The Dairy Downturn

Although the household budget part of me has been happy to purchase inexpensive milk over the last few years, even under $1 per gallon at times, the farmer in me is upset that prices are so low. I can’t help but think about our fellow farm families that are struggling to get by on the farm level price they receive. Recently, the challenges dairy farmers are facing have been widely covered, not only within agriculture but also in the general media. Earlier this month USA Today communicated the issue, reporting a loss of 500 Wisconsin dairy farms in 2017 and an additional 150 to date in 2018, pushing the number of Wisconsin dairy farms down 20% over the last five years.

At the grocery store you may find gallons of milk ranging in price anywhere from under $1 to more than $5 (maybe higher in some areas). Unless the milk is a specialty product, the farmer is getting the same price per gallon regardless of what you are paying at the store. Farmers sell their milk as a commodity at market price. For example, when you bought a gallon of milk in 2017, the farmer received approximately $0.17 regardless of whether you paid $1 for the gallon or $4 for the gallon.

The price differences you see at the grocery store are based on branding and store promotions, not farm level price. Of course the farm level price is correlated to an extent, a higher farm level price would raise the retailer cost and influence the retailer’s selling price range. If you are concerned the price range may imply a quality difference I encourage you to visit “Where Is My Milk From?” and enter the code from a gallon of the less expensive milk and a code from a gallon of the name brand milk. I’ve found in our region of Illinois the cheapest grocery store brand and the more expensive name brand gallon all come from the exact same place!

If you really want to help the dairy industry, support demand for dairy by consuming more milk and other dairy products. Remember, you’ll do more to help family dairy farms by spending your money buying more gallons of the cheaper milk rather than fewer gallons of the more expensive milk!

Read the full post on The Real Housewives of Rural Illinois.