April 5, 1999 | By: Mark Eclov

Dairy farmers will be receiving much smaller checks for their April milk. The basic formula price, which determines the farmer's price, took a $6.00 per hundred weight plunge in February and the price corrections are being being reflected in milk payments two months later.

"Milk prices have been on a roller coaster ride for the last five years, said Bill Crist, Extension milking management and dairy production specialist in the University of Kentucky College of Agriculture. "In this case, the price swing downward is over twice as much as the price has ever dropped in a one month time span."

"The lower prices are a result of supply finally catching up with the demand. Cheese prices took a big tumble in the last few months," said Crist.

"While this price swing is dramatic, it is not likely to force any great number of dairy producers out of business," noted Jack McAllister, Extension dairy performance specialist in the University of Kentucky College of Agriculture.

The recent price drop is buffered by the fact that dairy producers received record high prices for their milk as recently as this past December and January.

"We need to put this price swing in perspective because the price drop of 37 per cent was a decline from the highest price ever paid for milk," added McAllister.

The future of milk prices suggests a slow trend upward throughout the summer and better increases in the fall.

"May prices are expected to rise slightly, but the lower prices will most likely stay with us through the summer months," said Crist. "Prices usually increase in the fall and the forecasters are expecting that cycle to continue this year. Our dairy farmers will need it."

Record swings in milk, pork and grain prices over the last few months are a dramatic way of reminding anyone trying to make a living in today's farm industry that risk management has become a critical factor in staying afloat.

"Dairy farmers may buffer lower milk prices by getting hay made early, or better yet, by putting it into the silo," said Crist. "This high quality forage will help increase milk production and help lower the cost of production."

Other management tools such as a good artificial insemination program, forage testing, ration balancing and mastitis control can all help offset the lower milk prices now and in the future.


Writer: Mark Eclov
(606) 257-7223

Source: Bill Crist
(606) 257-7543