Milk Prices
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Chuck Denney
If you ‘got milk’ recently, chances are you paid a lot for it. Milk now averages about three dollars and eighty cents a gallon, and the USDA predicts the price could go higher. It seems a little illogical. Why is a gallon of milk a lot more expensive than a gallon of gas? One answer - people in foreign countries like our product and are buying more of it. Dr. Daryll Ray is an ag economist with UT.
Dr. Daryll Ray
“What’s happening is on the demand side. We have a demand worldwide for cheese, and that’s diverting some of the milk, the drinking milk, the non-fat dry milk to cheese production - and so therefore there isn’t as much milk available.”
Chuck Denney
You’d think if consumers are paying more for milk at the grocery store, that must be a good thing for farmers. And that’s true to an extent. But in recent years dairy production costs have gone up dramatically. Tennessee went from 900 dairy farms in 2000 to less than 600 today. After years of losing money, many farmers just shut down. But this recent surge in overseas markets has increased the commodity price for producers since summer by just a bit. Still for farmers there’s the rising costs in the 3 F’s – fuel, fertilizer and feed. Dr. Gary Rodgers is a dairy specialist with UT Extension.
Dr. Gary Rodgers
“There’s a lot of costs involved between the producer and actually getting it in the grocery store to the consumer. So that comes into play as well, but the producer, generally speaking, gets about 35 cents out of every dollar the consumer spends.”
Chuck Denney
Blount County dairyman Mac Pate has been in the business 58 years. His pretty place sits at the foothills of the Smoky Mountains - a farm that milks nearly 200 cows, three times a day. Mr. Pate knows about consumer’s frustrations about the cost of milk, but he asks that grocery shoppers also try to understand his situation. Last year his farm lost 70-thousand dollars.
Mac Pate
“Right now the price is very good, but we have just got through one of the worst years that I’ve ever had in all the years I’ve been dairying. So hopefully it will hold until a fella can get back in a stable position.”
Chuck Denney
Pate and many other people hope consumers will work their food budget so they can still afford milk - one of the most healthful foods we can eat. There’s a high demand for milk here and overseas, and if we’re thirsty, we’ll just have to pay for it.
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NOTE: International dairy prices increased 46 percent between November 2006 and April 2007, according to the Food and Agriculture Organization. The areas for the highest demand for American milk include China and much of Europe.
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