Dairy Farmers Feeling the Squeeze of High Production Costs

Historically high prices are not enough to increase production.

Dairy producers are receiving very high prices, but it's not enough to prompt a major expansion in production. The forecast for next year is 190.3 billion pounds according to World Agricultural Outlook Board Chairman Gerry Bange, which is a very modest increase of 0.4%.

Prices are at historic highs; the average all milk price is $18.95 per hundredweight this year and possibly slightly lower to $18.75 in 2009.

"Even with those very, very strong prices milk producers are still looking at substantially higher costs of production," Bange says. "Even with the lower feed prices we're talking about this month, relative to a year or two ago the feed prices are still much, much higher."

Bange says the higher cost of feed coupled with the higher energy costs makes the return for milk producers is not to their satisfaction.

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