Monday, June 29, 2009
(click on graph to enlarge)
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%.
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