sending not only milk, but also commodities such as beef, corn, soybeans and wheat to agriculture’s buyers. They’re a needed part of our industry,” said Olson, a Taylor, Wis., dairy producer. “However, we represent producers, and many aspects of our system need to be changed and made more equitable, so producers will receive prices that will cover their costs.”

“In the meantime, we continue to work for producers in the marketplace, and we urge them to market together with groups like National Farmers, that make producers’ best interests one of their primary objectives,” Olson says.

National Farmers is a risk management and price negotiation organization for the nation’s farmers and ranchers.