Tuesday, December 8, 2009
Follow Milk Money
(click on image to enlarge)
The Bureau of Labor Statistics (BLS) compiles many data bases. The Consumer Price Index (CPI) is fairly well known. The BLS also compiles Producer Price Indexes (PPI) which cover wholesale prices.
Essentially, these indexes measure change from a base point, in this case 1982-84 = 100. In that base period all items equaled 100 or, if you like 100%.
October is the latest month available. The dairy farm PPI for manufactured milk in October 2009 is 106.7. For processors, the PPI for cheese in October 2009 is 148.1. And for retail, the CPI is 200.63.
Above is a graph showing the change, beginning in January 2008, between farm and processor. As can be readily seen, the spread has increased dramatically.
This is probably no secret to most processors or to those in government who choose to look at the current dairy situation. Of course, many in government correctly can claim ignorance.
In ordinary times, the money would be seen as in the market. However, there is still a massive financial crisis and the government has allowed the powerful to take their perceived needs from virtually unrepresented dairy farmers.