Wednesday, May 13, 2009

Cause for Alarm

On May 12, 2009 the USDA released their latest World Agricultural Supply and Demand Estimate (WASDE).

Farm milk price “is forecast to average $11.85 to $12.35 per cwt.” for 2009. Then, “The 2010 all milk price is forecast at $14.70 to $15.70 per cwt.”

USDA ERS publishes monthly “Costs and Returns” for milk.

The latest “operating costs” average for the 23 lead dairy states is $15.41 per hundredweight. I think labor really should be a part of “operating costs” and if labor is added, the total out of pocket is $17.23 per hundredweight.

If USDA knows national milk production costs, for “cash costs” are higher than the milk price they are projecting for a two year period what do they think the likely outcome will be?

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