A spokesperson for an organization which claims to be, “the principal voice on national issues for dairy cooperatives and their dairy farmer members.” (you know the group) on a national dairy radio program today, June 19, 2009 tried to marginalize the impact of MPCs negatively affecting farm milk price.
“Some blame dairy imports, particularly milk protein concentrate (MPC) for the low dairy prices.” said the spokesperson “representing” dairy farmer interest. Oh no, “The real issue is exports,” he said, exports have dried up and as everyone knows the economy just isn’t that good. So I guess farmers should appreciate the low prices as some kind of divine command.
The U.S Bureau of Labor Statistics (BLS) publishes price data which is indexed. In the case of dairy, the index uses 1982 – 84 as the base period and calls that 100. Each month is compared with the base period. For example a number of 200 would mean prices had doubled. Under 100 would mean a price, which really can be seen as a percentage of the base, of less than the base period.
Retail dairy prices are tracked through the Consumer Price Index (CPI). Processors and dairy farmers are tracked through the Producer Price Index (PPI).
Take a look at the following graph:
(click to enlarge)
Obviously, the past 18 months have been an occasion to plunder the dairy farmer. Therefore, those who claim to represent dairy farmers have a lot of explaining to do.
In January 2008 the spread between farm milk price and processor was 25. In May 2009 it was 61.2 - more than double.
In January 2008 the spread between dairy farm price and retail was 46. In May 2009 the spread more than doubled to 104.16.
Price transmission has been nonexistent. Dairy farmers have provided the bailout, at least in part, for those between them and the public.
My point about MPCs has been fairly simple. If there is a surplus of milk there is no need to import MPCs. The MPCs are simply a clue indicating market failure. Who can justify market failure?
If dairy farmers had real leaders the picture and the above graph would be different.