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Today USDA released their Agricultural Prices report. The “all milk” price for June 2009 is $11.40 per hundredweight, down $7.90 from June 2008.
To put that is perspective; the “all milk” price was 25% of parity. Parity, of course, is the great boogie man from the 1980s. Parity, as everyone has been told over and over, ad nauseam, brought about a huge surplus of milk. And of course, the government had to buy the entire surplus and it was just bad beyond belief.
One problem with the conventional thinking on parity is when parity ended milk production continued to rise. Oddly, government purchases pretty much ended when parity ended. Dairy farmers simply received less for their milk.
Now, we are told, people stopped consuming dairy products and there we have the explanation for low prices. Somehow, other foods continue to be consumed. The average per cent of parity for all the commodities USDA lists is 40.63%. Potatoes are 50% of parity. Soybeans are 56% and grapefruit is 59%.
There is a problem with this picture.
There was an old political saying taught to us in High School...
ReplyDeleteSocialism; You have two cows the government takes one and gives it to someone else.
Communism; You have two cows, the government takes both and gives you back some of the milk.
Fascism; You have two cows, the government takes both and sells you back the milk.
Now I think we need to add one, not sure what to call it? Maybe Americanism? The "Free Market" takes your milk, pays you far less than it's worth, makes huge profits, you keep the cows and try to pay your bills and care for the herd, if you can't do it for what they say the market price of the milk is, then too bad for you. Farmers lose, market wins.
As we try to figure out what to do about these low dairy prices, keep in mind the last sentence of the Declaration of Independence where it's said. "And for the support of the Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor."
Alone each dairy farmer is quite helpless to change this terrible pricing system. Using the wisdom of our forfathers, we have to figure out how to bargin collectively and how to unite as one voice - it may be our only chance, unless the market decides to throw us a bone.
Jeff Suehring