Increase in Milk Production to blame for fall in Profits of Dairy Farmers

Milk supply is in excess across the country, owing to which price of milk has also been slashed. Milk sellers are facing tense times owing to glut in market. Many of their buyers have given them time to find new buyers for their milk.

David Wood, who has sold milk at many places, shared that now many people want to sell their milk. He affirmed, "It's a very difficult market right now. It took a lot of work to find a market, but we now have short-term contracts with three buyers and have been selling all our milk for the past week".

Condition is completely opposite this year, as last time, the US dairy farmers enjoyed high milk prices and low feed prices. Many factors have clubbed together which have led to an increase in milk production, lower exports and declining sales of fresh milk.

All these and other factors have brought a decline in milk prices paid to farmers. In 2014, the price was around $28 per hundred pounds for around 9 gallons and now, it is below $18. Wood said that he is selling milk for less than it costs him to produce the milk.

Joe Morrissey, a spokesman for the state Department of Agriculture and Markets, affirmed that the issue is affecting both large and small co-ops. But if compared then small groups are finding fewer outlets for their milk than they had in the past.

Andrew Novakovic, a professor of agricultural economics at Cornell University, said that generally, milk is marketed through large national or regional cooperatives. But such is not the case in the Northeast, as small groups of farmers there were able to negotiate premium prices.

Novakovic was of the view that negotiations are being made as now, people are not drinking milk as they used to and it is happening especially in the Northeast.