(click on image to enlarge)
In the above graph I took some liberties. The New Zealand production year starts in the middle of the calendar year. Therefore, some time adjustment is needed. Next, by placing the NZ price on the right axis, I was surprised to note that the two prices, visually, can be compared.
Recently, the price NZ farms receive has become higher than the U.S. price. Both the U.S. and NZ prices have been rising but, note the trends. NZ farm milk prices have been rising at a faster rate.
All the conventional experts talk about a world market. Exports are very, very important everyone is told. Well, if U.S. prices are lower than world prices, exports are very, very important to someone but, not dairy farmers.
US prices being much mower than world prices, CWT should stop subsidizing the export of cheese and give the money back to farmers instead of making the traders richer.
ReplyDeleteSo right, CWT subsidizing exports is a total waste of dairy farmers' money. There is no need to subsidize competitively priced US dairy exports. It's the high quality and attractive US price that sells the product to overseas markets.
ReplyDeleteIt's not export markets per se that are important, it's markets that are important to dairy farmers. If US dairy farmers are high-quality low-cost producers, which a lot, but not all, of them are, then they will be able to sell their product on the global market as well as the domestic market. It's that simple. It is the cost per unit produced that makes a milk producer competitive.